Understanding Affiliate Programs
There are various different types of affiliate programs that you will encounter in yoursearch. Before embarking on your search to add an affiliate program to your site, youshould understand the following:
- Affiliate programs do not yield significant revenue. Aggressive marketing of your affiliate programs can yield revenue in the low hundreds of dollars per month. While that's good money, it makes more sense to view your affiliate revenue as offsetting a cost -- such as the cost to host your site -- rather than as true income.
- Some affiliate programs are disreputable. Avoid those programs that charge fees; affiliate programs should always be free. Beware of programs that require minimum sales levels to be eligible for commissions; programs that won't disclose traffic figures and other important data; programs offered by unknown or sketchy sites; programs you learn about from spammers; and programs that feature policies that are subject to change without notice.
- Affiliate programs send your customers off-site to make their purchases. Affiliate programs are a great way to augment your site with related products you typically wouldn't or couldn't stock on our own. But remember, the commission you're earning is in trade for the buying customer who is no longer on your site to spend money. It costs a lot to attract a buying customer -- new customer acquisition costs start at $25 per customer and go into the hundreds and even thousands of dollars -- so don't let yours go too cheaply or too easily.
Understanding Commission Structures
Each time a visitor at your site clicks the affiliate's link on your site, you'redelivering a highly qualified lead. To make sure you get the most for the highly qualifiedleads you send, study the different commission structures that affiliate programs offer.
Straight commission. Also called standard programs, under this most common of all affiliate varieties, you earn a straight commission (typically5% to 20% paid to you monthly or quarterly) for all referred sales. The most popular affiliateprograms, including Amazon.com, Beyond.com, eToys, and Reel.com are all standard programs.
Two-tier programs. This commission structure is similar to multilevelmarketing. You make high commissions on sales referred from your own site, as well as asmaller percentage on referrals from all sites that you recruit for the affiliate network.While this requires more effort on your part, it may pay off in increased commissionrevenue, since the two-tier model offers a cut of sales generated by all new affiliatessigning up with the merchant through your site.
Fee per ad or fee per click. The third and rarest type of affiliateprogram pays a commission for each time a banner advertisement is displayed and/or clickedon your site. For example, AdXchange pays acommission each time its ad is displayed on your site. eAds pays a commission for every click-through the ad receives.
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