Description of Affiliate Marketing
Affiliate Marketing is a mutual revenue sharing agreement between the merchant and the affiliate. The merchant wants to sell, but he may lack sufficient buyers. Buyers want to buy, but from whom? Enter the affiliate marketer who connects these two and the transaction is consummated. In the process the marketer has earned a commission.
Affiliate marketing became popular with sellers because: 1) As a fee for transaction model, no major selling costs were incurred until a sale was made, and 2) Sellers only pay Marketers when the new introduction results in a lead or sale, making a low risk, good reward proposition for both parties. For the marketer the advantages are: 1) No need to purchase or manufacture a product, 2) In most cases, no need to warehouse or ship a product, 3) No need to invoice or collect for the sale, 4) No credit concerns.
Affiliate Marketing is usually funded as a fee-for- transaction program. The fee can take various forms depending on the offer made by the seller. It can be a percentage of the selling price. It can be a cost per action where the selling is largely done by the seller. It can be paid as a cost per click or a cost per mile.
Some sellers offer a multi-tiered program were the commissions are paid not only on the first sale but on subsequent purchases by the same buyer as well. Often these later purchases earn a smaller commission than the first sale. Also there are MLM network marketing programs which can which offer much more complex programs than the more standard programs do.
History of Affiliate Marketing
Amazon was not the first seller to offer an affiliate marketing program but is largely credited with leading the way. In 1996 they launched an associate program which was a for-runner of Affiliate Marketing. Basically the program allowed affiliates to place a “live” banner on their website. When a buyer clicked on the banner a buy signal was sent to Amazon’s home page, and a book was sold. The affiliate received a commission, the buyer received a book,and Amazon recorded a sale. This concept has had immense growth so today Amazon is one of the major retailers in the U.S. market
Affiliate Marketing Now
From its early beginnings Affiliate Marketing has become a growing force in today’s commerce. With sales estimated to be in the billions of dollars, it’s future seems very bright. Successful affiliate marketers tend to gravitate to sellers of big ticket items where their internal cost per action is rewarded more handsomely.
Growth has not been without some bumps in its path. Not every commission finds its way to the affiliate marketer who earns it. The earlier method for the tracking of the transaction allowed either less than honest sellers and/or hackers to disconnect the established path for the commissions for their own personal gain. Subsequent meetings between marketers and sellers have reduced these black practices. Moreover, marketers can choose to deal only with sellers who are deemed to be honest.
The Popularity of Affiliate Marketing
Affiliate marketing is part of a sales transaction done to earn a commission. The terms are pre-established by the seller. As such, the seller accepts a diverse community of affiliates since the sellers have little or no financial commitment until a transaction occurs. Both the seller and the marketer have low upfront risk and potentially high rewards making both willing participants in establishing a mutual agreement. Because of this, Affiliate Marketing has become a very significant part of Internet Marketing.
In addition, affiliate marketing gains its popularity from being universal and available to many people throughout the world. It is easy and fast to learn and provides affiliates with some extra income. It can also be a work from home project.
The most widely used affiliate marketing programs today use a commission based revenue sharing method. Others use a cost per action, cost per click or cost per mile. These all are one tiered meaning the earnings are paid for only the first transaction.
However, two-tier programs exist in fewer affiliate programs. Here the affiliate earns not only for the first transaction but also for subsequent transactions should the same customer purchase additional goods at a later date.
Beyond these, there are multi-level marketing and other more complex schemes which have their individual methods of attracting and retaining marketers.
So which markets are currently the most active in affiliate marketing? The adult market, gambling and retail industries are reported to be current leaders. Other growing markets are the travel, phone, finance and the entertainment markets.
Where Can A New Affiliate Begin?
The two most popular sites to thoroughly check out when planning an affiliate marketing start-up are ClickBank and Commission Junction. These sites are like massive wholesalers offering a wide variety of goods. ClickBank is the internet’s leading retailer of digital products. It offers buyers, sellers and/or promoters the opportunity to deal in digital goods from one central location. Commission Junction is a large online advertising company operating in the affiliate marketing industry. As such it is the largest affiliate network in North America and has offices world-wide. It also sells hard goods.
A prospective marketer can easily sign up with one or both. He will be guided through their operating procedures. Soon he can be selling goods from their warehouses and earn commissions on each successful sale. But have no delusions, success demands an equal portion of effort to make an affiliate marketing program go!
To further discuss affiliate marketing or to leave a comment,, please visit http://www.onlineachievers.com.