According to Wikipedia, affiliate marketing is a type of perfomance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. There exist two affiliate marketing options:
The first option is whereby as merchant hosts an affiliate program, and manages its day-to-day operations. Owning an in-house affiliate program ensures that the merchant has full control over every aspect of the system and can guarantee savings on other marketing and advertising costs. Nevertheless, if not well-managed the program will not be a success.
The second option is where an affiliate network acts as an intermediary between publishers (affiliates) and merchant affiliate programs. In this arrangement, the website publishers (affiliates) are facilitated in finding and participating in affiliate programs which are suitable for their website (and thus generate income from those programs), more easily. Moreover, it also allows websites offering affiliate programs (typically online merchants) to reach a larger audience by promoting their affiliate programs to all the publishers participating in the affiliate network.
So faced with these options the affiliate needs to consider certain features before choosing to either join an in-house affiliate program or an affiliate net work. Here-below are a few guiding principles that an affiliate may consider.
What defines a good affiliate program?
There are many features that define a good affiliate program but these stand out prominently:
- A good commission; paid continuously, and timely;
- Adequate communication; and
- Program tools to market the products effectively
So, whether it is an in-house affiliate program or an affiliate network, the affiliate should find out how the program to join fares in regard to the above three features.
What Affiliates should look for when choosing an Affiliates Program or Affiliate network
- Affiliates should ensure that the program offers the basic minimum of the resources to enable them effectively promote/publish their products/brands/services. At least banners, text links or storefronts should be provided by an affiliate program. In other words, it should be easy to use.
- Ensure that the affiliate program has, in place, an online reporting system. This would not only help the affiliates check as to whether the merchant is paying them the right amount of commission, but also help them optimize their marketing strategies.
- Find out how the affiliate program utilizes its cookies, especially the lifetime of the cookies. A short lifetime means that an affiliate may lose commission if the customers do not purchase immediately. Generally, a program offering cookie lifespan of 15-30 days or more should be attractive.
- Understand the payment policy before joining the program. Most Affiliate programs utilize the pay-per-sale/pay-per-action model. As the pay-per-click model is prone to both higher customer acquisition costs and affiliate fraud, it is being avoided by many affiliate programs. Pay attention to the percentage commission and how frequently it paid and what is the minimum payable commission.
- Apart from earning commissions, find out whether the program pays additional revenue from either impressions or hits. Note that a program that pays for both impressions and hits, besides commissions, will add to your overall earnings
- Understand what their hit per sales ratio is. The hit per sales ratio is defined as the number of hits to a banner or text link it takes to generate a sale based on all of the affiliate statistics. Understanding this factor is important as it will highlight how much traffic you are expected to generate before you can earn a commission from any sales
- The programs should not require you to pay anything to join it. Most affiliate programs that are being offered are free of charge. Therefore, any program requiring you to pay to join it should be raising a red flag for you. Chances are that it is not legit.
- Check for the kind of affiliate stats available. The affiliate programs should be capable of offering affiliates detailed stats, any time they decide to check. Needless to emphasize the importance of checking your stats regularly, for they are important to enable you to know how many impressions, hits, and sales have been generated from your site!! While impressions are the number of times the banner or text link has been viewed by the visitor, hits represent the number of clicks made onto either the banner or text link.
- Find out if the program is a one-tier or two-tier program. Generally, a one-tier program pays an affiliate for the business (s) specifically generated from his/her website. A two-tier program, on the other hand, while paying an affiliate for business specifically generated by him/her, also pays additional commissions on the sales generated by any other affiliates that were sponsored by the affiliate. It is more like a recruitment fee!!
- Know who is the Merchant and owner of the program. The affiliate should find out whom he/she is doing business with. Is the merchant existing? What product/service is being sold and what is their turnover? Getting answers to these questions should help affiliates to know about who is offering the affiliate program and decide whether the program offers what you have been looking for.
- Find out whether the merchants affiliate program considers affiliates as business partners. How do they communicate with the affiliates? Are the communication channels appropriate? Is the affiliate agreement flip-sided? Do they have a regular Newsletter to address any new changes? How do they respond to questions? Do they offer some training to the affiliates? If these and perhaps many more are answered in the affirmative, then consider this a good program to join.
How would an affiliate network operate under similar conditions?
Before going into the detailed comparison, one important point should be mentioned: the earnings of the affiliate network are directly hinged onto the successes of the affiliates and the merchants. So the network infrastructure and staff are such that they make the life of the clientele as easy as possible to ensure their survival. Most affiliates will find it easy to work with affiliate networks because of the following:
- Their affiliate infrastructure is easy to use. The design of the interface is in such a way that the affiliate will find it easy to create links and banners. This is very important, especially to beginners, with little experience in how to navigate when faced with an affiliate program in an interface that is so complex. Unfortunately, some of the in-house affiliate programs fall into this trap!!
- Most of the affiliate networks have efficient communication channels such that any of the questions and indeed complaints are addressed urgently. For instance, things may go wrong such as links stopping to work or transaction reports appearing lopsided! In such scenarios, help from a dedicated affiliate manager, along with dedicated staff, will be needed. Compared to affiliate programs, affiliate networks perform better in this regard.
- Scams that may be committed by the merchants, whereby, some transactions that should have earned a commission for the affiliate are willfully omitted, by deliberately either not recording some tracking information, or adjusting sales volumes, or both, are avoided. Essentially, through affiliate networks, affiliates can measure the volume of traffic their websites have generated towards each advertiser’s e-commerce site, by monitoring and logging each click-action by visitors to affiliate’s website. This is possible because affiliate networks generally assign unique identifiers to all affiliates (affiliate IDs) and merchants (merchant IDs). Upon signing up, affiliates receive special links from the affiliate network that encode the identifiers for the affiliate and the merchant for whom the affiliate is advertising.
Although setting up an in-house affiliate program gives the merchant greater control and administration of the program and also maintain the privacy of their business,,this venture is costly as its development and prone to fraud if not managed properly. This is not in the interest of the affiliates. So affiliates/publishers should do due diligence before signing up for an in-house affiliate program.
As an alternative, the merchants may run their affiliate program through an existing affiliate network that would provide the infrastructure (software) for use in program administration, tracking, commission payments, and reporting, Owing to the efficiency and to use of the affiliate network infrastructure, affiliates find it easier to promote the merchants’ products, or brands or services, through the affiliate networks.
Moreover, affiliate networks tend to have efficient communication channels such that any of the questions and indeed complaints are addressed in a timely manner, and are less prone to fraud. This gives the affiliate and indeed the merchants more confidence and reduce mutual suspicion of each other.
I, therefore recommend that the affiliates/publishers carefully evaluate those programs before signing up for any.
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