Affiliate Marketing
New Customers, New Profit
By Dan Gray
Traditional retailers and surviving dot-coms are increasingly reliant upon affiliate marketing to drive their Web sites' traffic and sales. Pay-for-performance is the norm as companies use affiliate marketing to generate new business in the tough economy.
Affiliate marketing is the performance-based process by which content Web sites are compensated for sending customers to merchant Web sites. A merchant's banner, product information, or text link to its site is posted on an affiliate site. The affiliate is typically paid a commission for each visitor who clicks through to the merchant site and fulfills an action. The performance-based cost-per-action (CPA) model rewards affiliate sites based on a percentage of sales or other criteria. Software, either on the merchant's system or at an affiliate solutions service provider, keeps track of the traffic, sales, and sign-ups directed to the merchant's Web site. While some merchants use this process purely to drive sales, others use it as a way to gain new customers, or build their mailing lists.
How It Works
The system works best when the affiliates are happy, meaning motivated and compensated. To have happy affiliates, you must put forth a solid offer and back that up with the people and tools to make it work. Merchants typically pay an affiliate between 5 and 15 percent of each resulting sale. These payments are most often made on a monthly or quarterly basis.
