The idea of paying a finder's fee, referral fee or commission on new business is as old as commerce but the next evolution of commission based marketing is online - Affiliate Marketing. Online Affiliate Marketing is a growing and ever-changing industry as companies and marketers try to unlock the best ways to attract customers together.
Affiliate Marketing involves placing affiliate links (special links with a tracking code embedded in them) in front of potential buyers via webpages, articles, social media (Facebook, twitter) or email. It is not an easy business but it costs nothing but time (or nearly nothing if you want to set up websites) to get started.
There are now 9 major types of Affiliate Marketing programs:
Pretty streight forward, the company pays the affiliate a fixed commission rate on each sale made as a result of the affiliate marketer's efforts. This can range from 2% (to start) at Amazon to 75% on some information products. Within a given affiliate program the different commissions can apply to different products, often roughly based on the seller's margins.
Many affiliate programs seek to further motivate their top Affiliates with a tiered commission structure. The hope is that the affiliates will stick with the vendor to get incrementally higher commissions instead of working on other projects.
For example the affiliate program may offer:
5% on the first 5 sales in a month
6% on the next 5 sales in a month
7% on any additional sales.
Pay Per Lead
Some affiliate programs pay the affiliate for every click-through to their website. These company's know that they can convert a certain percentage of leads and what those leads are worth to the company. These pay per lead affiliate programs are relatively rare because they are quite easy to abuse via traffic exchanges, bots and other fake traffic.
Immediate Pay Per Action
Affiliate programs that seek to collect email addresses or new site members may opt for a pay per action type affiliate program. ShareaSale (an affiliate network) pays the referring affiliate member $1.00 for every new affiliate that signs up to try their affiliate programs (link below...).
Differed Pay Per Action
Some affiliate programs will pay a commission or finders fee once the referred client reaches some purchase, sale, or earnings threshold. Every member of the oDesk site can share a referral link that, if used by someone else to sign up, with pay out $50 after the new member makes or spends $1000 on the site. So if an Administrative Assistant looking for work joins oDesk and is successful, the referring member makes a small bonus.
Subscription Based Commission
Selected sites that offer subscription based services will pay an affiliate commission monthly or annually based on continued use of the site by referred customers. Some web hosting companies are a good example as are sites that offer training or access to databases.
Override on Sales/Earnings
Similar, the flip side of the subscription based commissions that are paid based on the referred customer's spending, some sites that allow members to earn money will pay an override on those earnings to the member that brought in that new member. The override can be for life, for a fixed length of time, or for as long as the company feels like running the program.
Generally the website offers this referral bonus from the website's side of the revenue generated, which eliminates the problem of new sign-ups trying to skirt the affiliate link so they make more money. Chitika offers members a small cut of referred members total revenue for 15 months as an example. There is no earnings penalty for the person signing up to go through an existing publisher since the referral cost comes off Chitika's side of the program.
Adsense Impression Sharing
A handful of revenue sharing sites actually reward members for referring new members by sharing a portion of Adsense impressions with the referring members. Infobarrel is one of the few remaining examples, at a tiny 2% Adsense share. WebAnswers is another site that gives Adsense impressions to referrers. Xomba used to offer a referral share of Adsense but abruptly stopped when they revamped the site. SheToldMe and sister site Best-Reviewer also shares Adsense Impressions (on every page) created by people you refer to the site.
Multi-Level Affiliate Commissions
A few affiliate programs pay members several levels deep for referrals. YouSayToo has a combination program that gives a share of Adsense impressions generated by members that you refer and that those members refer. I've also seen a program structured to pay cash based on new site subscribers to a database that your recruited affiliates recruited.
What Kind of Disclosure is Required?
Disclosure requirements vary by where you live. In the US bloggers are supposed to disclose that they are using affiliate links. This can be done right in the post or on a disclosure page. In Canada no such requirement exists.
Some bloggers recommend being very open about affiliate links while others recommend cloaking the affiliate links so that the reader does not see they are an affiliate link. I take a middle road - I disclose on my blog that I use affiliate links and that they make me money but I also cloak some links, not to hide that they are affiliate links but to make them easier for me to remember and manage. In this article there are several affiliate links - can you find them? There are also links to other related article I've written so not all the links are affiliate links.
Where to Find Affliate Programs
Many companies offer affiliate programs through affliate directories. These specialized sites present many differant programs in one place, aggragate a member's earning from multiple programs and otherwise help facilitate the relationship between companies and their affiliates.
Other companies (Amazon for example) run their own affiliate program.
If you are looking for an affiliate program, try searching for websites selling what you want to sell. If they have an affiliate program it is often linked way at the bottom of the page with a discrete link called "partner with us" or "affiliate", or sometimes off an About Page or similar obscure page. You should also search through a good affiliate directory like ShareaSale.
There are also sites that do all the hard work for you by scanning your blog or website for affiliate linking opportunities and adding the links for you. For this wirk, they take a cut of the the affiliate commissions, but because these sites get top level commissions your 75% cut may be better than you can earn on your own.
Is Affiliate Marketing Easy?
Absolutely not. Affiliate marketing is far more than signing up for an affiliate program and posting a few links. To get buyers to buy through your affiliate links you need to provide valuable explanations or information that attracts them and convinces them to buy. You also need to find ways to attract people to your content in the first place through SEO, social media, link-building, article marketing, email marketing or any number of other strategies used together.
However, if you love marketing and are willing to put the work in Affiliate Marketing can be one of the most rewarding businesses you can try because it is low cost and home (or virtually) based.