If
you are affiliated to a company, then you have a special link or
relationship with that company. You can then be described as an affiliate to the company. When that company
is the provider of a
product or service and your affiliation is for the purpose of assisting
in the marketing of that product then you are providing affiliate
marketing.
How does it work? Well, most companies that have products to sell
(merchants) and the affiliates who seek relationships with these
merchants (for profit) are brought together via Affiliate Network
companies. The latter are responsible for the administration and
tracking of these relationships, including billing and payments.
What the merchant gets:
The merchant gets new marketing (affiliate) channels for product
placement and sales that would not otherwise be available. Products
sold in this way are generally extremely competitive and within
saturated markets. Consequently, merchants are willing to pay
generously for new business and an increased market share. Such
expenditure is low risk - no payment of commission is made without a
sale - and it is therefore attractive as long as rules are applied that
prevent affiliates working in direct competition with their brand. Such
rules are indeed applied and constitute the terms and conditons of the
affiliate contract or agreement. That said, some companies do allow
brand bidding, for example, those available via Clickbank.
What the affiliate gets:
The affiliate gets a share of the profits made from
his referrals to the merchant that result in a completed sale. This
share is known as a commission.
If the affiliate pays less on promoting
his website and/or in pay per click
advertising than be earns in
commissions, he makes a profit. In this way, the merchant has
transferred the financial risk for these sales to the affiliate but if
the affiliate can attract sufficient hits on his site, it can represent
a good income stream for him. Some affiliates operate across several
market sectors, others concentrate on only one. Many of the more
successful affiliates are in the latter category. It pays to know your
market.
To find out more about how this works in practice and to learn how to
be an effective affiliate yourself, you may find our ebook, the Successful Affiliates Guide of
interest. There is actually more to affiliate
marketing than most
affiliates realise; so it pays to get some focused advise and guidance
at the start.
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