Welcome to BIG AD EMAIL EZINE OCTOBER 2ND 2004 issue
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Understanding Affiliate Programs
  By S. Housley
  
  Affiliate programs are commonly misunderstood, in order to 
  understand affiliate programs lets start with terminology. 
  For clarification purposes, an affiliate is defined as any 
  "referrer" or website that promotes a product in an effort 
  to earn revenue. A merchant is defined as someone who owns a 
  product and is sharing revenues with an affiliate based on 
  the affiliate's performance. Affiliate programs can drive 
  targeted traffic to your website. 
  
  There are 3 basic affiliate programs, though only the first 
  two are commonly used. 
  
  Pay Per Click - this is when an affiliate is compensated for 
  sending traffic to the merchant. (AdSense is an example of 
  PPC affiliate program) 
  
  Pay Per Sale - this is when the affiliate is compensated by 
  the merchant if the referral generates a sale or purchase.  
  
  Pay Per Lead - this is when the merchant agrees to pay for a 
  qualified (or sometimes unqualified lead), which is very 
  uncommon because it is subjective and up to the merchant.  
  
  Affiliate websites tend to provide information, 
  entertainment, and content services to their customers. The 
  online merchants sell products, goods and services online. 
  These are programs permitting affiliates to earn money based 
  on the visitors to your site who click through to another's 
  website. Some pay a token amount for the click through and 
  others provide a percentage of sales when a visitor "clicks 
  through" to your site and buys a product or service on the 
  other party's site. This could represent a value added 
  service to your visitors.  
  
  Affiliate programs allow you to pay and track incentives 
  from other websites that send web surfers, leads or paying 
  customers to your website. Commissions based on purchases 
  made by traffic sent from the referring website can be paid. 
  Besides a commission, an affiliate can receive a flat fee, 
  or other incentives for all valid transactions it refers 
  that generate a sale or lead.  
  
  Be careful that the affiliate's web page is not cluttered 
  with banner ads that may crowd out your link, or that be 
  annoying to customers. Affiliate programs enable affiliates 
  to leverage their traffic and customer base in order to 
  profit from e-commerce while merchants benefit from 
  increased exposure and sales.  
  
  Commonly traffic to merchant sites is measured and 
  affiliates can clearly see conversion rates. Meaning, they 
  track the percentage of people they are referring, and how 
  much of it results in earned revenue. If the affiliate finds 
  a very low conversion, they will find a better way to 
  monetize that traffic, quite possibly with a competing 
  merchant product.  
  
  In order to be a successful affiliate, the affiliate site 
  needs to either have tons of traffic or target a specific 
  audience, frequently one untapped by the merchant. It has 
  been my experience, the closer the affiliate site content 
  resembles the merchant products, the higher the likelihood 
  of a good conversion rate.  
  
  Once you are committed to the idea of affiliates, the next 
  step is to determine the kind of tracking system you are 
  going to use. Sales can be tracked by HTML code, which is 
  placed in a shopping cart or on the 'order 
  confirmation'/'thank you' page, and cookies, which are 
  created after the customers click on a banner ad. Cookie 
  killers have been a problem for the affiliate industry. 
  Software vendors have an advantage over other merchants in 
  that new technologies allow software developers to better 
  control compensation. Vendors can 'wrap' their software 
  insuring that their affiliates are compensated for 
  referrals, even if the customer downloads a trial version 
  prior to purchasing. Buy now buttons in the software have 
  affiliate ids imbedded in the download. Combined tracking 
  systems have more success than those that rely on a single 
  tracking technology.  
  
  In order to develop a successful affiliate network, 
  merchants must realize that affiliates spend ad dollars on 
  site, and product promotion. If the affiliate is not 
  compensated fairly they will not remain in the merchants 
  network. The bottom line is that affiliate relationships are 
  partnerships, when both sides feel the situation is fair and 
  equitable the relationship will be a success. 
  
  About the Author:
  Sharon Housley manages marketing for NotePage, Inc. 
  http://www.notepage.net a company specializing in 
  alphanumeric paging, SMS and wireless messaging software 
  solutions. Other sites by Sharon can be found at 
  http://www.feedforall.com , 
  http://www.softwaremarketingresource.com and 
  http://www.small-business-software.net

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