In this article, we want to talk about Affiliate Marketing and how it is similar and dissimilar to Network Marketing or Multi-Level Marketing. Network marketing and MLMs are set up to sell a company’s products to the consumer where the distributor “hires” or brings into their organization to sell products. An Affiliate product is usually a single product sold by the “Affiliate” to their sphere of clients. It’s usually a one-time sale and you don’t build the downline.
Affiliate Marketing is performance based. You’re compensated when you sell the product or service. There are four core players: the Merchant (also known as the ‘Retailer’ or ‘Brand’), the Network (the company that takes care of the payment processing, paying the affiliate for the sale and sending out the offer itself in whatever form that would be), the Publisher (aka Affiliate) and the Customer. This market has grown in complexity.
Because of this, there has been an emergence of tier players, including Affiliate Management Agencies (you must apply through them to sell the product or service), Super Affiliates (the Affiliate Marketer who has a huge list of customers they can sell to) and specialized third-party vendors. For Affiliate Marketing, it’s all in the list. The bigger the list, the more customer and potential customers you can market you single product to. You can market as many products to that list, but it usually one product or service at a time.
To some degree affiliate marketing overlaps with internet marketing. They use advertising methods such as organic search engine optimization (SEO), email marketing, content marketing, pay-per-click marketing (PPC) and display advertising. Some affiliates publish reviews of the products or services they sell to get people interested in purchasing them. There is no formal training on the best way to do affiliate marketing because it’s based on real life experience. There are many books on the subject but none that are definitive on this subject.
Referral marketing and affiliate marketing are sometimes confused because they both use third parties to drive sales to the retailer. The difference is that to drive sales, affiliate marketing is dependent only on financial motivation and referral marketing, to drive sales, is dependent on trust and personal relationships.
Affiliate marketing uses website syndication, email and search engines to capture sales. E-Retailers’ marketing strategies play a significant role in affiliate marketing.
Affiliate marketing was launched in 1989 by William J. Tobin. He also applied for a patent on January 22, 1996. This was for tracking. He received a patent, in the United States on October 31, 2000. Tobin has the Japanese patent which he did on October 5, 2007.
Web 2.0 has opened platforms for affiliate marketing. It’s based on blogging and interactive online communities. It has improved communication between affiliates and merchants. It’s also opened up to bloggers, writers and independent website owners.
Predominant compensation methods are cost per action (CPA), pay per sale (PPS), cost per mille (CPM a little known definition for advertising reach per thousand viewers) and cost per click (CPC).
Cost per action only pays when someone buys the product or service. Pay per sale pays the person once the sale is made. Cost per mile pays the publisher if someone views the website. Cost per click is a measurement of what each click on your offer costs you. CPC is 10000 people view the ad that you paid $500 and 100 people bought the product so your CPC is $5.00.
There are many types of affiliate websites. They use them for comparison shopping, coupon and rebate promotions, niche markets, shopping affiliates, emails, video and video blogs and file sharing.
To locate an affiliate program you can go to an affiliate directory. You can use keywords to narrow your search i.e. “affiliate program”, “affiliate”, “webmasters”, etc.