A Basic Guide to Affiliate Marketing Programs

A Basic Guide to Affiliate Marketing Programs
A Basic Guide to Affiliate Marketing Programs

From the current hype surrounding affiliate marketing programs it might seem easy to dismiss the phenomena as a variation of Webmania, but there’s actually a viable business model underneath the hood. The idea is that advertisers should only pay for advertising that actually produces results, and it’s proving to be a winner.
Affiliate marketing works like this: Website publishers agree to provide space on their Websites for ads from advertisers in exchange for payment for any resulting visitors (known as clicks), leads, or sales that are generated. It’s called a pay by performance model, or sometimes a pay per action model. An affiliate program service, if used, provides the Internet server that feeds the advertiser’s ads to the publisher’s viewers, and the service keeps the books, makes the commission payments, and guarantees an honest accounting to both publisher and advertiser.
On a technical level, what happens is that when someone clicks on a sponsored ad, their computer is given a cookie (a small piece of code) identifying the publisher it came from, and the cookie stays resident on the computer, usually for several weeks. This allows the affiliate service to track the person, and log whether any site visits, lead questionnaires, or sale actions are made. If any of these events happen, the affiliate service company sends a check to the publisher, and a bill to the advertiser.
These commission payments are behind the explosion in affiliate marketing sites and services, and are also responsible for vast recruitment drives underway. As an incentive, many services are offering referral fees, sometime 10% of all commissions from each Websites recruited, so much of the promotion now is from sites wanting to register people for the affiliate services. In effect, people are chasing commissions on commissions. So, should you sign up as an affiliate marketing partner? Well, it probably couldn’t hurt.
Becoming a Publisher is Easy
Becoming an affiliate publisher is so risk free, and so easy, that almost any business with a Website should consider the idea. For these same reasons, affiliate publishing is also unlikely to return huge profits, despite what a number of books on the subject may claim. Realistically, how much you will make as an affiliate will be determined by the volume and nature of your Website’s traffic, and the choices you make in your affiliate programs. If you don’t expect more than a “chance” to make real money, you won’t be disappointed.
The first thing to consider about becoming an affiliate publisher is whether or not the idea is even feasible for your Website. The minimum industry standards for becoming an affiliate publisher require your Website to have it’s own domain name, and at least one e-mail account linked to that domain. In addition, it’s very important that your Website’s layout support the common sizes for Internet ads. If it doesn’t, you may find it very difficult, even impossible, esthetically speaking, to fit the ads into your pages. You must also plan on having someone assigned to monitor e-mail, and make necessary changes to your site as advertisers phase out older, and less effective ads, and as new ads come along.
If you can meet these qualifications, the next thing to consider is the demographics of your Website, and who else, besides your immediate competitors, would like to reach them. Once you determine this, you can start looking for affiliate programs that offer the kind of advertisers you are seeking, and the kind of terms you want.
The terms and payment conditions offered by affiliate marketing services and their advertisers vary widely. Not all affiliate marketing services pay promptly at the end of the month. Some services make publishers wait over two months before sending out checks, and one month delays are not uncommon.
Getting Your First Ads
With 1500 advertisers, and over 350,000 publishers, Commission Junction (www.cj.com) is probably the best place to begin life as an affiliate publisher. Within a few minutes of first logging on to Commission Junction, you can be choosing from thousands of ads for immediate placement on your Website. Most of the advertisers require no approval, just a general commitment that your site doesn’t feature pornography, hate related content, or encourage illegal activity.
With real estate on any Web page limited, selecting the most profitable mix of ads is a complicated task. Should you opt for limited appeal ads with high commissions, or ads for items with wide appeal and low commissions? And which products should you promote from which advertisers?
One approach is to choose ads for products that compliment your product. If your website is pushing Caribbean vacations, good choices might be scuba gear, sun tan lotion, car rentals, and travelers insurance. Another choice would be for products that are indirectly related to you product, like ads for credit cards, and credit card debt relief programs. Still another choice would be to choose products that are not related to your product at all, but of general interest, like income tax and cell phone services. Fortunately, performance numbers are usually available for each of the programs the affiliate services offer to help in decision making.
In fact, an entire industry has developed to provide advice on what ads to select. Most of the services like Commission Junction feature a list of their best selling ads, updated daily, if not hourly. Some services also make representatives available to give free advice to affiliate program members, including recommendations of which ads would best for their sites. Talking to service reps is a lot like talking to stockbrokers, with terms like “hot item” and “going fast” used commonly, and accurately.
Moderate Use is Best
The desire to present as many ads as possible on each page needs to be balanced against the dangers of overloading the viewer, and in effect, keeping viewers from focusing on any of the ads enough to actually comprehend and respond to them. Sometimes it might be advisable to only have one or two ads per page, especially if the ads are for high priced items with large commissions like cars or vacations.
In addition, the number of animated gifs appearing on any one page needs to be considered. Since your viewers are actually at your site to read the content you provide, and not the ads, they are likely to perceive animated ads as distracting and annoying, and on an exponential curve relative to number. Three or four animated gifs per page is a good upper limit, as long as they’re carefully spread out over the page. Beyond that number and your page starts looking like a three ring circus. Unfortunately, some advertisers offer animated gifs and nothing else.
Just Copy, Paste, and Check the Results
The physical process of selecting and using the ads is simple. Each advertiser has one or more pages showing all of the ads they are currently making available. You just click on the ad you like and a page opens with the a few lines of HTML code for that ad. You simply copy the code and paste it into your Web page.
To find out how well your ads are doing, simply log on to the affiliate program’s Website and check your account. In addition to indicating the amount you are owed, you can also look up statistics about how each ad for each advertiser is doing on your Website.
Ways to Become an Advertiser
Unfortunately, becoming an advertiser in the affiliate marketing world is far more difficult than becoming a publisher. Any attempt at advertising requires designing and producing HTML ads, and in addition, a operating Web server with tracking software, and then generating the publicity to let people know about your program.
The least expensive approach is to do it yourself. If you just want to increase traffic at your Website, you can join any number of banner swapping organizations. If you want to offer a full service affiliate program, with tracking of pay-per-performance, you can buy off-the-shelf, affordable, and reliable software that will handle it. It just takes a decent computer and a permanent connection to the Internet to setup and operate an affiliate marketing program. The advantages of this approach are the immediate and complete control it provides the advertiser. The disadvantages are that it leaves the issue of promotion up to the advertiser, and it lacks the credibility of a system that uses an impartial third party to keep the books.
The other approach is to let a third party that specializes in affiliate programs manage some, or all, of your program. This costs money, but it can be worth it. There are well over a hundred Websites that provide this service, from giants like Commission Junction to small vertical market niche players, and some of them are probably just right for you.
What it Costs
The fees affiliate marketing services charge varies. Commission Junction , for instance, charges $1295 for access to their network, $500 for an escrow account, and a 30% commission on all transactions fees paid to publishers, with a $0.30 minimum. Included are processing of checks sent to publishers, operation of the ad server, and approval of publishers if requested.
Websponsors, another of the major affiliate services, is currently offering to supply any advertiser with 2,000 leads, including name, contact info, and responses to three qualifying questions, for $6,000.
Deciding Which Service(s) to Go With
Which service(s) you go with will depend on your budget and your site’s demographics. If you have a product of general interest to sell, like Hawaiian vacations or DVD players, a service like Commission Junction, which offers an extremely high visibility can be a good choice (assuming you have the budget). They can make you ads available to 350,000 Websites overnight. However, if you have a specialized product, like pilot’s supplies, or law books, a specialized affiliate program service would probably be more cost effective.
Another thing to consider is the amount of control you want over what sites carry your advertising. Most advertisers with general interest products to sell will opt for letting any site carry their ads that desires to, but some advertisers may need to review each site for appropriateness.
Depending on the kind of product you are selling, you may want promote it as a pay per click, pay per lead, or pay per sale, or any combination of these. Not all AM services support all methods, so you need to find out these details before you sign up.
The Standard Ads
Once you have selected a service and paid the signup costs, the affiliate marketing service will want you to provide them with two things, a page of copy that describes why publishers should run your ads, and the ads themselves. It will pay to put a lot of effort into both. No matter how much traffic sees the link, if the link doesn’t “sell” people on visiting your site, or buying your product, they won’t.
Over the last few years several standard sizes for ads have evolved. The most common sizes for banner ads are 468×60 and 234×60 pixels. Side navigation bar ads offer considerably more variety with two common widths, 120 and 125, and heights in multiples of 30. Common sizes are 120×60, 120×90, and 120×240, but sizes up to 120×600 have been seen. There are also “button” sized ads at 88×31, just big enough for a logo.
The 120×60 ad is probably the most common non-banner ad for two reasons. It’s just big enough to handle a sales pitch along with a logo, and it doesn’t take up much space, making it more likely to be used.
Given the size limitations, it isn’t surprising that many advertisers are using animated gifs for ads. These essentially give the advertiser several different ads in the space of one, allowing for a much better articulation of the advertiser’s case. Animated ads are also much more likely to attract attention, since humans instinctively direct their attention at anything moving against a static background. Unfortunately for animated ads, overuse can work against the advertiser.
Your Ad Strategy
Deciding what ads to provide affiliate publishers is another critical issue. Generally, there are three approaches.
With the “all or nothing” approach you only offer your ads in 468×60 sizes. This guarantees a prominent position on either the top or bottom of any page your ad is on, but it also makes it far less likely to be used.
With the “limited variety” approach you offer one each of several different size ads. This allows flexibility without requiring a lot of ads to be created.
With the “maximum variety approach,” you offer several different ads in each size, allowing you to vary the sales pitch, artwork, and even color scheme, making it much easier to Web designers to fit the ads into pages tastefully.
Whatever approach you choose, your advertising strategy should include monitoring the performance of your ads on a regular basis, and modifying your strategy and ad mix as needed.
In Real Life
So how would an affiliate marketing program work in real life? Well, consider a hypothetical ski resort with a Website averaging 500 unique visitors per day, (or 15,000 monthly) which attracts people to its Website by offering detailed reports of ski conditions, and running live streaming video of activity on its ski slopes. This kind of Website would be in a good position to act as both an advertiser and a publisher.
As an advertiser, the ski resort would probably benefit by having links to its Website on others sites, perhaps ones that specialized in vacations. As a publisher, the ski resort could run ads for products that might appeal to its viewers, like ads for high quality skis, four wheel drive SUVs, winter clothing, and vacations.
For an estimate of potential earnings, consider this example. An ad becomes available offering a discount vacation package to ski country that pays a commission of $50.00. If only one tenth of one percent of the Website’s 15,000 monthly ad impressions results in a sale, or 15 sales result, the monthly commission to the ski resort would be $750.00. If, and this is a big if, the ski resort could find another four equally profitable ads, it could actually earn $3,750 a month in commissions.
In reality, most business will be lucky to make a few hundred dollars a month with affiliate marketing, or sometimes perhaps a few thousand. This isn’t a fortune, but it’s still enough to matter.
In Conclusion
Affiliate programs are being represented by some promoters as the next Gold Rush on the Internet. At best, this is only partly true, but affiliate marketing can still be a very useful tool for advertisers, provided its limitations are understood. If it’s used as part of a well-designed marketing campaign, it can be very effective. If it’s used instead of a real marketing campaign, it’s likely to be a waste of time and money.
Affiliate marketing isn’t going to replace any current advertising methodology, but it’s clearly a new weapon in the marketing arsenal, and one likely to be with us for some time. Affiliate marketing is ultimately a improved system for delivering qualified buyers to advertisers. Used properly, it will eliminate much of the waste in advertising, and that can only help our industry.

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