Affiliate marketing is an Internet based system involving three primary players. These are the retailer or company; the affiliate or associate; and the customer or visitor. The retailer rewards its affiliates for sales generated by them. This is usually accomplished by using the affiliate website to drive traffic to the company site. Typically, the company will provide a banner ad for the affiliate to place on his own site. The advertisement, featuring the products or services of the retailer or company, contains a link to the company site. Visitors to an affiliate site click on the ad and are redirected to the company site, where they can make a purchase, thus generating a commission for the affiliate.
Affiliate marketing is a form of advertising, but not a stand-alone method. Instead, other Internet marketing techniques are used to drive traffic affiliate sites. The most common methods used are emails, search engines, and articles in praise of the services or products offered by the company.
Affiliate plans are used most often by certain types of companies. Online stores and casinos are common participants, as are travel sites and cell phone companies. Another growing field is the one offering services or products related to the Internet, such as software for developing websites and web hosts.
Compensation is typically based on one of three methods. The most popular is where an affiliate receives a percentage of sales. A few pay a set rate whenever a specified action occurs, which can be a sale, an opt-in newsletter, or any other action the retailer chooses. Fewer than one out of a hundred use a compensation method that rewards affiliates just for getting their visitors to click on the ad.
Because affiliates normally do not make money unless the retailer can make the sale, two factors should be considered when selecting a retailer to promote. First, a professional company website that is easy to negotiate and properly maintained is essential. Prices should be competitive, and the service or products of value to most visitors. Second, affiliates will make the most money if they can match their visitors with a site offering something of interest to them. The tastes of your visitors should be considered when deciding on a company to host.
Some programs pay tiered commissions. This is similar to multilevel marketing, but is not as extensive. For example, if an affiliate is responsible for another site registering as an affiliate of the same company, he can receive a commission on both his own sales and those of the other affiliate.
Some affiliates drive visitors to a website where they can choose from a variety of offers. Normally, an email is sent advising the visitor to go to a website in order to receive a prize. Once there, a number of companies will present their offers, and if the visitor agrees to a set number of them, he becomes eligible for a drawing.
No millionaires have been created overnight by affiliate marketing, but it is a significant source of income for a large number of sites. Sometimes, affiliates will even create a web presence solely for the purpose of posting ads for their retailers. They can be an excellent method of generating additional revenue provided an affiliate can match a company site to his or her own.