Can Affiliate Marketing Build Your Sales?

If it's good enough for Amazon, it might be good enough for you. Jeff Bezos at Amazon.com started the first affiliate program, Amazon Associates, way back in 1996. It's still going strong.

Many top web marketing gurus get a big chunk of their cash flow from their affiliate programs. You can make money that way, too. This article will help you decide if affiliate marketing is for you and, if it is, what you should know and do.

What is Affiliate Marketing?

Affiliate marketing is the Digital Age version of finder's fees. One site (the affiliate) sends traffic to another site (the publisher or merchant) and receives some compensation based on the affiliate marketing agreement. Let's use the Amazon program as an example.

Amazon sells books. They're very good at it. You have a web site that promotes your business services. You don't sell books. You don't want to. But the people who are your prospective clients buy books and you know of some books that will interest them.

So you sign up as an Amazon Associate. Amazon helps you with code to put on your site. You recommend books and send interested visitors to Amazon. If they buy a book, you get a small commission.

Reasons to Set Up An Affiliate Program

We just identified one key reason to set up an affiliate program. With affiliates sending traffic to your site, you can make more money.

Unlike some other advertising you may be used to, with an affiliate program you only pay for performance. You can even decide what performance to pay for: a click through, a lead, or a sale.

There's another benefit, too. Affiliate sites link to your site. That's how they send you referrals. That increases the number of your inbound links, which is good for search engine ranking.

Downsides to Affiliate Programs

The biggest downside to an affiliate program is that it takes work. You have to help affiliates link to you and market effectively. You have to do the admin work of tracking commissions and paying affiliates on time.

Fortunately, automation can make everything doable. Here are some important features to look for in an affiliate management program.

  • Automatically calculates commissions, including two-tier.

  • Automatically generates code for affiliates and sends it with a welcome email.

  • Options for tracking commission.

  • Options to pay per click through, lead, or sale.

There's one more potential downside to affiliate programs. You can be held responsible for the actions of your affiliates. Under the CAN-SPAM Act of 2003 you can be liable for junk e-mail sent on your behalf if you should have known of the spam or if you took no reasonable action to police your affiliates. That's why you will have to check up on your affiliates and why you will want to design your program to make things easy.

The Two Kinds of Affiliate Programs

Some affiliate programs let anyone sign up. Amazon's program is like that. You get a lot more affiliates that way, but you also have more of them to worry about.

There are programs that are even more open than Amazon's. Some very successful programs allow affiliates to create sub-affiliates. The affiliates then earn fees based on their direct referrals and the referrals of the sub-affiliates in their network.

Other affiliate programs are more selective. At Match.com, for example, affiliates are invited and chosen based on their ability to reach specific target markets.

A good affiliate program can help your business in several ways. Just be sure to make wise choices about your program and pick the best tools you can.