Affiliate marketing:
why you should love it
by Sarah Jamieson
Amazon.com launched the first affiliate program (a.k.a. associate,
referrer, or partner program) way back in 1997. Since then the concept
has spread quickly.
Affiliate programs basically involve a web merchant paying affiliates
to act as salespeople for the web product. The affiliates put up something
about the product on their sites, and if a buyer wants to purchase
they click a link and are transferred to the merchant's site.
The affiliate then gets a commission if the buyer makes a purchase.
Affiliate programs are big business.
"By the year 2002, it has been estimated that 25% of ALL Internet
sales (over $10 billion!) will be generated by associate programs!"
says Nicole Vanderberlit of Jupiter Communications Inc.
According to Forrester Research, in 1999 affiliate programs made up
13% of online retail sales. And Forrester and Jupiter Communications
estimate that by 2003, affiliate programs will account for over 20%
of Internet revenues.
In the April 1999 study of advertising effectiveness by Forrester
Research, affiliate programs were the most effective type of advertising,
with a ranking of 4.3 on a scale of "one (poor) to five (great)."
See: Most effective marketing.
Yet few of the 47 marketing managers surveyed by Forrester had tweaked
to the fact that affiliate programs were hot stuff: only 17% had one
in place!
There's plenty of evidence that starting an affiliate program is
one of the very most important things you can do for your net business
- in fact, if your want to succeed online you must seriously consider
setting up an affiliate program to market your site.
Get high-traffic sites to sell your products: risk-free
Every time you place an ad, you are gambling. You have no idea whether
you will ever make a profit from that ad or even see the original
amount come back to you in sales.
But with your own affiliate program, you pay nothing until you have
the money "in your pocket."
It's very important to get your affiliate program right. For your
benefit we have packaged a perfect affiliate solution. It's a complete
affiliate management solution called Ultimate Affiliate Plus.
Ultimate Affiliate Plus is the #1 way to recruit affiliates - a proven
"domino effect" that continuously expands your sales force
- with no effort from you.
Turn high traffic sites into your own personal sales force.
"I just bought the Ultimate Affiliate Program and could not
be happier … it is the best program I have ever seen. "
Doug Dillard, of dotdealers.com.
The software was given the prestigious Editor's Choice award by Dr.
Ralph Wilson of wilsonweb.com.
Get your "unfair advantage"! Learn more about Ultimate
Affiliate Plus.
How to find affiliates
Finding targeted, motivated affiliates is your first order of business.
There are plenty of resources out there to help you do this.
Affiliate networks
Affiliate Networks give you access to a stable of affiliates and handle
payments and administration. But as you'll see, this comes at a steep
price.
Two well-known affiliate networks are ...
· Commission Junction - $1,295 setup, plus 30% of affiliate
earnings with a $250 monthly minimum.
· Dynamic Trade - $5,000 setup, plus approximately 2.5% of
affiliate earnings (varies by client).
Wow! These guys seriously charge these fees. You'll go broke before
your first sale.
Do you really own your affiliates?
Companies such as Commission Junction offer affiliate management,
but as you'll see, there are some big drawbacks…
Commission Junction takes a large percentage of all sales made by
affiliates. Currently you have to pay CJ 30% of what you pay affiliates!
That means that as your program gets bigger and you make more sales,
you're also paying more and more to your affiliate management program
- although they are giving you the same service they were when you
first started out!
Why pay a "success penalty" for growing your affiliate
program?
Here's a real-life example of how much that "success penalty"
will really gouge your profits:
First off, you pay Commission Junction $1,295 just in set up fees!
You must also pay them 30% of what you pay affiliates. It used to
be 20%, but then they raised it, making it unaffordable for many small
businesses. And that's not all …
Commission Junction requires a $250 minimum payment per month. Think
about what that really means! If your affiliates make 30 $20 sales
per month and you pay a total of $120 in affiliate commissions, you
do not owe Commission Junction $36 (30% of affiliate earnings). No,
you owe $250 - more than twice as much as you paid your affiliates!
Commisson Junction has already raised their fees from 20% to 30%
- so it's possible that they and their competitors will do it again.
Imagine yourself down the track, finding that the 30% commission you
could barely afford is now 35 or 40% or more!
And money isn't the only thing you stand to lose …You could
lose every one of your affiliates. Commission Junction owns all your
affiliates! If you leave Commission Junction it's you can say bye
bye to all your hard won affiliates.You find out that the affiliates
you thought were yours actually belong to Commission Junction! You
don't even know their names and e-mail addresses, and Commission Junction
sure as heck isn't give you those addressess.
You're completely at their mercy - you can stay put and pay whatever
fee they want to charge you, or watch the time and effort you put
into getting affiliates go down the drain!
With Ultimate Affiliate Plus you own your affiliates - forever. I
suggest you start with a program like Ultimate Affiliate Plus.
But don't just take my word for it …
Internet authority Dr. Ralph Wilson spent 50+ hours researching nearly
two dozen leading affiliate management options to write his acclaimed:
"Report on Affiliate Management Software".
In it, he has this to say about commisson-based programs like Commission
Junction vs. solutions like Ultimate Affiliate:
"A number of merchants are choosing an alternative approach
that gives them substantially more control over their program while
capping their costs with a monthly service fee rather than a per transaction
fee."
Dr. Wilson interviewed former Commission Junction users, who made
comments like:
"My publisher was using Commission Junction. Then CJ became
greedy and increased their rates… So, he will be cutting ties
with CJ. That means the sales force I built up will go bye-bye. This
could happen at any time with any program I do not control myself."
"We've actually just cancelled our relationship … because
the sales we were getting weren't enough to cover the administrative
fee."
"The web site is slow to respond, which makes all administrative
tasks laborious. The integrated messaging system is a major annoyance
since we would prefer to use our own email client. The help system
is even slower and not only is it difficult to find an answer, but
some answers are confusing or just plain wrong."
Compare that to Ultimate Affiliate, which won Dr. Wilson's prestigious
Editor's Choice award and is consistently praised as a top-performing
affiliate solution.
Biggest "benefit" of commission-based providers exposed
as useless to most of us.
Claim: Commission-based providers promote the idea that your program
will benefit from being exposed to their existing network of affiliates
(whom they own, of course!).
Fact: The "benefit" is that your affiliate program will
be like a needle in a haystack of hundreds of competing programs,
some paying higher commissions than you.
Sure, you may get a few new affiliates out of it. But listen to what
Dr. Ralph Wilson has to say about the quality of these affiliates:
"Having a pool of eager affiliates to draw from seems pretty
attractive. The truth is, however, that only 3% or so of these affiliates
have sites with much traffic, and only a few are making any significant
income from affiliate programs."
One of the business owners interviewed by Dr. Wilson has this comment
about Commission Junction:
"Too expensive. My investment has not paid for itself yet. They
don't provide very much support to merchants. 95% of our affiliates
are not performing. Very few are targeted to our market."
Another thing Commission Junction isn't eager to publicize is that
they openly publish clients' private sales figures.
That means that all your competitors have to do to benchmark you
and see your private sales statistics is sign up for free as a Commission
Junction affiliate. Why would you give your competitors access to
this kind of information?
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