What is an Affiliate Program?

Editor’s note: This article was first published by Web Marketing Today. In 2012, Practical Ecommerce purchased Web Marketing Today. We merged both sites in 2016, leaving Practical Ecommerce as the successor.

As most people are aware, it is an affiliate program. This is where a merchant pays you (“the “affiliate”) for linking to his site from yours. The merchant usually pays the affiliate only if a sale occurs through your link.

This type of advertising, which is advertising, is known as Pay Per Action (PPA). Affiliates are not paid to display the merchant’s advertisement link or graphic on their site. Instead, they get paid when a visitor completes a specific action (visits, fills in a form, etc.

Amazon.com: An example

Amazon.com was the first to introduce the Affiliate Program. Amazon.com pioneered the Affiliate Program method. I will briefly describe it.

Sign up to become an affiliate, and you will be assigned an Associate’s id. My name is “wilsoninternetse.”

Let’s suppose I have a review on a new book, Building the E-Empire, written by Juanita Ellis and Steffano Korper (ISBN 0-12-421160-7). I would link the title to take my visitor to Amazon.com’s book description.

You can see the elements. The Associate’s ID appears last in the URL. The ASIN is just before it. This is the Amazon Standard Item Number. In the case of books, this is the same as the IN (International Standard Book Number). This unique number is assigned to each book and book edition.

The Amazon.com web server will program the link, so the visitor is sent to the page for the book with the ISBN. My Associate’s ID and the visitor’s session (an arbitrary number assigned to each visitor whenever he visits the site) will also be recorded. I’ll be credited if the visitor makes any purchases during that session.

Although every merchant has its payment system, Amazon.com’s current model works as follows (subject to changes):

15% of the book’s sale price is my if the visitor buys the same book I linked to.

If my visitor visits Amazon.com, browses around, and buys another book, I receive 5% of the sale price.

All payments are made quarterly, provided the total commission due for that quarter exceeds a minimum amount.

Today’s E-Commerce Book is 30% off, or $27.97. You would get 15% if you bought it through my link or $4.20. If you purchased the book through another link on my site, I’d make 5% of $27.97.

Win-Win

Affiliate programs are a popular choice because they offer both merchants and affiliates a win-win scenario.

Merchant Advantage

A merchant’s advertising cost for a product is limited to the affiliate commission. The merchant pays only when the purchase occurs. This is a far better option than banner advertising, where the merchant must pay regardless of whether any investment happens. Affiliates are only charged 10% to 20% for purchases made through affiliate links, compared to banner advertising, which charges per 1000 banner views, CPM.

Your visitor will be more likely to revisit Amazon.com if he likes it. You’ll also get credit for any book purchases made by the same visitor through another link on your website. You can learn more about affiliate programs from a merchant’s standpoint in the Web Commerce Today newsletter, Issue 8, “A Merchant’s Primer of Affiliate Programs” (http://www.webmarketingtoday.com/wct1/issue8.htm), where I explain how to set up such a program.

Siteowner Advantage

Site owners stand to make money if enough people click on the affiliate links, make purchases and go to their site. It’s not necessary to set up e-commerce functions or take credit cards. You can simply join affiliate programs and let someone else do all the work.

Caveats

Something may be too good to be true if it sounds too good to be true. To be realistic, affiliate program income should be considered a bonus to your primary source, not the source itself. You need to have a lot of visitors, (2) merchants that offer generous payout policies, and (3) products that are well-targeted for the visitors who visit your site. Affiliate programs are not a good option for areas that don’t generate enough traffic.

Leave a Comment

Your email address will not be published.