Affiliate Programs Introduction Affiliate program A form of

Affiliate Programs

Introduction • Affiliate program – A form of partnership in which a company pays affiliates (other companies or individuals) for pre-specified actions taken by visitors who click-through from an affiliate site to a merchant site • In this chapter, we discuss: – – Costs Benefits Program reward structures Program-building options • Tracking and affiliate solution providers – Directories and search engines that provide affiliate- and partnering-program resources

How an Affiliate Program Works • New income streams • Merchant – The company that advertises on another company’s site • Affiliate – The company hosting the advertising in return for a reward based on predetermined terms – Affiliates act as an extended sales force • How it works – Merchant places banner on affiliate’s Web site – When a person clicks through to the merchant’s site via the advertisement on the affiliate’s site and makes a purchase, a commission on the sale is typically awarded to the affiliate • “Win-win" situation

Selecting an Affiliate-Program Reward Structure • Program reward structures – – – Pay-per-click Pay-per-lead Pay-per-sale CPM (cost-per-thousand) Multi-level, or multi-tiered Hybrid model • Implementation of appropriate reward structure(s) depends on the type of site and its product mix

Pay-Per-Click Model • Pay-per-click model – Rewards an affiliate for each click-through that is generated from a banner ad hosted by the affiliate • A click-through is when a person clicks on the banner advertisement on the affiliate site and is taken to the merchant site – Easy for affiliates to generate dishonest click-throughs to “run up the numbers” – Sites that depend on advertising rates use this model to increase traffic – Go. To and Lycos

Pay-Per-Lead Model • Pay-per-lead model – Rewards affiliates based on the number of qualified leads generated • Potential customers that have expressed interest in a product or service and meet requirements determined by the company • Can include new customer registrations and having visitors sign up to receive a newsletter or use a free demo • Mailsweeps. com

Pay-Per-Sale Model • Pay-per-sale model – Also known as the commission-based model – Compensates its affiliates for each sale resulting from affiliate-hosted advertisements – Rewards to the affiliates based on sales are typically larger – express. com – Virtual store • Allows affiliates to sell merchant’s products without requiring visitor to leave the affiliate’s site

Multi-Tiered Model • Multi-tiered model – Also known as the multi-level model • New affiliates are recruited by current affiliates, who are then rewarded with a percentage of the new affiliates’ revenues – Two-tiered model involves only the original affiliate and its recruits, also known as subaffiliates • Value. Click

Hybrid Model • Hybrid model – – Combines features of multiple models Can make an affiliate program more competitive Can increase the cost for the merchant Free. Shop. com

CPM (Cost-Per-Thousand) Model • CPM (cost-per-thousand) model – Requires the merchant to pay the affiliate a fee for every 1000 visitors that simply view the merchant’s banner on the affiliate site – Not used as often as the other models because merchants prefer to pay for actions – CPM is often used to price traditional advertising methods

Attracting Affiliates • Grow affiliate program and increase profits • Try posting announcements on message boards • Newsgroups – Online discussion groups – Spamming and unwanted advertising are unwelcome and can against rules • Use Directory – A site that provides aggregated information and links to sites relevant to specific topics – META tags • Researching companies to see what kind of affiliate programs they may offer can help a merchant. – Determine reward structures and commission amounts of competitors

Monitoring An Affiliate Program • Use tracking information – To analyze effectiveness of programs, make improvements, monitor payment schedules and identify strongest affiliates • Creating tracking solutions – By creating duplicates of every Web page, each affiliate can link to an individually assigned page • Referred visitors will click through to only the mirror page (the duplicate page) designated for that specific affiliate, allowing companies to record these visits separately • Costs include – time to construct mirror pages, – hosting and updating mirror pages, – payments, marketing, – credit-card processing and – customer service

Affiliate Solution Providers • Affiliate solution providers – Companies that can provide end-to-end solutions for a company’s affiliate program – Recruit affiliates and merchants to participate in programs, conduct accurate tracking, provide detailed reporting for merchants and affiliates and distribute commissions – Fees may be required for affiliate solution services

Commission Junction • Commission Junction offers design, implementation and management services (B 2 B affiliations) – No fee to become affiliate, merchants charged a fee – Application service is Web based • Do not have to download or upgrade any software – Instant tracking and reporting in real time – Makes monthly payments to affiliates for merchants • En. Context solution • Services to merchants include Smart. Match Smart. Track Smart. Zones Smart. Stats Smart. Serve Smart. Pay

Link. Share • Link. Share offers affiliate programs for B 2 B and B 2 C • Affiliates can join pay-per-click, pay-per-lead and pay-per-sale programs for free • Merchants can use The Link. Share Network , a Private Label Network or a combination of the two to develop affiliate programs – Link. Share Network provides merchants with access to companies that have become affiliates through Link. Share • Link. Share Synergy – Private Label Network allows merchants to sign up affiliates through their own Web sites

Link. Share’s home page. (Courtesy of Link. Share Corporation. )

Be Free • Be Free, Inc. BFAST (affiliate-program enabler) – Allows companies to target affiliates in a segmented manner – Rewards and compensation determined by the merchant – Be Free tracks impressions, click-throughs and sales for both the merchant and its affiliate partners – Be Free records each time a promotion is viewed or acted upon – When a sale is made, Be Free receives information through its connection with the merchant’s site – Reporting. net is used to provide performance information

Be Free’s performance-marketing for page merchant. (Courtesy of Be Free, Inc. )

Be Free demonstration: How promotions work, step 1. (Courtesy of Be Free, Inc. )

Click. Trade • Click. Trade is part of Microsoft b. Central • Web-based service provides tracking and payment services • Pay-per-lead, pay-per-sale or hybrid-model program • Merchants have control over affiliate links and banners • Charges 30 percent of any merchant payments to affiliates • Companies can sign up to be affiliates for free • Provides reports including tracking of affiliates

Plug. In. Go. com • Plug. In. Go. com Affiliate Network – – – – Web-based solution for affiliate programs Affiliate Mail Center Online message boards Rewards members through Plug. In. Go Points that Pay Reports can be produced daily, weekly or monthly Performs payment-processing services Companies can join as affiliates for free Charges one-time setup fee and a commission of two percent of every sale or lead made through the network

Web-site “Stickiness” • Stickiness of a site – The ability to keep people at a site and interested in its content • Update content frequently, carefully organize a site, provide quality customer service to keep visitors browsing • Merchants can offer virtual stores to affiliates – Offer e-commerce capabilities to sites that want to participate in affiliate programs, but also want to keep visitors at their sites • Nexchange and Cross. Commerce – Can control their brands’ presentation on affiliate sites

Vstore. com Feature • Vcommerce Corporation provides sites with store-hosting opportunities through vstore. com – Manages credit-card transactions, order fulfillment, customer service and hosting of the storefront – Provides step-by-step process for design and implementation • Select a category from the listed choices • Select a subcategory to further concentrate on a particular market • Choose a store design, store colors and store typography • Personalize store with a name, slogan and logo. • Provide personal information such as e-mail address, name, phone number and commission payment information

Vstore. com Feature Sample store from vstore. com. (Courtesy of Vcommerce Corporation. )

Becoming an Affiliate • Low barriers to entry • Usually free • Joining too many programs may make the site look cluttered and unprofessional • Identify a target market • Sign up directly at the merchant’s site or join through an affiliate solution provider or affiliate directory • Adbility – Offers information on various forms of marketing, including affiliate programs

Becoming an Affiliate Adbility’s specific segments within an industry. (Courtesy of Adbility. com. )

Becoming an Affiliate Adbility’s listing of affiliate programs for books in the “general” segment. (Courtesy of Adbility. com. )

Becoming an Affiliate • Some programs have requirements to become an affiliate – Site statistics, information about visitors and a tax identification number • Hidden fees and restrictions in some affiliate contracts – Not allowing companies to join other affiliate programs • Note the reputation of the merchant • Most affiliate programs require a person or company to have a Web site to participate • Some programs allow individuals to join by placing affiliate links on their personal sites

Examples of Affiliate Programs • Amazon. com Associate Program – Pioneer in affiliate marketing – Sites will be rejected if they contain “amazon” or variations of the word in the domain names, promote violence, are discriminatory or contain sexual material or other content deemed inappropriate – Associates Central • provides graphics, links, earnings and traffic information – Affiliates can provide an Amazon. com search box on its site or link to the home page or recommended books – Joining is free and pays up to 15 percent in referral fees

Barnes & Noble Feature • Barnes & Noble offers Affiliate Network – – Potential affiliates must complete online application Gives options for links, banners and virtual storefronts affiliate. net provides affiliate performance reports Sends a commission check to affiliates every three months • My. B&NLink program allows people to earn commissions by placing a link to the Web site in their e-mails – Restrictions include spamming, pornography, hate mail and illegal activities

Costs and Taxation of Affiliate Programs • Costs – Merchant is required to pay the affiliate, with the amount depending on the pre-specified terms of the program • Costs can rise with increases in the number of click-throughs, purchases or other specified actions – Include losing visitors through affiliate links – Include developing and implementing the program • Internet affiliate program taxation – Commissions collected by affiliates are considered income and will be taxed – State taxation on sales made through affiliates in states other than the state where the merchant is located has not been settled

Affiliate-Program Directories and Search Engines • Affiliate-program directories and search engines – Provide parties who are interested in becoming affiliates with programs that match their interests, and parties who are interested in finding affiliates with the different options available to them • Associate-It, Associate. Programs. com, Refer-it and Affiliate. Find. com

Affiliate-Program Directories and Search Engines Associate-It’s home page (Courtesy of i. Seed Inc. )