Internet Marketing Solutions & Publications - Affiliate Marketing Program

Affiliate Marketing Program

Do Affiliate Marketing Programs Work?

If you’ve spent any time at all on the Internet in the last few years, you’ve heard about the affiliate marketing program. The concept is really very simple. The affiliate marketing program has a lot of attractiveness for a prospective marketer because there is little or no cost outlay in the beginning of the process. Usually, if the marketing efforts are not successful, the marketer does not pay anything. But are the affiliate marketing stories of big money to be made from affiliate marketing programs true, or is this just another myth?

Affiliate marketing is a revenue sharing methodology that works exclusively with the concepts of Internet Marketing. At its core, affiliate marketing involves paying back a small amount of money for customers that are referred to a product or service offered by another merchant. The URL that is provided to the web browser contains a unique affiliate ID that is provided by the merchant in the affiliate program. Clicks using that ID are added up and credited to the affiliate (you). The concept originated with adult websites in the early 1990s, but it wasn’t long until major online retailers like Amazon.com were using it as well. Most affiliate marketing programs depend on a large number of affiliates to drive traffic to the merchant's website.

The great majority of affiliate marketing programs pay on a CPS, or "cost per sale" basis. So, if the web browser makes a purchase through an affiliate link, the affiliate gets paid. A smaller number of affiliate programs use CPC, or "cost per click" where each clickthrough on an affiliate link pays an amount that is usually much smaller. Due to fraud and other issues, CPC is on the decline. Additionally, many of these affiliate marketing programs offer payment options either in cash or credit for the program owner’s business, keeping more of the money in their pockets.

Another side to affiliate marketing is where you have a product or service you wish to promote through the use of other affiliate marketers who sign up as affiliates with you. If you are interested in creating an affiliate marketing program for your product or service, there are a few important business concerns to address.

First, you should make sure that you occupy a marketing niche that can support this kind of venture. Competing with an existing program for the same product is essentially a losing battle. Competitors generally have a high market penetration that will make it very difficult for you to build a large enough team of affiliates without offering more competitive financial terms. Also, the administrative component of an affiliate program can become overwhelming as the program grows and will require your time in paying hundreds if not thousands of individuals. Consult your tax attorney or CPA on the consequences of this type of affiliate marketing program.

Affiliate marketing programs can be a powerful tool for an Internet-savvy small business, but they are not a short road to riches. Be aware of the strengths and weaknesses of affiliate marketing before you invest in developing an affiliate program that involves products and services online.