Affiliate Marketing -
For Business Owners

Discover How Having an Affiliate Program Can Boost Your Business Profits, Provide Free Advertising, & Increase Your Market's Reach

While many businesses are starting to realize the benefits of affiliate marketing, many still don't understand the value. This page was created to help the business owner understand affiliate marketing - from all angles.

Not only am I an affiliate marketer, but I also run an affiliate program on one of my business web sites. So I'm familiar with both sides of the coin.

But first, here's a brief summary of what affiliate marketing is. Affiliate marketing is the term given to letting others (called, affiliate marketers) help sell your business products or services in exchange for commissions.

The business owner sets the commission and other terms. The affiliate marketer agrees to them and then starts promoting those products and services.

There are different types of commission an affiliate marketer can earn, the most common one is for sales. In other words, the affiliate marketer only gets paid if a sale occurs, and that sale occurred through them.

Some businesses pay commission for leads too. Mortgage and insurance businesses are two prime examples of this type of commission. Often times they will pay an affiliate for sending them a lead who fills out their form. The commission is usually a flat rate.

Mortgage and insurance companies stand to make a lot more money on that lead, so shelling out a few bucks for getting a potential new customer is well worth it to them. There are other businesses that feel the same.

But the majority of the time, affiliates only earn commissions on sales they help generate.

From the business perspective, here's a quick list of benefits of internet marketing:

Increased sales
Increased profits
New customers
Greater market reach and exposure
Free sales reps
Free Advertising
Increased web traffic
Increased page rankings

I might be missing a few benefits, but as you can see, there are plenty of good reasons to have an affiliate program!

Now I'd like to explain each one so that you can really understand each benefit and how it affects your business.

Increased Sales and Profits

These two benefits go together. If you rely only on your own advertising efforts and sales reps, your reach is limited. You can increase your market's reach by having a well optimized and high ranking web site (but chances are you're still paying for Pay-Per-Click advertising).

Allowing others to sell your products results in more sales and therefore increased profits. Amazingly enough many businesses fail to see this benefit - instead, they only see the commission they are shelling out.

So let's break it down further so you can see how it actually works.

Lets say you have a product that sells for $20 and you agree to pay affiliates a 10% commission on sales they help generate. So for every sale they help generate, they will earn $2- and you'll earn $18.

So what if you shelled out $2/sale - you still made $18/sale that you may not have had otherwise (so that's more profit for you).

You can increase your profits even further by increasing the number of affiliates (who pay their own advertising costs).

Once you start generating a substantial amount of sales through affiliate marketers, you can reduce the amount of money you spend on advertising - which in turn increases your profit.

So not only are you making more sales you might not otherwise have, but you're increasing your profits through increased sales and reduced advertising costs!

New Customers and Greater Market Reach

Again, these two benefits of affiliate marketing go together - and they could also be tied to the two mentioned above.

Everybody has a different circle of friends, customers, and people they come in contact with. Many affiliate marketers have their own web sites and customer lists.

Recruiting them, can help you reach more people you might not otherwise be able to reach. When an affiliate marketer brings you a new customer, that customer has the potential to become a customer for life (increasing your loyal customer database).

Many affiliate marketers are so good at what they do, they can easily reach people all over the world - so you don't have to limit your business to your geographic location, or the U.S. - you can have international exposure and sales!

Free Sales Reps and Free Advertising

Simply put, affiliate marketers are sales reps for your company. Only you don't have to pay them a salary (or health benefits) to work for you! They work for free. You only pay them commissions when a sale (or lead generation) occurs.

Affiliate marketers also pay their own advertising costs. They're advertising for you and your business out of their own pocket! So in essence, you're getting free advertising!

If enough affiliate marketers do their job well, then you may even be able to cut your advertising expenses significantly (or entirely) and enjoy the benefits getting new sales and customers without paying for advertising.

Increased Web Traffic and Page Rankings

The amount of visitors your web site gets each day, week or month, is your web traffic. Many factors affect how much web traffic you get. Web optimization, advertising, and inbound links all play a role.

Many affiliate marketers have their own web sites, customer lists, advertising budget, etc. In order to promote your products and generate a sale, they have to send potential visitors to your business web site (where hopefully you have good sales copy that actually converts the visitor into a customer). But this process increases your web traffic (which increases your exposure).

The more affiliate marketers you have, the more people are sent to your web site from all over. The more web traffic you have, the more customers you have (assuming you have good sales copy to convert visitors into buyers).

Your web site's page ranking is affected by the number of inbound links to your site. The more inbound links you have, the higher your page rank.

Affiliate marketers place links to your site on their web pages and in their advertising campaigns - which gives you more inbound links (for free).

The higher your page rank, the higher your search engine listing. The higher your search engine listing, the greater the chance that people will find your site through search engines.

As you can see, this is another win-win situation for the savvy business owner.

Adding all these benefits together greatly increases the bottom line for your business! The benefits by far exceed the costs involved.

Starting an Affiliate Program

There are a couple of different ways to start an affiliate program. The first is to hire an affiliate network to manage your program. While there are hundreds of affiliate networks out there, the top rated ones include:

Commission Junction
LinkShare
ClickBank (digital products only)

Affiliate networks are corporations (or web sites) that specialize in bringing affiliates and merchants together. The affiliate can usually join for free. But the merchant must pay a fee to have their program managed by the affiliate network.

Affiliate networks are responsible for tracking affiliate sales and commissions, and then paying affiliates commissions earned.

Benefits of using an affiliate network include:

Somebody else manages your program (less work for you)
Access to thousands of affiliate marketers (you don't have to advertise, get listed in directories, and find them - although you still can)

The disadvantages of using an affiliate network include:

Expensive (costs are often too high for small businesses)
In order to make good on your commission promise, these companies often require you to keep a balance in their checking account.
You don't have total control over the program

Another option is to run your own affiliate program (my favorite option). This gives you TOTAL CONTROL over own affiliate program and eliminates the middle man.

However, there is still a monthly expense involved with this option, but it's not as great as using an affiliate network.

When it comes to running your own affiliate program, I like AssocTRAC. This is the same affiliate management system I run on my trout fishing web site.

AssocTRAC is an all-in-one affiliate management solution that enables online businesses of any size to easily start and run their own affiliate program.

With AssocTRAC, you pay a one time fee for the software, and then a monthly fee for real-time tracking and access capability for your affiliates.

In order to entice affiliate marketers to work with you, you have to have the ability to provide them real-time tracking and sales information. In other words, they need an account they can log into to check this information as well as find other resources (affiliate links, product information, etc.).

When using an affiliate network, they provide this for you (and pass the costs on to you). When running your own affiliate program, you pay the costs directly (but they're a lot cheaper than paying them in addition to having an middle man (i.e., the affiliate network).

For smaller businesses, running your own affiliate program requires a bit of extra work on your part, but it's a lot more cost effective.

Recruiting Affiliate Marketers

The first step in recruiting affiliate marketers is understanding what they need (and want) to do their job.

First, let's look at what affiliate marketers need to do their job effectively. Affiliate marketers need:

Affiliate links (generated by the affiliate network or AssocTRAC)
Ability to deep link to specific products or web pages
Product info and images (for their web and advertising campaigns)
Images of different sizes (for flexibility)
A page with great sales copy that converts visitors to buyers after directing them there (the business owner's responsibility)
Help when they need it

Those are the basic needs that affiliate marketers have. Now lets discuss some of the "wants".

In order for affiliates to get paid, there needs to be a way to track each visitor they send to your web site as well as when they make a purchase. This is done through tracking cookies (created by the affiliate network or AssocTRAC).

However, these the length of time a cookie is active, can be changed. And the longer the cookie duration, the better it is for the affiliate marketer.

In short, longer cookie durations mean that even if a visitor didn't buy the first time they were sent to the business web site, but bought later, affiliates still get paid.

If I refer somebody to your web site (in hopes that they'll buy your product), I want the assurance that even if they don't buy on the first visit, I will earn a commission if they buy on subsequent visits.

Statistics show that most people require 5-7 contacts before they'll buy. It takes this many contacts before people understand the benefits of buying a product and build up trust to buy from that business.

If a cookie duration is too short, affiliates don't get paid - and you'll lose them. Too many merchants still don't value their affiliates enough to take care of them.

As an affiliate marketer, I won't even consider working with a business that has less than 90 day cookies.

Likewise, I will go out of my way to seek out businesses that offer 120 day cookies, 3 year cookies, and especially cookies that never expire! Why? The longer the cookie, the less harder I have to work (which makes me happier).

Deep linking is another need/want. The savvy affiliate marketer needs to have the ability to link directly to any product or page on a merchant's web site - especially if this site offers more than one product!

Think of it this way ... one of the sites I do affiliate marketing for is the Bass Pro Shop. They're an online store with thousands of products. If I write an article on my site about one of their products, I want to link directly to it (using my affiliate link). But if all I get is a link to the main site, then my article (and link) has lost some of it's selling power (because many customers will not make the effort to click through multiple links to find it themselves).

So in short, the chances that we both (business and affiliate marketer) lost a golden opportunity for a sale is greatly increased. Deep linking protects both the merchant and affiliate marketer against this scenario.

Recurring commissions is another thing affiliate marketers want. If they send you a customer, you stand a good chance that the customer will return and buy again. Paying affiliates for subsequent sales (even if the customer doesn't use the affiliate link) will make your affiliate marketers very happy - which makes them want to work harder for you and remain loyal.

Two-Tier Affiliate commissions also do a lot to increasing your bottom line and making happy affiliate marketers. Some affiliates are so good at what they do and how they reach people, that they're able to recruit even more affiliates for you. And if you're willing to pay them a small commission for sales affiliate marketers they recruit make - they'll work even harder for you!

Serious affiliate marketers are business people too. Only they're usually running their online business from home. But they are dedicated business people making decisions, paying for advertising, building web sites, etc.

They'll work very hard for you, but only if you reward them. The more you do to provide the resources and tools they need and take care of them, the more loyal they'll be and the harder they'll work for you.

The more money they make on each sale or customer, the better it is for them. This means they won't have to work as hard for to find other products and businesses to promote. They won't have to work as hard to keep generating new income.

The happier your affiliate marketers are, the more focused they'll be on you and your business (and not others). The more loyal they'll be to you.

Word spreads fast on the internet too. So if you're doing a good job of caring for your affiliates, word will spread and you're more likely to get more happy affiliates!

Affiliate Marketing - For Business Owners