Home > Profit > Affiliate Programs > Getting Started

by Michael J. Moody

Affiliate programs have become the darlings of the Internet. From a concept that was made popular by Amazon.com, this marketing approach has swept through the Internet like wildfire. Everybody that is anybody, now has an affiliate program. And why not? For product suppliers, it is the ultimate "pay-for-performance" mechanism. No sales, no commission! And for Internet marketers, it can relieve many of the backroom tasks and details that can kill a small business.

As originally envisioned, affiliate programs only required the affiliate to put up a banner ad on their web site. Each banner had a unique identification number and as customers moved to the product suppliers site through the banner; the affiliate's ID# would remain with the customer. Should the customer buy anything at the supplier's site, the affiliate would get credit for it and receive a commission.

This system worked well for companies such as Amazon.com, who now have over 300,000 affiliates that have Amazon.com banners on their site. However, there have been a number of problems with this marketing model since it was introduced. Work has been underway to resolve some of these shortcomings.

As a matter of fact, nothing more than an evolution has been taking place over the past 12 months with regards to the structure of affiliate programs. While this has certainly been noteworthy, it is really just the beginning of the changes ahead for this unique marketing approach. Rather than just provide an overview of the current state of the affiliate marketplace, this article is intended to speculate on where it will end up. Accordingly, we will look at several aspects of the affiliate marketing approach and provide some insight to the problems as well as potential resolutions.

The Basic Concept

Originally, upstart Amazon.com began using the affiliate concept as a marketing method, and as a way to limit their expenses until there was an actual sale. Today, this approach continues to attract smaller, specialty merchants to its ranks. The majority of these merchants are new companies with limited marketing budgets. Looking down the road a year or two, we will see that similar to most things on the Internet, many of these pioneering companies will make way for the big dogs. An excellent example of this trend is search engines, the previous darling of the Internet. Today, most of the successful, independent search engines have either been purchased by big Internet players or will be shortly. Obviously, the success of the affiliate marketing approach has now been noted by the big names in marketing and they will be moving into this arena swiftly.

Big name direct marketing firms have either begun affiliate programs or will be announcing them in the near term. The movements to this market by the big firms will be a trend that will continue and will ultimately lead to the demise of many of the smaller, marginal players that are flooding the market today. Bottom line, the big boys are coming to town and you better plan accordingly.

Other trends that will occur:

• Today, most affiliate programs allow an unlimited number of affiliates. They do not limit in any way there number, in fact, Amazon.com points with pride to its network of 300,000+ affiliates. Forward looking program managers will recognize that in order for network members to earn meaningful income, they will have to limit the total number of affiliates in the program. As a result, one can expect affiliate programs to begin limiting the number of their affiliates. The offset for this change is that program managers may begin setting minimal sales goals to maintain active membership in their programs.
  
  
• Most affiliate programs today are simple product supplier/product marketer relationships. Each piece in this equation is easily replaceable by either party. In an attempt to attract and retain effective marketers, program managers have begun to tie the two parties more closely together. Recent examples of these efforts would include such things as coop ads, company car programs, mortgage payment plans and even stock ownership. It is anticipated that this movement will increase in the future as program managers realize that successful affiliates are worth their weight in gold.


• As affiliate programs continue to attract new Internet marketers, one of the key items that is beginning to be offered is quality training and marketing assistance programs. Some of the most productive affiliate programs incorporate a "paint-by-the-numbers" approach to instructing their affiliates how to best market their products. These daily "to-do" lists are extremely helpful to new marketers and even provide a built-in discipline for the more experienced marketers. Increased emphasis on these programs and shared marketing tips from successful affiliates can be expected.


• Along the same lines, some program managers also offer increased training as a means of additional revenue to the affiliates. Programs such as WebPosition GOLD for example, allow affiliates to increase their commission percentage if they want to be more active in the sales process. Rather than just market the product, a marketer may choose to become a distributor and assist customers by answering questions, product fulfillment, etc., thereby increasing their commission rate from 15% up to 40%. These two tier commission structures will continue to grow in the future.


• Diversification will be a commonplace occurrence in the future. This will be the case on both sides of the transaction (program manager and affiliate). Once program managers have successful affiliates in place, they will begin to offer varied products to there marketing groups. Such is the case, for example, with affiliate marketing guru Declan Dunn, who has expanded his information product line to now include such things as CD Cleaners. Clearly, this is a trend that will only accelerate in the future.

Additionally, successful marketers, not wanting to have all their eggs in one basket, will work to establish relationships with 3 or 4 key affiliate programs. This will assure them multiple streams of income, while limiting the disruption should one of the programs encounter problems. It will also put the marketer in a better negotiating position, if he is not tied to one program.

Promotional Activities

In the beginning, affiliate programs were viewed as a method for deriving extra income for successful webmasters. The emphasis was on providing a mechanism that required no additional work on the part of the webmaster. Banner ads were perfect for this approach. Banners, however, were heavily dependent on the webmaster already having significant amounts of traffic coming to his web site. Obviously, not everyone has this type of traffic at there web sites. As a result, a number of different approaches have evolved to resolve this issue. One of the most successful has been the introduction of the FREE web page concept as an alternative to the banner ads.

As the affiliate program concept moves forward, the banner ad approach will give way to the free web site concept. The reasons include the decreased effectiveness of banner ads, as well as the ability of the program manager to better control the site content. Many affiliate sites today are nothing more that 10 or 12 banner ads accumulated at one location. The lack of professionalism of this approach is obvious. Additionally, a new marketer can move effectively into affiliate programs without have to be an HTML wizard.

While all Internet marketers are struggling to locate effective promotional methods, affiliate marketers are limited in what they can do. They can not utilize such recognized methods as press releases, or ezines. One method, however, that is gaining wide acceptance by all Internet marketers is clearly one of the best options for affiliates, that is opt-in e-mail. This method has recently enjoyed some success, but in the future it will become "numero uno." For the most part, if done properly, this will be the most cost-effective method to reach a highly targeted market. While fears of SPAMMING have caused marketers to shy away for this method, an aggressive "opt-in" e-mail campaign will become the most productive marketing activity for the successful affiliate marketers of the future.

Part and parcel to this "opt-in" e-mail movement is the increased importance of the "opt-in" mailing list. List development will be a basic requirement for any successful Internet marketer. While it is always better to develop your own list, many people are unable to do this, thus increasing the value of a good opt-in list vendor.

Other promotional considerations will include:

Summary

Affiliate programs have made a big impact on the landscape of Internet marketing; however, they are just beginning to fine tune their approach. This evolution will continue and forward-looking program managers and marketers will need to adapt their operations to this changing environment.