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The Internet Businesses Survive Without Affiliate Marketing? |
Copyright
© John Woon
What is an affiliate program? I've been bombarded with this question
from Internet business newbies since I got myself involved in this very
interesting but challenging online business.
Many years ago, ever since we started manufacturing products for sale
in the offline physical world, we had been having sales agents
representing different manufacturers to help the latter to expand their
markets. The agents conclude sales without carrying inventory, handling
payments, signing contracts, sorting, packing and shipping of the
products. Their main focus had been to make the sale by getting the
orders from the prospects and existing customers, which were then
processed by the manufacturers or merchants.
In the Internet online world we have affiliates instead of agents.
Affiliates are highly targeted pay-for-performance sales agents.
There are also some forms of Internet advertising that rewards the
affiliates for driving traffic to the advertiser i.e. the manufacturers
or the affiliate program owners. The advertiser pays the affiliates to
place a link on their website, and the affiliate sends traffic to the
advertiser in return. In other words, it's about the affiliates
receiving commissions for helping in making the sales.
The most common reward is pay-for-sale, where the merchant pays the
affiliates who referred the paying customers.
Affiliates are being considered as a complementary but very important
sales channel although the merchants themselves continue to get their
own direct traffic in making their own sales.
The affiliates do not have to suffer from the occasional sleepless
nights worrying about the processing of orders, packing and shipping
etc because this are being taken care of by the merchants who usually
have an effective tracking system to determine which affiliates drive
which orders to them starting with the so-called affiliate links. These
are the links that the affiliates put on their websites, newsletters,
ezines or emails.
How does an affiliate link look like? You may ask. The most common
affiliate link is embedded in the linking URL. For example, if you see
a link like "http://www.abcmerchant.com/?xxxx=3456",
you can be quite sure that the affiliate with the ID (identification)
3456 will receive money from ABC Merchant when someone places his order
after clicking that link.
Other affiliate links are more complex and encrypted with some sites
having their links masked so that the prospects won't be able to detect
that the URL they're clicking is an affiliate link.
An excellent example of an affiliate program is that of Amazon.com who
happens to have one of the oldest affiliate programs in the Internet.
Other possible affiliate programs are as follows:
1) "Pay per click" - the merchant pays the affiliates for the driving
the traffic and the resulted orders to them.
2) "Pay per lead" - the merchant pays the affiliates for directing the
prospects to register their interest with a possibility of making the
sales later.
3) "Pay per subscription" - if the merchant has a recurring revenue
from the customer's repeated orders, the affiliates will benefit
accordingly.
Why bother about Affiliate Marketing at all then?
The following are some of the reasons why Internet marketers the world
over swear by the affiliate marketing as a form of their Internet
advertisement and strategy:
1. Low budget Many are hesitant to venture into any home based
businesses because of the lack of fund or the unwillingness to part
with money due to uncertainties. In affiliate marketing, you don't have
to invest a lot financially to start pulling in profits.
2. No inventories There is no need to keep and manage an inventory as
this would be taken care of by the merchant.
3. Passive income through leverage One could copy what the truly
wealthy people are doing (or rather not doing). They earn their income
through various leverage strategies which allow them to make money
while they're sleeping, meddling with hobbies, or having vacation in
far away places such as the beautiful beaches in Hawaii or Malaysia.
Unlike a paid job, affiliates could just drive traffic to the
merchants' websites without having to sweat after having provided them
your ad copy and links.
4. Minimal risk The main reason for most successful Internet marketer's
extensive use of affiliate marketing is the low-risk nature of the
program. This is especially attractive to those with low budget for
advertising
5. Globalisation With affiliate marketing, you are dealing with an
unending global market place. All you have to do is study, research and
select a niche product or service and prepare all the necessary
marketing tools for your affiliates to direct traffic from just about
anywhere around the world to your website.
6. Getting paid while you sleep This system allows you to "recruit"
thousands of "salesmen" who are willing to work for you 24 hours a day
and 7 days a week. The best part is the fact that they're willing to do
so for nothing! This is a system that allows you to switch your
business to "Autopilot" mode so that you could continue to earn money
whether you're awake, asleep or holidaying in Bangkok or Penang. It is
a system that allows you to work from home or some places 10,000 km or
more away from home.
Having said this, it must be stated that not all affiliate programs are
successful. Many affiliate program owners fail because of their lack of
the necessary investment, for instance, the merchant needs to invest in
an effective tracking system, which is usually an outsourced affiliate
network or an in-house affiliate software system. Another factor to
consider is having sufficient human resources to recruit, manage, and
motivate the affiliates with the right technical support and
remuneration. Without a good support system in place, the affiliates
will not stay long enough to produce the desired results.
Most online businesses use affiliate marketing strategy to sell their
products which could include physical products, software or e-books.
Service industry can also benefit from an affiliate program via a
pay-per-lead program.
Before a merchant could establish an affiliate strategy, he should
consider many factors among them are the answers to the following
questions:
1) What are the benefits to the affiliates? What commission rate should
be offered to affiliates to attract them and motivate them?
2) What are the competitors doing? Are there any innovative strategies
that could produce product differentiation? 3) What pay-for-performance
model should be adopted?
4) How to manage the affiliates and motivate them?
5) How are the affiliates paid using the latest technology without
affecting their moral due, for instance, to delayed payment of their
commission?
6) What affiliate software tracking systems are available and which is
the best for the purpose? A well designed affiliate program could bring
very explosive positive results to the affiliate program owners'
business and the stream of income for the affiliates themselves.
An affiliate strategy done right can increase online sales
tremendously. There are well over 30 affiliate software packages to
choose from. There are also more than 200 features in affiliate
software and network offerings.
With all these possibilities, no wonder many success stories of the
Internet businesses today are the results of suitable application of
affiliate programs. Indeed, most online businesses could not survive
today without effective affiliate programs.
About the author:
Sung-Liang Woon (John Woon) is an established Rubber and Latex
Consultant with about 30 years of experience. Check this fantastic
website to find out how he has ventured into Internet business: http://www.pluginprofitsite.com/main-9747.
Check his website: http://www.johnwoon.com
and take a tour at his blog: http://www.blogwithjohnwoon.blogspot.com
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