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Affiliate Marketing As A Marketing Tool

Nov 15, 2007
Every sale, visitor, customer or subscriber leads to the publisher earning a reward from the web business that it promotes, in the case of affiliate marketing.

The individuals and companies that perform affiliate marketing include specialized third party vendors, affiliate networks, affiliate managers who work within the company that is the advertiser, affiliate management companies, etc. The affiliates advertise the services or products of their partners, through various means.

Advertisement displays, search engine optimization, marketing through emails and marketing through search engines (through paid advertisements) are among the methods used by affiliates to promote the services or products and, in this manner, internet marketing and affiliate marketing do overlap in some ways.

The marketing strategies of e-retailers generally have a significant role for affiliate marketers. This is despite the fact that the profile of affiliate marketing, which involves traffic being driven through the affiliates' websites to that of the company providing the service or product, generally tends to be lower than that of online marketing. Most of the online marketers' attention is caught by RSS, email and search engines.

The main methods used for compensating the affiliate marketers include cost per click, cost per mille, cost per action and cost per sale (sharing of revenues). Among these, cost per sale is the most popular.

The advertiser has to bear the greater part of risk in the case of cost per click and, the whole of it, in the case of cost per mille, if a visitor to an affiliate marketing site is not converted into a consumer for the services or products being promoted through it. Therefore, the affiliate marketer might not work too hard to attract the kind of audience that the advertiser would want to. This is primarily because the affiliate has already earned the commission by that point of time.

In the case of cost per action and cost per sale, the advertiser and the affiliate share the risk. Therefore, the affiliates try to attract the most relevant and targeted kind of traffic, so that the probability of conversion is high. This is because, for the affiliate to earn commission, the visitor is required to perform some other specified actions, in addition to visiting the website of the advertiser.

The models for compensation that are used in the sales department of the companies that engage affiliate marketers, are often quite similar to the ones in accordance with which the affiliates are paid, even as the affiliates are not employed directly by the company. The sales employees too get a commission for the sales that they make and receive incentives, if they manage to exceed the targets set at the beginning of a performance review period.

However, a vital difference between the affiliate marketers and the advertisers' in-house sales force is that the employees can continue to engage the prospective client or customer up to point where the sale is closed or a contract is inked, whereas the affiliate marketers can not do anything, in this regard, beyond the point where the visitor is directed to the advertiser's website. Therefore, the amount of influence that the affiliate marketers could have on the process is considerably lower.

Even as it is not simple to scale up affiliate marketing, unlike display advertising, businesses, ranging from those that are small to those that are midsize, have benefited immensely from this type of marketing. An important factor that has contributed towards this is that apart from the initial costs incurred during the setting up of the program, the business is not burdened with any expenses, until any results materialize. Thus, it is a very performance-oriented model.

Affiliate networks, which are hosted services, and standalone software, are the two main types of solutions that advertisers can select from. The traffic that is received from affiliates is either tracked by a third party or by an in-house team.

It is no longer possible to generate substantial revenues through automatically managed affiliate programs or those that are not managed well enough. Therefore, it has become a much more complex task to manage such a program successfully. This is, in part, because there are far more affiliate programs in existence nowadays than a few years ago. So, a considerable amount of work and maintenance is required to make an affiliate marketing program successful.
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