Making Money with Affiliate Programs

Introduction

An affiliate program is a business model utilized by product owners, retailers, or merchants in which an affiliate marketer is compensated for each visitor, subscriber, or sale provided to the respective product owner, retailer, or merchant. For example, if ABC Store is selling a product through their website, and you send a potential customer to their site who subsequently purchases their product, if you are a registered affiliate marketer for their website, then they would pay you a commission for the sale, since you sent them the customer and in doing so generated a sale for their site. When discussing Internet affiliate marketing, commissions can range from a fraction of a percent to over 75%. Online stores, who deal in physical items such as CD’s and books, tend to pay lower commissions than sites that deal in digitally-delivered products such as e-books and software. This is because profit margins are typically much higher with digitally-delivered products than with physical products. For the purposes of the information that follows, we will assume that you are interested in promoting higher-commission digital products (although the same techniques can be used for lower-commission products as well).

Advantages

Affiliate programs are gaining popularity because they provide people with an opportunity to earn income online without needing to manage or develop a product. Some of the advantages of affiliate marketing are:

• Affiliate marketers do not have to produce their own product. This saves them from having to spend considerable sums of money and time. All risk and capital associated with producing a quality product, website development, payment processing, and so on are on the shoulders of the merchant or product owner.
• Affiliate marketers do not have to handle customer service, returns, and payment processing issues.
• Affiliate marketers can focus their efforts on products that already have a proven track record, or that they good reason to believe are going to be successful.
• Affiliate marketing can be approached with minimal financial expenditure.
• Many avenues of promotion are open to affiliate marketers. Both online and traditional marketing methods can be used to effectively promote somebody else’s product and generate sales and commissions.
• Affiliate marketing can be done part-time or full-time, as a hobby or as a profession.
• There are considerable resources available, in the form of information, software, and services, to help affiliate markers of all experience levels to succeed.

Problems

Not everything with affiliate marketing is rosy, however. Some of the problems or disadvantages affiliate marketers can experience are:

• High expectations and product hype: In an effort to get affiliates to start marketing their products, product owners and merchants often make highly exaggerated claims about how much money will be made, how little time will be spent, and how quickly results will be obtained when marketing their products.
• High advertising costs: In moderately competitive and highly competitive markets, it can be very difficult for beginning marketers to obtain high search engine rankings in popular search engines such as Google and Yahoo. The pay-per-click approach allows for immediate results, but also can come at prohibitively high cost. Text ads, full page ads, banner ads, ezine ads, and other forms of marketing can also be expensive in competitive niches. Free or low-cost methods, unless selected carefully, usually do not yield quality results.
• Skill and patience are required: Contrary to what many sales copies claim, affiliate marketing does require skill, time, and patience. If a person goes into affiliate marketing with the idea that they are going to be making a lot of money right off the bat and that all is going to be quick and easy, they are liable for some disappointment.
• Fraud and Lost Credit: Unfortunately, some affiliate programs cheat their affiliate out of commissions by not crediting them for the sales they generate. Also, affiliate programs that rely on cookies to track referrals may not credit affiliate’s accounts due to some antivirus, antispyware, and internet security programs blocking or deleting the tracking cookie from the buyer’s internet browser.

Despite the potential problems, affiliate marketing can be a viable money-making option for imaginative, entrepreneurial people who enjoy working on the computer and who are willing to learn and to stretch their horizons. There are certainly many people who do very well with affiliate programs.