 Affiliate Programs
First Published: October 1999
Last Update: April 2002
Author: Computer Partners
The New York Times probably said it best in March when it
informed us that 1999 might be the Year of the Affiliate. Truer words were never
spoken as affiliates have blossomed on the Internet making the use of affiliates
one of the hottest web marketing techniques available.
One of the earliest companies to create an affiliate program,
Amazon.com has established itself as a leader in the industry. Amazon.com began
its program in 1996 and to date the company has approximately 250,000
affiliates, all linking their sites to Amazon.com.
If you are new to Web marketing and are unfamiliar with
affiliates programs, this is how it works at Amazon. Almost anyone with a
website can become an affiliate member. There is an online application that you
first must fill out. When you hear back from Amazon.com you receive a special
code that you have to use on your site, to get credit for any purchases made.
Amazon will also check out your site before you get final approval.
Affiliates who provide a general link to Amazon.com receive a
5% commission on all products purchased. However if the affiliate recommends
specific book titles, the fee goes up to 15 percent. If the user doesn't buy
anything during the visit, and decides to go back to Amazon.com later to buy
from the site, the affiliate doesn't get anything.
In his July 11 article on Affiliates Programs in Alertbox,
Jakob Nielsen said that the practise of using affiliates to sell products,
actually began in the summer of 1994 by a sports site known as, www.S2.com.
Since that time, the affiliate system has become one of the most profitable Web
marketing techniques known.
Particular types of businesses are more suited to the
affiliate selling technique. As Nielsen points out in his article, books lend
themselves well to the program since almost every site will have some books to
recommend about their specific area of expertise.
Another product that seems extremely well suited to the
affiliate style of selling, is CDs. In July Julia King reported in Smart
Marketing that online music retailer, CDNOW Inc. had 160,000 affiliates and from
each affiliate the company estimated it received one out of every four new
customers. '"They're the equivalent of 160,000 deputies all selling
[CDNow's] products,"' Ray Satterthwaite, an analyst at Gartner Group Inc.
in Stamford, Conn was quoted as saying.
She also reported that Barnesandnoble.com announced in July
that it was extending its affiliate book-selling program to anyone with an email
address.
This adds a new twist to the affiliate marketing scheme. The
company, which already has about 120,000 affiliates receiving between 5% and 7%,
now offers a 5% commission to email users for referral fees. They also have it
set up so that if email users do make a book, cd or software recommendation to a
friend who buys the product, the commission can be sent to one of five charities
that are sponsored by Barnesandnoble.com.
In a lot of cases the affiliates themselves don't make a lot
of money from participating in such programs. Some companies pay affiliates more
than others. According to Nielsen, Autoweb.com, which has about 5,000 affiliate
sites, pays $5 for every referred user who ends up posting a used-car ad.
CarPrices.com, which has about 9,000 affiliate sites, pays $3 for every referred
user who requests a price quote on a new car.
In January, InternetNews.com reported that American Greetings
Corporation was offering generous commissions of up to 40 percent on initial
product and subscription sales purchased through affiliates' sites.
Nielsen said that other more advanced affiliates programs
will pay based on the life-time value of the referred customer and not just
based on his or her initial purchase
The great thing about affiliate programs is that it doesn't
cost companies like Amazon.com anything until a product is sold. Because of the
way affiliates are set up, some companies have made a business out of acting as
a middleman between companies and their affiliates.
For instance Be Free Inc, out of Marlboro, Mass, primarily
sets up affiliate programs for online companies and then charges a 2% fee of the
value of all transactions. King reported that Staples.com, an online retailer of
office products, recently outsourced its affiliate program to Be Free.
It also reported that Be Free has more than 76,000 affiliates
in its networks that includes clients such as Travelocity Electronic Newsstand,
Reel.com and Network Solutions.
Martha Stone reported in ZDNN in March that GeoCities
(Nasdaq:GCTY) had also recently jumped on the bandwagon and signed a technology
licensing deal with BeFree.com. GeoCities launched its affiliates program to 3.3
million of its Homesteaders.
"I think the future is personal commerce sites ... it
drives a lot of commerce," David Bohnett, chairman and founder of
GeoCities, was quoted as saying. "People want to hear what others have to
say about their recommendations."
"We believe affiliate sales channels can produce 25 to
30 percent of online merchants' revenue if the appropriate feeding is done to
that sales channel. It reaches to places you wouldn't normally get to,..Online
sales of products will be in multibillions of dollars. Millions could come from
each sales channel." said Gordon Hoffstein, CEO of Be Free, also quoted in
the article.
Some of the pitfalls that Web site owners fall into is by
signing up with too many affiliates. According to Nielsen this jeopardizes long
term trust for short term gain. Not only does it provide too many links for a
user to view, but it creates a temptation to link to things that you cannot
fully recommend. By doing this you erode consumer trust. He said that trust is
the most important thing you want to establish on a Web site.
So now that you know all this, how do you determine what
affiliate programs are out there, which ones offer the most commission and which
ones would best lend themselves to your site? Well fortunately there are several
sites out there that focus on providing this free information for consumers.
The Affiliate
Guide site is an excellent resource that gives you detailed information on
all aspects of being an affiliate. The
Associates Programs site provides an affiliates program directory from A to
Z. It lists the name of the affiliate, the commission paid and what sort of
service it provides. It also provides a search engine just in case you happen to
know the name of the affiliate that you want to research.
A good referral guide is found at 4yoursite.com.
This site is even easier to use with clickable subjects listed in Alphabetical
order.
Whether businesses are becoming affiliates to make money from
their sites, or whether they've set up affiliate programs to drive businesses to
their sites, affiliate programs have taken off like nothing before.-- And when
it comes to Web marketing their value should not be underestimated.
Below are some Books You May Find Interesting.
| 
