There are three basic types of affiliate program payment arrangement :
1. Pay-to-sale
Amazon.com's affiliate program is an example of a pay to sale arrangement. In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something. Some merchant's website, like amazon.com, pay the affiliate a percentage of the sale and others pay a fixed amount of sale.
2. Pay-to-click
In this programs, the merchant's site pays the affiliate based on the number of visitors who click on the link to come to merchant's site. They don't have to buy anything and it doesn't matter to the affiliate what a visitor does once he gets to the merchant's site.
3. Pay to lead
Companies with these programs pay their affiliates based on the number of visitors they refer who sign up as lead. This simply means the visitor fills out some requested information at the merchant site, which the merchant site may usee as a sales lead or sell to another company as sales lead.
There are a number of other arrangements as well. Basically, a company could set up an affiliate program based on any action that would benefit them, and then pay their affiliates based on the number of customers the affiliates send them who perform that action.
There are couple of very popular variations on these basic payment plans :
* Two-tier programs : These affiliate programs have a structure similar to multilevel marketing (MLM) organizations such as Amway or Avon, which profit through commission sales and sales recruitment. In addition to receiving commission based on sales, clicks or leads stemming from their own site, affiliates in these programs also receive a commission based on the activity of affiliate sites they refer to the merchant site.
* Residual programs : Affiliate in this programs can keep making money off a visitor they send to the site if the visitor continous to purchase goods or services from the merchant site. Many online merchant who receive regular payments from their customers (such as monthly service fees) run this sort of affiliate program.
Additionally, there are a few pay-per-impression (pay-per-view) affiliate programs. Companies running these programs pay affiliates based only on the number of visitor who see their banner ad. Usually, this sort of arrangement is not structured as an affiliate program, but simply as a traditional advertising program.
With an affiliate program, an online merchant only pays its affiliates when things are working. Because there's much less risk to the merchant, it's a lot easier for websites join affiliate programs than it is for them to attract advertisers
How to Get Involved in Affiliate Programs
If you are interested in getting involved in affliate programs, the first thing you have to do is describe whether you want to become an affiliate, want to acquire affiliates, or both. If you run an e-commerce site and would like to increase your sales, you might want to start your own affiliate program. If you run a small content site as a hobby and would simply like to bring in a little money to cover production costs, joining a few programs as an affiliate would be a good option. Your best option depends on what aspects of affiliate programs could best serve your site and how much you are willing to spend.
Becoming an affiliate is relatively easy. Go to an affiliate network site and fill out an online application to become a member. The application will ask for some personal information (name, address, and desciption of content) and will have you agree to a service agreement. Most affiliate networks are completely free of affiliates.
If the affiliate network approves your application, you can begin picking affiliate programs that interest you. Because so many affiliate programs are free to the affiliate, it's probably in your best interest to steer clear of programs with a charge. Once you've choose some affiliate programs, the online merchants running these programs will have the opportunity to review your site. If they approve you, the affiliate network will walk you through the process of posting the appropriate links, which come directly from the network's site. They will also establish payment arrangements with you. Most affiliate networks have a set minimum payout amount. This means you won't receive a check until the total money owed you reaches a certain amount. After you have set all this up and the affiliate network has explained its system to you, you can get back to work on your website's content and wait for your money to come in.
How are Affiliate Programs Administered?
Affiliate program are pretty simple in concept, but a lot of behind the scenes work is necessary to make them work properly. In order for the affiliates to be compensated, someone needs to kepp track of the actual activity surrounding the affiliate's link to the merchant site.
Depending on the arrangement, someone might need to determine :
* The number of people who click on the merchant site's link on an affiliate site.
* The number of people who end up buying something or performing some other predetermined action once the affiliate sends them to the merchant site.
* The number of people who see the merchant site's banner link on an affiliate site.
Someone also has to keep track of the original arrangement between the merchant and the affiliate and make sure the affiliate receives whatever money is owed to them.
It's a lot of work for merchant website to actively recruit affiliates anf for affiliates to search for affiliate programs they are interested in.
All an affiliate webmaster has to do is put the link up and hope the checks come rolling in.
For a lot of websites, however, all the work of recruiting affiliates or merchant websites is just too time consuming. And a lot o f webmasters would rather not reply on the merchant site totally their own bill correctly. Affiliate program network offer an excellent solution to these problems.
Affiliate network or "affiliate broker", act as mediators between affiliates and merchant websites with affiliate program. They track all activity, arrange all payment, and help affiliate set up the necessary links on their website. Additionally, affiliate networks help recruit affiliate by including an online merchant's affiliate program in their directory. Different affiliate networks offer different extra features, but most have a help center and a place affiliate and merchants can go to view reports of their traffic. Affiliate networks are real convenience for prospective affiliates because they present a wide variety of affiliate programs in one central location. They make it much easier to find a good program that is appropriate for your site. In return for the convenience they provide, affiliate networks take a cut of each transaction. Typically, a network takes somewhere around 20 percent of the commission.
Basically any website can join an affiliate program, and if they choose well, they can make money off of it. Some site, such as Memolink and Mypoints, are just big collections of affiliate programs. These sites join a variety of pay-to-click or pay-to-lead programs and then pay their visitors a fraction of the commission on each click or reward them with prizes.
Affiliate Program Linking Methods
An affiliate can link to a merchant site in a number of ways. The best link choice depends on the nature of the affiliate and the nature of the merchant. Each kind of link is specially suited for particular purposes. Common types of links include :
* Text links : The blue writing is an example of one. If you click on the text, your browser will bring up the web page to the merchant's site.
* Banner links : These may be the best choice when you think a text link doesn't do enough to attract visitors.
* Searh box : This type of link allow visitors to search an online database on another site. The results of the search are links to other pages on the site.
These are several wayss affiliate programs use these links
* Link to the home page : This is a straight-forward link to the merchant's home page.
* Product-specific link : If an affiliate website wants to sell only a specific product, they can link to that product's page on the merchant website.
* Storefronts : If an affiliate website wants to expose visitors to a variety of products, they can link to a storefront. Prefabricated storefronts are maintained by the merchant website.
* Co-branding : In some affiliate programs, affiliates can maintain their website identity even after a customer links to the merchant website. The merchant website will handle all the sales and will usually host the page but will configurate the page so that it appears as through it's still part of the affiliate website.
* Registration : An affiliate can link directly to a registration form on the merchant site. If a visitor would have to register to use the merchant's website, this link is a good time-saver.
So how do affiliate networks know when a visitor clicks from an affiliate to the merchant site? In most cases, the visitor doesn't actually go directly to the merchant site, but insted to a page on the affiliate network site. The URL for the page contains several pieces of information, including :
* an identification number for the affiliate
* an identifiation number for the merchant
* the URL of the merchant site
When you click on the link, the network site records a hit on that particular URL, which tells them what affiliate sent a visitor to that merchant. It then immediately sends the visitor to the actual merchant site.
What Makes an Affiliate Program Successful?
Affiliate programs work best when affiliate choose product, services and companies that match the content of their website and would interest their readers. If a content website chooses affiliate programs well, everybody involved in the process wins. The affiliate wins because it is able to sell products to its visitor without having to run an e-commerce business. The merchant site wins because the affiliate sends it customers it wouldn't get otherwise. The affiliate network wins because it gets a piece of the profit for setting everything up. The web surfer wins because the affiliate website directs her to products she would be interested in, which she can then purchase easily.
