Affiliate marketing
Online Advertising
Affiliate marketing
Affiliate | Cost Per Action | Cost Per Click | Cost Per Impression | Cost Per Thousand
Affiliate Marketing is a popular method of promoting
web
businesses in which an
affiliate is rewarded for every visitor,
subscriber and/or customer provided through his efforts. It is a
modern variation of the practice of paying finder's-fees for the
introduction of new clients to a business. Compensation may be made
based on a certain value for each visit (Pay
per click), registrant (Pay
per lead), or a commission for each customer or sale (Pay
per Sale), or any combination.
The most attractive aspect of affiliate
marketing,
from the merchant's viewpoint, is that with this pay for performance model, no
payment is due to an affiliate until results are realized.
Some e-commerce sites run their own affiliate programs while other e-commerce
vendors use third party services provided by intermediaries to track traffic or
sales that are referred from affiliates. Some businesses owe much of their
growth and success to this marketing technique, although research has shown in
general the increase to be approximately 15-20% of online revenue.
Some advertisers offer multi-tier affiliate programs that distribute
commission into a hierarchical referral network of sign-ups and sub-affiliates.
In practical terms: publisher "A" signs up the affiliate program with an
advertiser and gets rewarded for the agreed activity conducted by a referred
visitor. If publisher "A" attracts other publishers ("B", "C", etc.) to sign up
for the same affiliate program using her sign-up code all future activities by
the joining publishers "B" and "C" will result in additional, lower commission
for publisher "A".
Snowballing, this system rewards a chain of hierarchical publishers who may
or may not know of each others' existence, yet generate income for the higher
level signup. Most affiliate programs are simply one-tier.
Merchants who are considering adding an affiliate strategy to their online
sales channel should research the different technological solutions available to
them. Some types of affiliate management solutions include: standalone software,
hosted services, shopping carts with affiliate features, and third party
affiliate networks.
In its early days many
internet
users held negative opinions of affiliate marketing due to the tendency of
affiliates to use
spam to promote the programs in which they were enrolled. As affiliate
marketing has matured many affiliate merchants have refined their terms and
conditions to prohibit affiliates from spamming.
Currently there is much debate around the
affiliate
practice of
Spamdexing and many affiliates have converted from sending email spam to
creating large volumes of autogenerated webpages each devoted to different niche
keywords as a way of
SEOing their sites with the search engines. This is sometimes referred to as
spamming the search engine results. Spam is the biggest threat to organic Search
Engines whose goal is to provide quality search results for keywords or phrases
entered by their users.
Google's
algorithm update dubbed "Big Daddy" in February 2006 which was the final
stage of Google's major update dubbed "Jagger" which started mid-summer 2005
specifically targeted this kind of spam with great success and enabled Google to
remove a large amount of mostly computer generated duplicate content from its
index.
Early days
In the early days of affiliate marketing, there was very little control over
what affiliates were doing, which was abused by a large number of affiliates.
Affiliates used
false advertisements, trademark
bidding on search engines, forced clicks to get tracking cookies set on users'
computers, and
Adware. Many affiliate programs were poorly managed.
This changed dramatically over the last few years for multiple reasons.
Revenue generated online grew quickly. The
e-commerce website, viewed as a marketing toy in the early days of the web,
became an integrated part of the overall business plan and in some cases grew to
a bigger business than the existing offline business. Many companies hired
outside affiliate management companies to manage the affiliate program.
When Google, the most popular search engine on the Internet, introduced AdWords (pay-per-click
advertising pioneered by Goto.com, then Overture.com and now
Yahoo! Search Marketing) many Merchants became aware of the issue of
trademark bidding by affiliates. The
terms of service were quickly modified by most merchants and structures were
put in place to monitor affiliate activities.
Adware
Adware is
still an issue today, but affiliate marketers have taken steps to fight it.
Merchants usually had no clue what adware was, what it does and how it was
damaging their brand. Affiliate marketers became aware of the issue much
quicker, especially because they noticed that adware often overwrites their
tracking cookie and results in a decline of commissions. Affiliates who do not
use adware became enraged by adware, which they felt was stealing hard earned
commission from them. Adware usually has no valuable purpose or provides any
useful content to the often unaware user that has the adware running on his
computer. Affiliates discussed the issues in various
affiliate forums such as ABestWeb and started to get organized. It became
obvious that the best way to cut off adware was by discouraging merchants from
advertising via adware. Merchants that did not care or even supported adware
were made public by affiliates, which damaged the merchants' reputations and
also hurt the merchants' general affiliate marketing efforts. Many affiliates
simply "canned" the merchant or switched to a competitor's affiliate program.
Eventually,
affiliate networks were also forced by merchants and affiliates to take a
stand and ban adware publishers from their network.
The new Web
The rise of blogging, interactive online communities and other new
technologies, web sites and services based on the concepts that are now called
Web 2.0 have impacted the affiliate marketing world as well. The new media
allowed merchants to get closer to their affiliates and improved communication
between each other. New portals like Return on Affiliates allow affiliates, merchants, and networks to
interconnect easily, on a professional and a personal level.
New developments have made it harder for unscrupulous affiliates to make
money. Emerging
black sheep are detected and made known to the affiliate marketing community
with much greater speed and efficiency.
See also
External links
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