A continuation of Affiliate Marketing

I had discussed the theoretical aspects of Affiliate marketing in an earlier article. In this article I’ll dwell on affiliate marketing, how it works, merits, de-merits etc.

An affiliate program, like I said earlier, is an arrangement where a merchant or trader pays the publisher ( the ‘affiliate’) for links from the publisher website to the merchant website. The affiliate is paid only when a sale is made as a result of this link. This is also called Pay per action (PPA) advertising, simply because the affiliate gets paid only when a visitor performs a certain action – visits, buys, registers, leaves contact details…).

Let me give a brief example of how it works.

Let’s assume I am an affiliate of ebay.com. As an affiliate I have an Id. Suppose my id is ‘shankar’. Suppose I have reviewed the performance of a Dell Lattitude Laptop on my website. I will link the title of my review so that it takes my visitor directly to the laptop description on ebay.com.

When the visitor clicks on the link on my webpage, my unique id will be recorded by the ebay webserver so that if the visitor makes a purchase, I’ll get credit. There are different commission models –

If the visitor buys the same laptop I have linked to, I’ll get say 20%

If the visitor browses around and ends up buying something else, I’ll get 7.5%

These commission percentages could vary from merchant to merchant.

Affiliate marketing is popular because it benefits both the affiliate and the merchant. The merchant’s cost of advertising is limited to the percentage paid to the affiliate. And, the merchant pays only when a sale is actually made. In a sense, Affiliate marketing is like CPA, because in both cases, pay out happens only on a sale.

A disadvantage of affiliate marketing is that results can’t be predicted. It’s like casting a fishing line and hoping that a fish ‘bites’. Success of affiliate marketing is a function of number of visitors to the affiliate website. To that extent affiliates will have to be chosen carefully.

From an affiliate point of view, it is a revenue stream – albeit an unpredictable revenue stream – where there is no real effort on the affiliate’s part. No complaints.

In summary, affiliate marketing can be one of many things a merchant can do to propagate his brand, increase sales etc. It has to be combined with other forms of advertising to make a meaningful advertising campaign.