Affiliate marketing is not as new as people think it is, instead it has been employed ever since the birth of the internet. Affiliate marketing or performance marketing as it has been renamed recently is one of the best ways to market products and service. The way affiliate marketing works is that a company or any product owner in general contacts other websites. These websites are known as affiliates, the product owner then offers the affiliates to offer their products and services for sale and the company then pays a commission on every sale. The payment terms can be different considering various variables, but the idea remains the same.
For sellers, affiliate marketing is a great strategy as it is low cost and also risk-free. In this way, sellers can find profit through the web traffic other websites are getting and this can help increase sales. Website owners also enjoy this business strategy as it is an easy way to make their website profitable. It might be difficult to find product owners at first, but once they come, it is an easy way to earn money.
There are many companies that have launched affiliate programs, and for a long time, it was thought that Amazon was the first one to do so. However, this statement is utterly false because PC Flowers and Gifts launched their affiliate program 7 years before Amazon did in 1989. Back then, the internet was not widely available and that is why affiliate marketing was not able to get the love that it deserved. However, many years have passed since then, and now performance marketing has grown rapidly and it continues down that path. Affiliate programs are good and all, but wouldn’t it be better to start your own affiliate program. Here we will take a look at a couple of different ways that you can start your own affiliate program and add more value to your existing business.
Is it Worth the Time?
Affiliate marketing has come a long way since it first emerged, and it is safe to say that as of now, it is worth a lot. According to statistics, affiliate programs in the UK alone generated over £1.3 billion in sales, this shows that using affiliate marketing for your business could be a great way to diversify your sales and grow the business. You might be all excited right now and would want to start your program right away. But before we do that, let’s take a look at the different ways that you can pay affiliates as it is one of the most important parts.
There are four main types of remuneration models that affiliate programs use and each model has its advantages and disadvantages. So, choosing the best model comes down to what you want from your affiliate program. The four types of models are as follows:
- CPL – Cost Per Lead
- CPS – Cost Per Sale
- CPC – Cost Per Click
- CPA – Cost Per Action
Before you choose any one of these models, you need to ask yourself a few questions. The first being that does you sell your products online and do you have the means to track the sale from beginning to end? The next question is whether you have a long sales cycles that also have a lot of follow-ups? Lastly, are you looking to build an email subscription or just want to drive traffic?
As you can see, it is very difficult to use any one method on any website. For example, you cannot use the CPS model on a website that doesn’t have the means to monitor transactions. So, before you start to focus on other details, it is probably a better idea to focus on which commission model is best for your business. One thing that you need to keep in mind is that there is no right and wrong when you are making this decision. You only need to focus on the risks and advantages and that is it.
Running Your Program
Once you have made all the necessary decisions, it is time to focus on how you are actually going to manage your affiliate program. There are two main ways to do that, one is to in-house and the other is to use an outsourced network.
If you wish to keep costs at a minimum then the in-house strategy can be very beneficial. This strategy is most effective if you are looking to start small and only have a small number of affiliates. By a small number of affiliates, we mean around 20 to 30 affiliates. Below are a few ways that you can use to develop the affiliate program.
Google Analytics is one of the first tools that you need to start using, it is completely free and you can use it to analyze the activity on your website. If you set up different URLs for the affiliates then you can easily combine the tracking and track the activity that they generate for you. You can also use any of the commission models as long as you have goal tracking. With this method, the only manual work that you will have to do is the payment, however, with only a handful of affiliates, this might not be as difficult.
Aside from Google Analytics, there are other places you can try as well. Take HasOffers for example, it is completely cloud based and it allows you to run your affiliate program. You can even create a network and offer different products from a whole array of websites.
Post Affiliate Pro
Unlike HasOffers, Post Affiliate Pro runs on your own server, but it is extremely powerful. It is a great way to build your affiliate program and it also offers a ton of commission structures. You can also integrate payment methods so that you don’t have to do anything manually.
Pros and Cons of In-House
The pros are:
- A private network of affiliates
- Offers full control
- Very cheap
- Requires a lot of management
- Requires more time to grow the program
Outsource programs are completely different from in-house programs, here you can just pay some money and sign up to a third-party affiliate network. This network will have all the software that you need to track sales. In addition to that, these networks already have hundreds of affiliates that become accessible to you so that you can promote your products there. There are many different sizes of affiliate networks that you can find, and the bigger the network is the higher the fee is going to be. Some of the biggest networks are Tradedoubler, Commission Junction and AffiliateWindow.
If you don’t wish to spend a ton of money, then you can opt for low cost and smaller networks such as Affilinet, Linkshare, Webgains, and Affiliatefuture. If you only have a specific product in mind, then you can opt for niche affiliate programs. In this way, you can find only those affiliates that are most relevant.
- Large number of affiliates are accessible.
- Offers a higher number of sales.
- Offers more brand exposure.
- Comes at a higher price point.
- Requires a bit of self-management.
- Important to choose the right niche network.
Starting an affiliate program is not as easy as most people think. As you can see, there is a lot of homework that needs to be done, before you can make any kind of decision. However, if you spend some time on developing a viable strategy then it can lead to your success. It is not necessary for you to choose either in-house or outsource programs because you can make the switch anytime you want. However, it is recommended that in the beginning, you start from the in-house program and then slowly move towards outsourcing.