No internet marketer can dream of online success without considering affiliate marketing as a marketing tool simply because of its ability to reach targeted customers who might have otherwise never have heard of the product or service being offered. The best part of it is, it is probably the least expensive promotional method, freeing up the affiliate merchant’s time to focus on other priority activities.

Affiliates almost miraculously multiply the marketing effort and this concept can work for practically any kind of online business. This is how the principle works: the affiliate promotes the merchant’s affiliate program and both benefit. While the merchant earns profits and expands the customer base, the affiliate earns a commission on each sale. Each merchant offers different payment schemes. This could be based on per sale, per lead and per click depending on what is mutually decided on. The merchant also supports the affiliate with advertising material to sell.

Why Offer An Affiliate Program

All said and done, an online marketer can only do so much when it comes to promoting and marketing products and services. But by offering an affiliate program, the marketer leverages the marketing effort of almost a limitless number of salespeople on a purely commission basis. There’s usually no overhead cost. Added to this, by getting more affiliates the marketer is able to build the brand. Lead generation is even more rapid. Affiliates increase the bottom line – profits – which is the reason why anyone chooses to market online.

Depending on the products or services offered and how the merchant plans to go about it, the costs could vary. If the merchant decides to use an affiliate network, then the costs would vary from provider to provider and the set up system. For those merchants who want to manage the affiliate program in-house, then it would involve setting up affiliate management software that could be anything from $50 and upwards depending on its features. If the merchant plans on providing affiliates with advertising material, then there’s the cost of producing those. At most, everything included, an affiliate marketing program can be launched at less than $1000. In any case, the merchant will easily recover whatever costs are incurred once the affiliates start to perform.

It only takes a day or two to set up the affiliate program. The merchant has to keep a track of the affiliates and monitor how well the program is doing. Some merchants prefer to outsource the task of affiliate management. The affiliate manager takes care of the following:

• Recruiting affiliates
• Manage the affiliate-merchant relationship
• Monitor affiliate programs
• Keep track of the necessary statistics
• Follow sales and commission payouts

Usually, most affiliate programs show the best performance as soon as they are launched. One major reason is the novelty of the program and the affiliate’s enthusiasm. The merchant must devise ways to keep them motivated and keep the sales coming.

Affiliate Commissions

Affiliates earn a commission on each sale they make. How much the merchant decides to pay them depends on the price of the product or service and how much profit they plan on making on it. Many merchants part with 50-75% commissions on each sale in order to keep up the volume of sales.

Apart from commission on each sale, affiliates are also paid for repeat sales from the same customer. This is where tracking the affiliate plays a part and this is done with ‘cookies’. Cookies vary in duration and can be set for the required period. Suppose they are set for 30 days, then the affiliate will earn commissions on repeat sales for all purchases made within thirty days. The merchant includes various terms in the affiliate agreement while recruiting the affiliates.

Affiliate marketing is a very interesting business and there is a lot more to it than just providing an affiliate link and hoping the sales will pour in. Most of all, as mentioned before, how to recruit affiliates is the single most crucial step, since that’s the starting point for an affiliate program’s success.