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What is Affiliate Marketing?

by Igor Shevkopyas

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Affiliate marketing is performance based marketing that connects you with a number of affiliates who promote your product or offering with text links or banners on their website. You give the affiliate a commission on the sales they generate or the click throughs they send to your site.

Compensation

Most affiliate marketing programs use pay per sale. That is, you only pay the affiliate after you have made a sale from a customer referred to you. Other compensation methods are cost per click (CPC) or cost per mille (CPM).

With CPC or CPM, you would pay the affiliate after they have referred a certain number of customers to your website, or after a certain number of customers have signed up for your newsletter or have given you permission to contact them.

If you are just starting your online business, affiliate marketing is a quick, inexpensive way to access a large commissioned sales force. You only pay for results, so there is no cost until you have a sale. Unlike the huge cost of pay per click or banner advertising, you have a database of affiliates advertising for you.

The affiliate uses Internet marketing methods such as search engine optimization, paid search, email marketing and display advertising to promote your offering.

Your goal is to have as many affiliates as you can find promoting your offering. However, as the number of affiliates you have increases, so does your work load to manage them. You also need to ensure you are receiving legitimate traffic. Your affiliates could be anywhere in the world so you need to have the right affiliate management software in place to keep track of your affiliates and the links and sales that they send you.

Affiliate tracking takes time and you need a reliable solution to manage links, detect fraudulent activities and properly calculate commissions. That is where affiliate marketing software can help.

Affiliate Marketing Software

Affiliate MarketingAffiliate marketing software can help you keep track of your affiliates and the links and sales that they send you.

There are two basic options for affiliate marketing software:

  1. Purchase software that you run on your own hosting account
  2. Join an affiliate network

If you purchase affiliate marketing software you will likely have a one time cost and then pay extra for support through a support contract or pay per use.

If you are just getting started with your online business, you will have to market your affiliate offering to build up a database of affiliates to promote your offer.

With an affiliate network, you get instant access to a database of affiliates. For a monthly fee, the affiliate network will present your affiliate offering to all of the affiliates in their database.

The affiliate network manages your payments so you only need to make one payment to the network and not multiple payments to each affiliate. A drawback of networks is your offer could be placed alongside your competition and then you need to compete on commission offered to get affiliates to promote your offering.

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