What is an Affiliate Program?
Before answering this question, I will refer you to a certain scheme, which
will help you understand the principles behind the Affiliate Programs and why they have been
created.
Look at the diagram:
Seller's profits purchase
Seller Advertising buyers
Seller's costs
Nothing special you may say and you're right. This is a simplified
marketing scheme of a traditional seller.
A company offers its customers its products/services, but in order to sell them,
it must first invest (I gotta stress this word) money into advertising
campaign, PR, direct marketing, and etc...
...in a whole range of activities that will allow it to get to the customer.
Simple maths: if the marketing costs are lower than profits obtained from
sales, the company may grow and develop; otherwise it runs in the red. This is a
principle of every business venture (e-business is not immune from it).
The thing is that from the time immemorial businessmen and marketing experts
have been trying to find a marketing tool that would:
1. be risk-free (you have to pay for commercials first what if they turn
out to be a total flop?)
2. be less demanding in terms of investment of money and time (especially
at the beginning when the resources are limited)
3. bring a steady growth of PROFITS.
Is that a utopia? No!
"Is it possible at all? Can you first count your profits and then
pay for marketing?" - they asked.
15 years ago the marketing experts would have killed for the tool that would
...let them pay ONLY for results after sales had been made after the
customer had bought the product!
In the past it was extremely difficult, because there was no infrastructure
for it in place.
Now, you live in the time of Internet and E-marketing!
Affiliate Program Why is it such a revolutionary tool?
Instead of 1000 words...
|
This is a specific product seller, owner of an E-business... |
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...and these are his potential partners, Internet users, owners of websites
|
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"I'll give you 25% for each product sold to customers referred by you!" |
|
1.
"OK, so we are your partners from now on. But how do we refer these
customers to you?
|
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"Each of you will get a unique ID number that will be attached to a URL
leading to one of my pages. Thanks to this, I will know who's brought the
customer to my business and who's earned a commission." |
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"Excellent! So, we'll place those links on our websites and in our
e-mails... We'll be promoting your products and services!"
|
What does this seller's marketing look like now when he's implemented an Affiliate Program?
First the seller's profits
Seller Purchase Buyer
then the seller's expenses Partners
Genius?
You bet! This scheme has plenty of advantages such as:
FOR PARTNERS:
·
don't have to sell anything (no products of
their own)
·
no paper work and bureaucracy
·
no worry about the customer service and
distribution.
·
May concentrate on recommending the product
or services
·
may become a partner for free
FOR SELLERS (OWNERS OF AP's):
·
no risk of unsuccessful advertising campaign
·
pay ONLY for performance
(pay-per-performance)
·
pay for marketing after selling their
products and services
·
get their products sold, develop their
customer base, and promote their brand
Types of Affiliate Programs
Generally Affiliate Programs may appear in three different types:
Pay-per-sale (PPS)
(partners receive their commission for sales generated by their sites based on
an agreed upon commission ratebase)
Pay-per-lead (PPL)
(partners get paid for leads generated by their sites to the destination site
this type may involve payments for e.g. forms being filled out, things that are
not necessarily connected with sales)
Pay-per-click (PPC)
(Payment is made for qualifying clicks to the destination site based on a
prearranged per-click rate banners, links, etc)
PPS, PPL and PPC may be combined: PPS + PPC or PPL + PPC.
Another classification of the Affiliate Program model is base on the number
of levels it involves.
Single-Level Marketing
(partner s receive their regular PPS or PPL commission)
Two-Level Marketing
(partners receive PPS or PPL commission and they may recruit more partners,
which will give them an additional recruitment commission)
Multi-Level Marketing
(MLM as above but they also receive commissions for the recruitment on other
levels in their pyramid)
More affiliate questions answered > > >
