Developing Partnerships:
What You Need to Know About Affiliate Marketing

By ThinkAvenue Editor

Affiliate programs are based on paying business partners a referral fee for sending their site visitors to your site.

When you’ve just launched a new Web site and you’re working out different strategies to drive visitor traffic as well as increase sales, an affiliate program can be the most efficient, cost-effective solution. Affiliate programs are based on paying business partners a referral fee for sending their site visitors to your site. First, you must find complementary merchants for your product or service. You then work out a commission structure that gives them a proportion of the commerce generated from actions their visitors take with banners or other types of links on their sites advertising your business.

On the most basic level, you need to reward your partner for sharing their audience with you.

Many companies that offer affiliate programs provide their affiliates with graphics and HTML so that the merchant partners can create their own mini-store. These affiliate partners then get a percent of any business generated from visitors who come by way of the affiliate’s site. You don’t have to be as big or even as organized as Amazon to get your own affiliate program going, but you can use their recipe for success and apply appropriate parts to your own program. On the most basic level, you need to reward your partner for sharing their audience with you. How you choose to structure that reward program depends on what works best for your business and for your affiliates.

To simply the commission payout and structure, you can invest in one of the many Web-based programs that efficiently track and pay commissions so you don’t have to spend valuable time on affiliate operations.

Seems easy enough. But, before you jump on the affiliate program bandwagon, consider the following:

• What’s your objective?
• What will you offer affiliate partners?
• Who are good candidates to join forces with?
• How can you measure your program’s success?
• How can you market and expand your program?

Defining Objectives

The most common reason for launching an affiliate program is to generate sales. You can also use affiliate partners for lead generation and as a means of targeting new market segments. Sometimes an increase in site traffic is a good enough reason to have affiliates. With increased site traffic, you can promise more visitors to advertisers interested in running banners on your site, which all can lead back to more revenue.

When you design your affiliate program, you not only need to keep in mind what prices or percentages you’re willing to pay partners for the desired action, you also need to decide what action will trigger payment.

An Offer They Can’t Refuse

When you design your affiliate program, you not only need to keep in mind what prices or percentages you’re willing to pay partners for the desired action, you also need to decide what action will trigger payment. You can choose to pay per click, per lead, or per purchase. Generally, the cost increases as the action taken gets closer to a purchase. In other words, an affiliate would expect more—a higher price, or a percentage of the sale—if a visitor ended up making a purchase rather than simply clicking on a banner and landing on your site.

You need to put the time and effort into researching potential affiliates to make sure they are worthy and appropriate to meet your business goals.

A Good Partner

Before you take on just any relationship, you need to make sure you’re partnering with a company you trust. After all, you don’t want to be associated with a merchant that doesn’t meet your standards. You also need to make sure that the affiliate offers a complementary product or service to your own business. If you sell tires and have links on a day care center’s site, customers won’t know what to make of it…and they certainly won’t know to look for a tire supplier on their day care center’s home page. The most successful affiliate s truly offer their audiences access to relevant products. That means you need to put the time and effort into researching potential affiliates to make sure they are worthy and appropriate to meet your business goals.

Taking Measurements

The easiest way to track your success is to see how much you are paying out to affiliates. If your affiliates aren’t collecting much commission, your program needs to be reevaluated. Conversely, if you are paying commissions that exceed your sales, you need to rethink your commission structure. Be sure to account for any promotions and marketing you do for your program when figuring your actual profit.

Keeping It Going

It’s next to impossible to finding the precise formula when you first launch your program. The most successful programs are designed with plenty of room for experimentation. If what you’ve tried isn’t working, try partnering with different merchants, changing your incentive or action trigger.

Learn from early mistakes and keep in mind that the whole process is about building a system that works without a tremendous amount of investment.

Learn from early mistakes and keep in mind that the whole process is about building a system that works without a tremendous amount of investment. Affiliate programs are meant to require little effort to establish and even less to maintain. If you’re program is working, you’ll increase sales, leads and site traffic all from having the right contacts. On the Web, as with any business, it pays to be associated with the right people.