Affiliate Programs Secret to Net Marketing
Web Cards has more than 700 affiliates and is adding new ones at a rate of 200 a month. Affiliate programs are partnerships in which online marketers pay a commission for the business they receive from Web sites who send customers their way.
One only has to look at the success of Amazon.com, which recently announced that it had 60,000 affiliates and was adding 500 a day, to see that affiliate programs are booming. CD Now, Barnes & Noble, TechWave and other leading online retailers have discovered the value of these programs.
The simplest model for affiliate programs is "pay-per-click" on a banner, which means the site owner is paying for a visitor. If the merchant finds that one out of every 100 visitors buys a product and that the purchase results in $5 profit, she can pay 5 cents per click-through ($5 per 100 visitors) to break even on the sale -- hoping that she will make money when the customer comes back to make another purchase or recommends the site to a friend.
The pay-per-click system is popular with adult-oriented sites but has gotten a bad reputation not only because of the content, but also because there has been so much in discussion groups about sites who don't pay their affiliates.
A more sophisticated version of "pay-per-click" is "pay-per-lead," which we use at Web Cards. This system offers a higher bounty -- in our case $1 -- for each person who clicks on a banner and then fills out a form requesting samples. As with many purchases, our customers usually don't buy when first discovering our site. In fact, it can be months after getting samples, our newsletter and several of our promotional Web Cards in the regular mail before they buy. However, we have enough experience to know what percentage of these leads will buy and, therefore, how much we can afford to pay for them.
Probably the most popular type of affiliate program is the commission one used by Amazon, which pays a sliding rate depending on the type of book purchased and can range from 5 to 15 percent. Here, the customer clicks on the Amazon button on the affiliate's site (often after reading about a particular book) and hopefully makes a purchase for which the affiliate gets a commission.
Amazon has received praise for the smooth operation of its program but criticism for capturing future business from the acquired customers without paying commissions. However, in Amazon's defense, it is difficult to continually manage commissions for thousands of affiliates and millions of transactions.
Most of Web Cards' business comes from a small percentage of its affiliates. About 10 percent of the affiliates account for 90 percent of the commissions, which can exceed $500 a month for better sites. Some Web Cards affiliates generate new leads regularly because they are continuing to attract new visitors to their sites while others generate an initial burst of traffic that trails off after all the regulars have found out about the product.
Key to a successful affiliate program is trust. An affiliate must feel that they will not only get paid but also receive the fair amount due them. At Web Cards, we set up a Web page for each affiliate to track their responses real time at any time. When their visitor fills out our form, a credit is immediately added to the affiliate's total at their private Web page. Other affiliate programs notify participants about results regularly by e-mail. We issue checks to all sites due more than $10 in commissions promptly 10 days after the end of the month. (Amazon waits for the total due to reach $100 and pays quarterly). Foreign payments to our affiliates are made by credit card because of the problem of cashing U.S. checks in other countries.
How do you set up an affiliate program? We developed our software internally, but the choices are numerous. They range from services that handle the entire process such as Be Free www.befree.com, which administers the Barnes & Nobel program and costs thousands of dollars, to simple programs such as ClickTrade www.clicktrade.com and LinkShare www.linkshare.com, which you can set up yourself online A good description of affiliate program software can be found at www.associateprograms.com/howto.html.
As we look to the future of our program, we will be adding benefits to make it a richer experience for our affiliates and more rewarding for us. We soon will put new software online that pays affiliates both per lead and a commission for sales -- helping them share more in our success. We do regular mailings to affiliates suggesting ways to enhance their programs. Contests and other incentives are also planned. We also have found that affiliates often turn into customers.
The nature of the Web is that sites have an almost unlimited amount of potential space for links to affiliates. Many sites have huge amounts of traffic but little source of revenue. Affiliate programs are an easy way for them to take advantage of their traffic and space by partnering with businesses who sell products online.
There are several good sources on the Web for more information about affiliate programs. One of the best is James Marciano's Refer at www.refer-it.com, which lists and rates hundreds of programs. Another good source of information is Allan Gardyne's www.associateprograms.com. Web consultant Mark Welch publishes a list of affiliate programs at www.markwelch.com. Another new service is www.sitecash.com.
Web Cards has been growing by more than 25 percent a month over the past 18 months -- much of it thanks to our affiliate program. Setting up the program was only slightly more complex than setting up our Web site. You can see the details of our program at www.printing.com/bannerinstructns.html.
Considering the growth of Web Cards, Amazon, CD Now and TechWave, affiliate programs promise to be key to online marketing in the future.
Joe Haedrich is president of Web Cards Inc., Plainfield, NJ.