Affiliate Marketing – Strong Online Business Model
Affiliate marketing is a popular type of marketing wherein two or more companies unite their marketing efforts by promoting the products or services of each other. Partnerships can involve affiliate networks, management companies, in-house affiliate managers, third party vendors, and others.
In these types of agreements, businesses get together for a mutual benefit. Both share the marketing and promotion efforts, and the profits are then split between them. How revenue is split depends on which business is able to attract more customers. For instance, if one affiliate site is more popular than the other, the more popular site is rewarded for it. Most commissions are distributed to those affiliate sites that generate good steady traffic into their affiliate sites.
Amazon is a great example of successful affiliate marketing. Amazon first used this type of marketing over ten years ago by posting banners in various websites. When users linked to Amazon through an affiliate site, that site would be paid a commission. Reports show that in 2007, affiliate marketing generated over $1 billion of sales, and over $2 billion in 2008. And the numbers continue to increase.
However, affiliate marketing programs have seen the most success in adult gambling and retail. Statistics show that future growth will be seen in the cell phone industry, finance, and travel. The entertainment industry, which includes gaming, also looks very promising. Internet-related services such as broadband are also starting to utilize affiliate marketing. Some different types of affiliate programs that you can take a look at are Search affiliates, Comparison shopping websites, Loyalty websites, Personal websites, and Weblogs.
Display advertising and paid search are other examples of affiliate programs. Another type of program is called cost-per-mille, which is where clicks are not tracked. The affiliate site only needs to display an ad, and he will get a fixed amount whether customers click on it or not. This is good because you get a steady income, but at the same time you may be missing out on some good commissions if your website generates good traffic.
A final alternative method is called pay-per-click. Here, a customer sees a banner than interests him and he clicks on the link, that click is recorded and the affiliate website will be paid for that click. However, fraudulent activities are occasionally committed with pay-per-click, and so affiliates must exercise caution.
Some companies have huge networks of affiliate partners. They are often formed in hierarchical patterns. The referral commission is distributed accordingly among a number of partners and subpartners. Oftentimes, the partners don’t even know that they are affiliated to each other, yet they still manage to help each other generate income. Quixtar is a great example of such, which is a division of Alticor who is also known as Amway.
One of the most attractive aspects of affiliate marketing is that the merchant does not have to pay an affiliate unless revenue is collected. This type of method is based purely on performance. This way, you do not have to pay for advertising that did not generate income, which is a big help for start-up companies that have limited capital and cannot afford to fund large marketing campaigns.
Affiliate marketing can only get stronger with the continued growth of the internet. Numbers show that the number of people that surf the internet and start online business is steadily increasing. You can be sure that affiliate marketing will start to play a bigger role in the advertising industry.