Affiliate Marketing- Part I

"A system of advertising in which site A agrees to feature buttons from site B, and site A gets a commission on any sales generated for site B. It can also be applied to situations in which an advertiser may be looking for marketing information, rather than a cash sale. Popular among startups with very small marketing budgets."

This is what you get when you do a search in Google for the definition of Affiliate Marketing.

I still remember, my early days of induction into the world of Internet Marketing, more specifically "Affiliate Marketing."

Till then, I was completely oblivious to this term. For most of us, Affiliate marketing is a term that has different meanings. Let me first move to the other side of the line and say that affiliate marketing is nothing but unnecessary pop ups, newsletter spam, affiliate tracking code cloaking and much more.

Now from the other side of the line, Affiliate Marketing is a way to market your products online by signing up affiliates who have websites and are willing to advertise your products on their site, in return earning a certain percentage of the commission from the sales they generate.

If you take a closer look, for one particular product or a company, you will find server loads of affiliates, marketing the company or a product. Now this is an indicator to itself of the way you market your products on the Internet.

To talk about Affiliate Marketing, this one article would not suffice. Hence, I have divided it into a series of articles. Although I am very tempted to first write about "The tools to improve an affiliate's conversions" let me stick to the chronology.

Why does a company need an affiliate program?

Having defined, affiliate marketing, the next obvious question that arises is, why a company needs affiliates when it can market its products on its own.

To answer this, while a company may be very huge in terms of the infrastructure, or has a really successful product, it cannot sit silent and bank on its own strengths.
Further to this, a company cannot customize the look and feel of the site to suit the tastes of the local markets. Although there are tools where you can cloak your website, it would involve a lot of complexity in terms of the technical and marketing demands. Hence, arises the need for affiliates.

What makes a company look for affiliates?

Let’s face it. Every website which has a decent hit rate does enjoy a certain niche market. It is mostly for the smaller sites that you see a higher percentage of customer loyalty. There are various reasons to this; one most obvious factor is the service and the personalization provided by the smaller sites. It is sites like these which attract companies to negotiate them into signing up as an affiliate.

The mistakes most companies make:
In my experience, working with the affiliate program, one huge error made was that most companies which are into affiliate marketing just design the specs and set it up on their website and wait for webmasters to sign up with them.

Now you never know the kind of traffic you would be attracting. This where the 80:20 rule comes in the picture and that is how most of the companies strategize their affiliate marketing efforts.

A more detailed article about this can be found, entitled: "Eliminating the 80:20 rule"

Do you think you are ready to sign up as an affiliate?

Perhaps, for most of us, this question never seem to arise because of the fact that the commissions offered to an affiliate is huge enough to blind us from the most basic and simple facts to begin with. Let’s face it, if a company offers you a huge commission for selling their products, you can rest assured that it will take you a lot of time and effort to make a single sale. I would not quote any numbers here as the commissions differ from one market sector product to another.

A few pointers to keep in mind before signing up as an affiliate:

1. Take stock of the situation.
Or as the "Gurus" call it, make a SWOT analysis of your site. This will present your website in a very plain and subtle way. Through this you would know where your website's strength lies in.

2. Scout for the right product for you.
This is common sense, but let me reiterate this fact. Always sign up for products you think will fit in with your website's theme. You would not want to be a web host and sign up as an affiliate, selling another web host who promises to give you a 50% commission. Now that would be very silly to do. The bottom line is that sign up for services that will "Add Value" to the services provided by your website.

3. The Affiliate Terms & Conditions.

This is the saddest part of affiliate marketing. In my experience, I used to come across at least 2 cases of misunderstood affiliates who feel they are cheated out in the deal. Always ensure that you read the terms & conditions carefully and clarify with the company incase you have any further queries.

4. Prepare your site.
Another major problem in affiliate marketing is tracking. Always ensure that you have some tools and logs to monitor the traffic on your site and if possible the outgoing links, clicks, etc. Let’s face it, no matter how big a company is, setting up the perfect affiliate tracking tools is something which I have not come across so far. So there will always be a situation where in you will have to lose out on a conversion. Make sure that you have your back covered with the tools so that your case will have credibility.

Remember, a company would never want to deny an affiliate, especially if the affiliate is really genuine. Why? I’m sure you know the reasons.

5. Affiliate Networks or Direct Affiliate?
Now that you have all the details with you, the next question is whether to sign up with an affiliate network of to sign up directly as the company's affiliate. There are a few things to consider here. I would not restrain you from signing up with either of the entities as both have their pros and cons.

a) If you are looking at a reasonably good tracking system and hassle free set up, then Affiliate Networks would be the right place for you.

b) If you are not quite sure of the products you want to sell, but you want to set up some affiliate banners, then affiliate networks is the best place to sign up.

c) If you think you can handle the terms & condition put forth by the company and if you are fairly adept in setting up a foolproof system on your site then sign up with the company directly. It will also help you negotiate a custom deal which will offer you much higher payouts as compared to signing up with networks.

Keep in mind that affiliate networks are nothing but sites just like yours who sign up as a master affiliate. By setting up their infrastructure, tracking, etc they allow various other people to sign up through them. What happens in this case is that the affiliate networks are the master affiliates, while you become the sub affiliate. So what this means is that the extra commission earned by the networks for the sales you bring, a part of it is used towards providing you with better service. And there are a few networks which also charge you a certain fee for the transactions.
But do not think that signing up directly will be a better deal. Because although this will provide you with direct interact with the company and in most cases, with the account manager, you will have to be 100% of your tracking and other problems that might arise.

So if you are ready to make some serious money and efforts towards marketing a product, then go ahead, there is no better way to do it than through affiliate marketing and no, I am not talking about Google AdSense here.