Partnering with Online Merchants Through Affiliate Marketing Programs

Sometimes known as associate, referral and bounty programs, an affiliate program is a partnership with an online merchant in which the affiliate earns a commission for referring sales and/or leads to the merchant's business. From a merchant's perspective, partnering with affiliates is an inexpensive marketing strategy to increase sales, drive traffic, generate qualified leads and extend brand reach. From an affiliate's perspective, few other businesses online or off are as relatively inexpensive and simple to start and maintain.

Here is a basic 4-step overview of how affiliate marketing works:

• You join an affiliate program and are given a unique affiliate identification and access to your special links. These special links are coded with your affiliate information so that if someone clicks these links, the merchant can track the customer to you.
• You place your affiliate links on your web site, in your newsletter, your blog, or email letters.
• A visitor on your site or reading your email clicks the special link, resulting in a purchase or signup.
• You earn a commission for the sales and/or leads that were generated through your links.

Simply put, affiliate marketing is commission selling on the Internet. Commissions may be based on the purchase amount (Pay per Sale), a set value for each visit (Pay per Click), or action such as regisitration or download (Pay per Lead).

Tens of thousands of merchants from sole proprietors to major corporations such as Sony and Dell have their own affiliate programs. There are normally 3 types of commission schemes for affiliate programs:

• Pay-Per-Sale & Percentage Programs - Also known as "Partnership", "Percentage" and "Percentage Partners" programs these programs pay either a fixed dollar amount or a percentage of sales generated by your links.
• Pay-Per-Lead and Pay-Per-Action - With Pay-per-lead, affiliates earn a set amount whenever a visitor from their site provides a merchant with their contact information, eg. name, address and email. A Pay-per-Action commission scheme pays out a commission when a visitor from your site completes a required action by the merchant, such as downloading free trial software or signing up for a free trial membership. As such, the visitor is also providing name and address information, and is thus providing a "lead" for the merchant.
• Pay-Per-Click Programs - Pay-Per-Click affiliate programs are similar to Pay-Per-Lead. Essentially you are paid a set amount each time one of your visitors clicks on your affiliate link and lands on the merchant's site.