What Is An Affiliate Program?

An affiliate program is basically a program where you promote someone else’s product or service for a commission. This can be done in many ways and in the last part of this part there will be an introduction to different types of affiliate programs.

History

The first merchant to make use of affiliate programs (referral programs, associate programs) on a big scale was Amazon.com. As you probably know Amazon.com is the biggest book store online. Now it is selling much more then books, but it started out as an online book store.

Amazon.com saw the possibility to extend their business and attract more customers by giving website owners the possibility to promote their books and get a commission for every sale.

It practically meant that their bookstore extended to all their affiliates sites and was not only located at Amazon.com any more. Talk about leverage! Imagine if a normal shop in the street should do the same thing. Going from having one store located in one place, to having franchises all over the world in a very short time with little effort and little cots.

You would not be able to do that in the ‘bricks and mortar’ world, but on the Internet this is possible. There are many other examples of businesses that have grown enormous on the same concept, but Amazon.com was the first to make this type of programs very popular.

The affiliate programs works with special software that tracks visitors. Let’s say a visitor on an affiliate site gets interested in a product the affiliate recommends. The affiliate will then lead the visitor to click on a link for more informatio n about the product. The link they will follow is what is called an ‘affiliate link’.

The affiliate link has a referral code, and every time someone visits the merchant’s website via this link, the special software registers who referred the visitor. If the visitor makes a purchase this purchase will be credited the affiliate who referred the visitor and the affiliate will get a commission of the sale.

The advantages of affiliate programs are many:

• You do not have to have your own product
• You do not have to process orders
• You do not have to do shipping and handling
• You do not have to do customer support
• You can start your own business with little investment
• You have minimal or zero overhead
• You can do advertising for free and/or extremely cheap
• Your business can be up and running in a matter of hours and days

For the merchant it was mentioned in before, but once again; affiliate programs are the single best and cheapest way of leveraging a business online. There are different types of affiliate program and here you will get to know the most common types and which ones you might want to avoid.

First of all, an affiliate program should be free to join. It should also provide you with exact information about the commission structure, and that structure sho uld be easy to understand without a degree in economics.

There are two types of affiliate programs which are the most common, that are pay per sale programs and pay per lead programs. The pay per sale program will pay you either a percentage of the pro duct price or a flat fee each time someone referred via your link makes a purchase.

The pay per lead programs will give you a flat fee every time someone is referred via your link. But beware with the pay per lead programs, many of them have special rule s for what qualifies as a lead.

Most of the times it is not enough to simply refer someone to the merchants website, many times the visitor has to sign up for something or do a survey or something like that before it qualifies as a lead. If you are a loan or credit card affiliate, sometimes the visitor is not counted as a lead before he/she fills in an application.

Most programs are one tier, which means you are only paid for the sales referred directly by you. Some of the programs are also two tiers, wh ich mean that if you recruit new affiliate, youwill get a percentage of their sales.

Some programs go further then this and are called multi tier programs. These programs you need to be extra careful with, because there is a thin line between multi tier (MLM) programs and pyramid schemes. Stick with the one and two tier programs in the start, and you will be fine.

The best is to read the fine print of the affiliate agreements, but if you sign up for affiliate programs via places like PayDotCom.com, ClickBank.com and Commission Junction you are usually in good hands.

There are other details to affiliate marketing that you need to be aware of like if the customer you refer will be a life time customer. A life time customer means that if the person you referred makes additional purchases, you will be paid additionally as long as the person stays a customer. This is of course the best, but not all programs works like that.

You also need to know how long the referral code (tracking ‘cookie’) is working. Some programs only give you a commission if the person makes a purchase on the same visit as you have referred. Others will give you a commission if a person returns to the website and makes a purchase later, unless the visitor comes via another affiliate referral link.

The best is of course if the tracking cookie is permanent.

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