What is Affiliate Marketing?

Affiliate marketing is a form of business activity that is mostly practiced online. It involves an individual or company advertising for and selling another company's goods or services. This individual or company will then be referred to as an affiliate to the company. The individual or company gets paid a commission once a customer presents themselves to purchase the advertised goods or services.

The Approach

There are two ways of approaching this. One is by signing up individuals or other companies to become your business affiliate, while the other is by becoming an affiliate to other companies and thus advertise for and sell other company's products.

The former approach will therefore require you to pay a commission to your affiliate, who is mostly referred to as the "publisher", while the latter will require that your company gets paid some commission for the customers reached by the company you are promoting, which is normally called the merchant or advertiser. In order for an affiliate marketing program to be successful, a business should consider working with individuals or companies who can tap customers that the business would not have otherwise reached on their own.



The Benefits

Affiliate marketing is beneficial to both the merchant and the publisher in that:

There is no loss incurred. On the merchant's part, he only gets to pay the commission once a specified number of customers buys their products through the publisher who has signed up with them for the program, while on the publisher's part there is no cost of capital and other expenses involved in having a certain product; they only get to sell what is already produced. Thus, it is a win-win situation on both sides.

It is possible for the merchant to track the origin of a given sale. This improves the transparency of the whole process, making it possible for the merchant to be 100% sure that he will get a return on his investment and for the publisher to know just how many people used his referral service to buy products from his merchant.

It is a cost effective means of advertising, as placing an ad in the dailies is far more costly than placing it with the affiliate. Furthermore, there are no fees charged for SEO or PPC, the merchant only pays for the affiliate fees once a customer presents themselves.

Having a big affiliate network increases your company's visibility online. This will give your business a competitive edge.

Affiliate marketing can act as a form of an outsourced sales team. Most of the websites that act as publishers have excellent content which have been optimized for SEO, thus making it possible for a large number of people to see your company and products.

Should You Join?

This decision can be made after considering some of the factors that might prove to be a bane once you sign up for the program. One factor to consider is how you will get the tracking reports in order for you to either pay the publisher, or get paid by the merchant. Distrust is not uncommon in affiliate marketing, as both parties might wonder whether the sales generated were truly from the said publisher. It is therefore wise to consider having a third party tracking system, which will have additional fees.



Another thing to consider is whether the publisher's website has great content that will drive in more people to visit the site. A poorly constructed website will drive people away preventing them from even clicking on your business's links. You should also consider just how much you are willing to part with so as to pay your business's affiliate, as this is another form of advertising, and being too stingy might not work well with the program.

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