Affiliate marketing: How to start your affiliate program

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If you have products to sell, particularly if they are considered niche or highly desired items, you may consider starting your affiliate program on your Web site. This provides you with the greatest flexibility, control, and administration over your program, affiliates, and products. One word of caution: Do not attempt to design and develop your affiliate software — it is not worth the effort, cost, or time.

Let’s consider Atlantic Publishing Company. They develop, write, and publish books, like this book, and they do their editing, layout, graphics, art, marketing, production, and sales. They own the copyright of their works, and because they have titles that cover a wide variety of topics, many of which are considered to be niche marketing, they are a perfect case study for establishing an affiliate program. Atlantic has an affiliate program that has been very successful for them.

One of the concepts businesses often struggle with is why should they start an affiliate program when they already sell their products on their Web site, and why should they pay a commission that is money out of their pocket. The reason is that through an affiliate you have market growth. The more Web sites on which your products are sold, the easier it is to find them. More people become aware of them, and viral marketing can take over as your products show up on Web sites, blogs, e-mails, and more.

I am an affiliate of Atlantic Publishing because they pay me 20 percent for each book I sell through my Website or blog. I earn this by placing the links on my Website and blog. That is the end of my work to earn the 20 percent commission. Why would Atlantic Publishing want to do this? As an author, I can direct people to my Website and blog, and if they are interested in my books, they can click on the link on my Website and buy them through Atlantic. I get a commission and Atlantic gets a sale they may not have gotten otherwise. Paying 20 percent on a total sale is better than no sale, which means no income. Multiply this formula times the number of affiliates and the increased marketplace presence and you start to see the big picture.

If you have 500 affiliates, and each affiliate makes one sale per day, then that is 500 books you have sold that you would not have sold otherwise. Even with the additional 20 percent commission fee you pay, you still have a net income significantly higher than you would have with zero sales. You do need to ensure that you can absorb the commission rate and remain profitable. The 20 percent that Atlantic Publishing offers is very high; typically it is in the 7 to 12 percent range. By offering a very high commission, Atlantic attracts affiliates to join their program.

Think of the advantage of starting an affiliate program. You have full control over every aspect of the program, you can save on other marketing and advertisement costs, and you can advertise your program through your blog, e-mail marketing, and more. Once established, businesses and individuals will seek you out wanting to join your program. Here are some of the basic benefits of establishing an affiliate program:

• Other businesses, Web sites, and blogs are advertising your products for you

• Your products, banner advertisement, text, and other promotional materials are

on other Web sites and blogs throughout the world, driving traffic to your Website

• You establish your presence on a very unstable Internet and earn brand-name recognition, appeal, and customer satisfaction

• You dramatically increase sales volume.

One of the challenges businesses have to overcome is the fear of the unknown, and affiliate marketing is no exception. Amazon.com and eBay.com have the finest affiliate programs around, but you do not need to be either of these companies or have their budgets, technical staff, or power to succeed.

You do need to decide what your overall objectives and goals are before you make your decision to establish an affiliate marketing program on your Web site. Here are some basic questions to answer when trying to determine if an affiliate program is right for your business:

• Do you want to automate the process as much as possible, allow self-registration into your affiliate program, and have your affiliate program track sales, commission, and all other administrative functions? The answer should be yes unless you want to develop and implement a manual system. There are some manual options, but these are not recommended. Do it right; give your affiliates reporting capability and let the system work for you, not the other way around.

• What model do you want to use? Pay for clicks, impressions, leads, or actual sales? I recommend actual sales; clicks and impressions are great, but they do not necessarily mean sales. Pay for actual sales if that is your goal or leads if your goal is to collect business leads.

• Are you interested in multi-level marketing or two-tier marketing? A one-tier system is straightforward: You have affiliates, and you pay them a commission

for each sale or lead. In the two-tier system, your affiliates can establish affiliates under them, at a lesser commission rate, meaning that for each sale from the second tier you pay them a commission, plus your first-tier rate. My advice is to keep a one-tier system and pay the maximum commission you can afford. In the long run, it is more effective and appealing to affiliates.

• Do you want your affiliates to sell all of your products or just select products? Similarly, do all or only some of your products qualify for a commission?

• Do you want affiliates in your country, or do you want to expand internationally? Do you ship internationally? International affiliates may draw in international sales.

• Are you interested in paying a commission based on a percentage basis of the total sales or a flat fee per sale? For example, 10 percent of the total pre-tax sales or $10 commission per sale regardless of the sale amount.

Most feature-rich affiliate programs have the essentials you need to be successful, such as online monitoring and reporting for your affiliate, e-mail notification after each sale, a variety of options for banner, text, and other links, and the ability to maintain and track account status.

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