Getting to Know Affiliate Marketing
Wikipedia defines Affiliate Marketing as “a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing effort.”
In the olden days of business development and marketing for small and medium-sized businesses, affiliate relationships meant enticing customers to visit similar, but non-competing, stores to share the market pool. An example could be a restaurant offering specials to diners heading to a nearby theater. There would be an agreement set up between the companies to share revenue, commissions or other perks.
Ecommerce Affiliate Marketing has taken the same principals of customer sharing to a more extensive network of affiliate relationships around the world.
- Websites are created to attract traffic from banner ads, search engine marketing, search engine optimization and offline marketing efforts
-The visitor will see information about their product or service and then be transferred directly or indirectly to the affiliate partner’s site
-The affiliate site in some way will be compensated for visitors that result in a sales lead, purchase, download or other pre-defined conversion
In a metaphorical sense, affiliates sit between the fishing boat and the school of fish, catching a portion of the fish in the net, and selling it to the fishing boat.
Forrester Research’s U.S. Affiliate Marketing Forecast for 2009-2014 estimates that the affiliate marketing industry will grow from $1.9 billion in 2009 to $4 billion by 2014.
This growth will be facilitated by the relatively low barriers to entry to create websites, blogs and affiliate ecommerce sites. Open source tools such as WordPress, Drupal and Magento are allowing Online Affiliate Marketers to set up shop in a relatively short length of time and at low cost.
The owners of these sites could then join the popular affiliate network sites such as www.commissionjunction.com and CJ will connect your sites with retailers within your market or focus area. CJ will then provide tracking, reporting, and facilitate commissions while—you guessed it—taking a portion off the top.
Companies are also electing to create their own private affiliate networks. The benefits are higher commissions, stronger partnerships, often exclusive relationships (i.e. a site cannot direct traffic to competitors), and mutual marketing opportunities. The downside is the time and infrastructure investments needed to allow for tracking, reporting, and metrics appropriate to both parties. There are also additional marketing and sales costs involved in reaching out to potential affiliates create the initial partnership.
If affiliate relationships are not part of your online marketing mix, there could be a significant opportunity for traffic and revenue.
