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Affiliate marketing is still an essential digital media channel for many transactional e-commerce sites for retailers, travel and financial services. Affiliate marketing is also a revenue model to consider for site owners, especially online publishers. Here's the issues to think about it to manage it effectively.
Success in affiliate marketing for the merchant is all about building the right relationships with the right types of affiliate. Most businesses find a 95:5 rule for affiliates, so the first thing to get right is to choose the right affiliates. To form the relationship, you'll need a great offer since if an affiliate is good, they'll have other great offers already.
Affiliates are driven by your potential measures through their Earnings Per Click (EPC) that they offer you or they may compare to ad revenue based on eCPM - earnings per thousand pages served. So you need to think of affiliates like publishers and consider these factors which will increase the value they can generate from you:
Affiliate marketing is not so suitable for business products or lower priced consumer products since it won't be sufficiently profitable for the affiliates, so it may be difficult to recruit sufficient affiliates.
You could say that Affiliate marketing is the ultimate form of marketing communications since it's a "pay-per-performance marketing" method i.e. it's a commission-based arrangement where the merchant or business selling products only pays when they make the sale or get a lead.
The graphic summarises the affiliate marketing process. You can see that the when a visitor to an affiliate site (who may be an online publisher or aggregator) clicks through to a merchant site, this prospect will be tracked through a cookie being placed on the visitor's computer. If the prospect later transacts within an agreed period, i.e. usually 1, 7, 30, 60 or 90 days, the affiliate will be credited with the sale through an agreed amount (percentage of sale or fixed amount).
Compare this to the wastage with traditional advertising or direct mail! It can also drive a volume of business in a range of sectors - many banks, travel companies or online retailers get more than 10% of their sales from a well-run affiliate marketing programme.
These are the related techniques which we recommend as important for managing Affiliate marketing effectively. View these hub pages giving details on best practices, statistics and examples for these techniques: