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Affiliate Program Business Basics

by Joel Mark Witt

Affiliate Program Business Basics

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Home Page > Business > Home Business > Affiliate Program Business Basics

Affiliate Program Business Basics

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Posted: Oct 26, 2009 |Comments: 0
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Affiliate program businesses are still on a roll as the boom in the affiliate industry continues. Many are a part of this industry, and many more want to enter it, either as merchants or as affiliates. The world of affiliate business continues to change and everyone needs to adapt to these changes to be able to stay in the business. The best way to have the ability to go with the radical flow of affiliating is to have firm grasp of the fundamentals. The basics of putting up and operating an affiliate program business are vital to success.

Affiliate Program Business Introduction

A website is the flag that signifies the company it belongs to. In the past only the well established and highly profitable companies have their own websites. But nowadays, thanks to the continuous evolution of the Internet, setting up a website has become so easy anyone can do actually do it. The fastest and easiest way of building a website is by using an online website builder that has ready-made templates and other webpage elements you can choose from to construct your very own unique website design. These sites will also be the ones to provide your sites URL for you. The downside to using these site builders is that most of them attach advertisements on webpages that are made with them, and their greatest advantage is the ability to design a website and get it online in less than an hour.

Design only grabs the attention of human readers, but before people can marvel at the beauty and greatness of your sites appearance, they must first be able to find it. And for people to find your site, the best and fastest way is that they find it in the results page of the major search engines. And one of the best ways you can get good rankings on the trusted search engines is through search engine optimization or SEO. SEO however can prove to be complex and hard to do especially to those who have never even heard of it before. A good alternative to SEO in getting your website seen is engaging in an affiliate program. Such action allows you to profit from your content-driven website’s traffic as well as make sales with the same website.

Affiliate Program Business Definition

An affiliate program sometimes also called associate program in layman’s terms is a system of arrangements in which an online website known as a merchant website pays affiliate websites commissions to send traffic to it. The affiliate websites post links to divert the traffic they receive to the merchant site. They are then paid depending on the affiliate agreement.  The commissions may be based on the number of visitors the affiliate site sends to the merchant site, the number of people the affiliate site sends to the merchant site and clicks at least one of the product advertisements, or the number of visitors directed to the merchant site by the affiliate site and actually makes a purchase. The framework of the agreement is that the merchant pays according to the agreement the associate whenever his affiliate site brings site traffic or money to the merchant website. The recruitment of affiliates is not only a great way to sell products over the internet but it is also a great marketing strategy as it provides the merchant website a unique competitive advantage. Networking can be said to be one of the best and most effective ways to get your site famous online.

There are at least three parties in an affiliate program transaction:

1. The Customer

2. The Affiliate Site

3. The Merchant Site

The concept of having an affiliate program business which utilizes the World Wide Web as a marketing strategy was first announced to the public in 1996 by Amazon.com CEO and Founder Jeff Bezos. Amazon.com encourages affiliates to post links to the Amazon website in general or to specific books. Whenever someone clicks on the link and makes a purchase the affiliate who owns the link will receive a certain pre-agreed percentage of the earnings. All the affiliate need to do is to send traffic, and the rest is done by Amazon.com like order taking, money collection and product shipment. Amazon.com is not only the first affiliate program business; it is also on of the most successful with more than half a million affiliate websites.

Over the years affiliate programs have grown to epic proportions and have taken many different forms. Affiliate program businesses are now everywhere and they are found in almost every niche of the business world. Many companies specializing in e-commerce now function as merchants while those who do little or totally no e-commerce work as affiliates.

Affiliate Program Business Basic Payment Methods

There are three basic types of affiliate program payment arrangements:

1. Pay-Per-Sale (Cost-Per-Sale)

The pay-per-sale agreement has been popularized by the mother of affiliate program businesses Amazon.com. Under cost-per-sale the affiliate is earns commissions from the merchant each time he sends a customer to the merchant website and that customer makes an actual purchase. Amazon and many others pay a specific percentage of the sale as commission while others pay a fixed rate for every sale.

2. Pay-Per-Click (Cost-Per-Click)

Pay-Per-Click is considered by many as the most popular and common affiliate agreement. Under such agreement affiliates are paid fixed rates based on the number of visitors who click on the links placed on the affiliate website that lead to the merchant website. A purchase is not required to earn commissions, all that has to be done is that the visitor clicks the link and stays for a certain time usually at least 30 seconds on the merchant website. Whatever the visitor does once he gets to the merchant site does not affect the commission.

3. Pay-Per-Lead (Cost-Per-Lead)

Under the pay-per-lead arrangement affiliates are paid based of how many visitors they send to the merchant website and subsequently sign up as leads. Signing up as leads means that the visitors fill out the information request form at the merchant site. Leads are used as

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