Affiliate Programs Explained
Affiliate programs are a common type of partnership
between a seller and an advertiser. The advertiser
directs visitors to a seller's website and for this
the advertiser receives a percentage of the revenue
generated from the visitors coming from the advertiser.
The advertiser is said to be an affiliate of the seller.
The percentage paid by the seller to the affiliate
is set by the seller and varies depending on the type
of products, the profit margin on the products sold
and how keen the seller is to promote his or her products
through affiliates. Percentages anywhere between 10%
and 75% are common.
The advantage for the seller includes additional
sales and that the seller knows exactly what margin
he or she will have on products sold to visitors coming
from affiliates. If the seller markets his or her
products through advertising using sponsored links,
banners, text ads or other online advertising, the
seller does not know before starting a campaign what
number of sales will be generated per dollar spent
on advertising. The seller thus does not know if the
campaign pays off or not. With sales generated from
affiliates the seller knows exactly what percentage
of revenue from a sale goes to the affiliate and therefore
knows exactly how much is left for the seller. A seller
who offers an affiliate program can have hundreds
or even thousands of affiliates.
For the affiliate participation in an affiliate
program allows the affiliate to make money online
without having a product to sell. For the affiliate,
revenue can be generated simply from attracting
visitors. The affiliate does not need to worry about
procuring or shipping products or about providing
any kind of support to the buyer. The affiliate
has a wide range of choices for how to attract visitors.
In a common setup, the affiliate has a website from
which visitors can be sent to the seller's website.
The affiliate may also have a blog which generates
so much traffic that it pays of to direct visitors
to a seller's website. A blog can be created for
free and so is the choice of many affiliates. Finally,
an affiliate may direct traffic to a sellers website
by advertising using banners, text ads or sponsored
links as available through Google's AdWords, Overture
or similar services. If the affiliate attracts visitors
from such advertising only, the affiliate does not
need to create a website or blog and so does not
need to create any content for such.
Affiliate programs and paying of commissions to the
affiliate can be supported by third parties or be
handled directly between the seller and the affiliate.
If paying of commission is handled directly between
seller and affiliate, the affiliate normally needs
to sign up for the affiliate program on the seller's
website. In case of third parties handling payment
of commission it is common that no agreement needs
to be set up between the affiliate and the seller.
The third party however will then have separate agreements
with the seller and with the affiliate. Commissions
are normally paid by cheque but in some cases it is
paid by PayPal or wire transfer.
Technically affiliate programs are normally supported
so a visitor's IP address is recorded when the visitor
follows a link provided by the affiliate to the seller's
website. If a purchase is made and payment is collected,
the visitor's IP address is determined again, and
if it matches that recorded when a link was followed,
the commission can be paid instantly. In some cases
a "cookie" is stored on a visitor's computer when
a link is followed and this is used to identify the
source of the visitor.
In short, affiliate programs allow sellers and affiliates
to share the revenue generated for sales from sellers'
websites and can generate considerable income for
About the Author:
Andrew Nielsen is the author of The Online Business
Builder. Visit http://www.i-want-to-be-rich.com/
to download the eBook.
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