You may have come across websites that advertise Amazon.com's books on their sites. What are they doing here? They are part of something called an affiliate marketing program.

Affiliate marketing programs are a win-win solution for websites today! How do they work? Amazon pays the smaller website a commission (need not be monetary) whenever a customer on their site clicks on the Amazon ad or link and checks out the Amazon site from that link. Sometimes, this could be extended to a payment when the user doesn't just visit the Amazon site but also buys a book. What's happening here? Amazon is achieving a wider customer reach and building brand awareness at a fairly inexpensive cost. While the smaller website is making money by just selling space on it's site.

Now you might say that banner ads are not too effective today. Yes, we agree, but a banner ad is not the only way in which a business can use affiliate marketing. Before we look at the different types of affiliate programs, let's see how affiliate marketing can help any business today.

We all want our websites to make money. Sometimes our products and services do it without too much effort. But in a world where websites are proliferating by the dozen and so are products and services; an added marketing effort could be of some use.

Affiliate Programs

Affiliate programs provide an easy way to attract new customers to your site by allowing existing customers to help you market your company. With the right tools you can construct a winning program keeping in mind issues such as security, privacy, ease of use, navigation and interfaces. Once this program is up and running you can then analyze the metrics and determine which ads work best and where.

Affiliate programs are a means of offering commissions to an individual or company for referring a customer. The customer or the affiliate who refers your website is paid each time a contact or a sale is made on their site on your behalf.

These payments or commissions need not be monetary; they could be return of links or promotional materials in exchange for a link from a visitor's site.

Performance Advertising

The term performance advertising may be familiar to you. What does performance advertising do for a company? Increase brand awareness, lower customer-acquisition costs and increase sales. Affiliate marketing is a form of performance advertising where the benefits are manifold. Survey results have proven that affiliate marketing is one of the most effective traffic-driving techniques used on the Net today. The benefits are obvious - increase sales, drive traffic, generate qualified leads and extend the reach of your brand through the affiliate partner web sites.

• Opportunity to create a powerful and effective marketing network for your product or service
   
• Using affiliate solution providers like linkshare.com can help businesses evaluate and track the effectiveness of their affiliate programs.
   
• No upfront costs involved. Payments are made once the results begin to happen.
   
• Builds strong relationships with customers and affiliates
   
• Affiliate marketing is a risk-free customer retention tool.

• Kinds of affiliate marketing programs
   
• Starting from the oldest kind, the banner ads or text links to two-tier programs.
   
• Banner or text links
   
• Storefronts
   
• Pop-ups
   
• Embedded commerce
   
• Email
   
• Two-tier programs

Affiliate programs comes in all shapes and sizes. Let's look at some of what we can implement for you:

We could call them models because they've evolved quite a bit and their success rates have been measured since the time of their inception. The most successful ones so far are those, which match with the content of the site on which they are offered. Presenting the right message to the right audience is crucial here.

Banners or Text links:

Banners or Text links are the oldest affiliate models and this is usually a banner or text link that along with some testimonial explains the product or service. When the user clicks the banner, it sends her to the product site where she can buy or find out more about the product. The website that hosts the ad is paid a commission either on the basis of a CPC (cost-per-click) or CPA (cost-per-action) program or on a simple commission basis. Most of your affiliates would prefer the CPC or CPA methods because these are guaranteed methods of payment.

Storefront and Syndicated Boutique Model:

The only disadvantage faced with the above method is that the affiliate site owner loses valuable traffic from his site when users click on banners and move to the other site. Another way is to make sure that visitors use the affiliate program and stay on that site. This could be either in the form of a popup ad or through the much talked about storefront and syndicated boutique model. For example, the website art.com allows gallery owners to host their paintings on it and sell. The basic necessities required to create a store are provided by art.com and this helps small gallery owners in a great way. Webserver space, design templates and the requisite technical know-how are provided while each sale generated through the storefront is paid for. Art.com is an example of a vertical market niche where the affiliates are all related to the art market.

Most search engines afford a higher ranking to a site that has more links pointing towards it. The qualities of the links that go into a site also matter. Also, it is easier for a search engine to locate your site because there are many sites and links pointing towards it. Quality links usually mean that the right kind of target audience will come to your site. A lot of people find good links by moving from one site to another. Well-placed links are long-term traffic generators. Link popularity is a measure of the quantity and quality of sites that link to your site.

Email as a form of direct marketing

Using Email as a form of direct marketing is another method where a more than a passive approach can be adopted. When a person signs up for such a program, each time she sends an email, a small snippet of code goes along with it. This code is for a small promotional message at the bottom of the message. HTML enabled mail allows complete images to be tagged at the end of the messages imploring the recipient to click on the offer to avail discounts or special deals.

Two-tier program

Another approach is the Two-tier program where a company can set up a virtual sales force where every affiliate can create affiliates of their own who can then sell the service on their sites. (www.2-tier.com)
Once you decide on what affiliate program to follow, you can then plan to see that it works out to be a success. Once implemented the program will have to be tracked and measured for effectiveness. Your future affiliate marketing strategy will depend on this.

A large network of affiliates, creative affiliate offers is only the start of a successful affiliate program. You can choose to manage the program within your organization or outsource the solution. Managing a successful affiliate program takes work and is a process that continues long after your program is launched.

How do we ensure that your affiliate program succeeds?

• Proper tracking (impressions, click-throughs, sales, orders)
   
• Accurate payments
   
• Fair and clear affiliate agreements
   
• Targeted and timely offers
   
• Good promotional copy
   
• Ongoing communication with the affiliate partners
   
• A creative affiliate program

• Websites that complement the content, the goals and target audience of your website.
   
• Websites that give you the opportunity to review your products and services
   
• Theme specific search engines and directories
   
• Those that advertise your competitor sites