Do Affiliate Marketing Programs Work?
You’ve heard about affiliate marketing programs if you’ve spent any time at all on the Internet in the last few years. It’s a pretty simple concept that has a lot of attractiveness for a prospective marketer –the marketer doesn’t pay, and if the marketing efforts are not successful, there’s little to no cost outlay at the beginning of the process. At its base, it involves paying back a small amount of money for customers referred to your product or service. Most affiliate marketing programs depend on a large number of affiliates to drive traffic. But are the tales of huge money from affiliate marketing true, or is this just another Internet bubble? Let’s take a look at how the process works.
Affiliate marketing is a revenue sharing methodology working solely on the Internet. If you are interested in creating an affiliate marketing program for your product or service, there are a few important business concerns to address. The idea originated with adult websites in the early 1990s, but it wasn’t long until major online retailers like Amazon.com were using it as well. The great majority of affiliate marketing programs pay on a CPS, or “cost per sale” basis – if the web surfer makes a buy through an affiliate link, the affiliate gets paid. Affiliate marketing programs can be a powerful tool for an Internet-savvy small business, but they’re not a short road to fortune. In addition, the managerial component of an affiliate program can become irresistible as the program grows – you will be making payments to hundreds if not thousands of individuals, and if they make over $400 you will be required to submit a 1099 form to the IRS for them as well.
Foremost, you should make sure that you occupy a market niche that can support this kind of venture – competing with an existing program for the same product is fundamentally a fool’s gambit, as their market penetration will make it very difficult for you to build a large enough team of affiliates devoid of offering more competitive financial terms. A smaller number use CPC, or “cost per click” – every click through on an affiliate link pays a (typically much smaller) amount. The URL that is provided to the web browser contains a unique affiliate ID, and clicks using that ID are tallied and credited to the affiliate. Due to fraud and other issues, CPC is on the decline. In addition, many of these programs offer payment options either in cash or credit for the program owner’s business, keeping more of the money in their pockets. Before you invest in developing one, realize their weaknesses and strengths.
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