Affiliate programs go by many names, including affiliate marketing programs, virtual marketing, revenue sharing, associate programs, Internet affiliate marketing, direct marketing, performance marketing, partner marketing, pay-for-performance, and referral programs. The names themselves give you an idea of what is involved. But as Shakespeare put it in Romeo and Juliet: What’s in a name? That which we call a rose by any other name would smell as sweet.
By whatever name it’s called, an affiliate earns a commission from a merchant for generating a desired result. The specific result that must occur for the affiliate to earn a commission is (or should be) spelled out, and specified contractually, when the affiliate signs up for the program.
Warning
Read the fine print carefully when you sign up for an affiliate program. These agreements can be complicated, and you should be completely clear about exactly what commission you are supposed to get under all the circumstances covered by the agreement.
Most often, the event that leads to a commission for the affiliate is (as I’ve already said) a merchant sale resulting from the affiliate’s promotion. But this need not be the case. In some (less common) circumstances, providing a merchant with a qualified sales lead may be enough to generate a commission for the affiliate.
Joining an affiliate program is potentially lucrative, but requires real attention and care. If not done right, you may not make any money from the affiliate programs you have joined.
Unlike other forms of advertising on your site, you really should care about who your affiliate partners are. This is because you do not get paid unless the affiliate links on your site lead fairly directly to a sale. With contextual or sponsored ads, your content is merely a host for advertising; with an affiliate ad, you are a kind of partner.
Understanding affiliate programs can be confusing—there’s not a great deal of objective information available about this kind of advertising, affiliate aggregation sites are complex, and affiliate agreements are often full of legalese and opaque. But fear not! After reading this chapter, you’ll have a pretty good idea of what affiliate programs are, how they work, and how you can craft an affiliate strategy that can help you make money from your web content.
There are a number of steps involved in the affiliate marketing process. Here’s an overview:
A publisher signs up for affiliation with a merchant.
The merchant approves the affiliation and welcomes the publisher into the program.
The publisher is provided with a tracking number for the program.
The merchant makes available to the publisher a variety of graphics and links for the program.
The publisher constructs links to the merchant that incorporate the tracking number and may use the other material supplied by the merchant.
Visitors to the publisher’s site click the links.
The merchant’s site tracks purchases made by visitors from the publisher.
The merchant puts a cookie on the visitor’s computer that tracks additional purchases during a designated period.
The merchant makes periodic reports to the publisher and pays a sales commission based on actual purchases.
These steps are shown in Figure 5-1.
Here are the steps in the process explained in a little more detail:
- 1. Publisher signup
A publisher (an owner of a content-based website or sites) signs up as a web affiliate of a merchant, either using an affiliate aggregator—a company in the business of servicing affiliates for multiple merchants (see Benefits of Affiliate Aggregators)—or directly with the merchant (for example, Amazon.com).
This signup is done using a web interface, although sometimes certain documents (such as a W9 tax form) may need to be filed with the merchant or affiliate aggregator by mail or fax.
You’ll need a Social Security number or an employee tax identification number (EIN) to sign up with most affiliate programs based in the United States.
Note that some solo merchants use affiliate aggregation software to power their programs. In this case, even though the merchant is using software supplied by an aggregator, it is a one-off—you are signing up with one, and only one, merchant.
- 2. Merchant approval
The merchant approves the publisher. Depending on the goals and methods of the merchant, this step may happen automatically or semiautomatically, or it may involve a manual determination of the suitability of the publisher by the merchant.
Marketing goals and guidelines vary; a premium-brand merchant may want to take care that an affiliate is not perceived as déclassé and therefore manually approve all affiliates.
In some cases, merchants have outreach programs that contact sites they may feel are appropriate for affiliation. Other brands may feel that the more inbound links, the better, and let anyone sign up as an affiliate who wants to.
- 3. Tracking ID
Once the publisher has been approved, the publisher is provided with a tracking ID to use in affiliate ads.
Affiliate aggregators use one tracking ID per publisher, even when the publisher has signed up with multiple merchants. But if the merchants you work with don’t affiliate through aggregation software, they will each provide you with a unique tracking ID for use in links.
Be sure to keep these tracking IDs so that you can retrieve them, along with logon information for each affiliate program.
- 4. Creatives
The merchant supplies banner and links—collectively called creatives (see Creatives)—that use the publisher’s tracking ID. The merchant also supplies information about how to create links with the proper tracking ID to the publisher. If the merchant-publisher connection is taking place with the facilitation of an affiliate aggregator, then the aggregator makes it easy for publishers to obtain links.
Banners and links are supplied as HTML code, usually complete with the publisher’s tracking ID embedded in the link, so you don’t need to know much HTML to join an affiliate program. If you are comfortable with HTML, you can, of course, construct your own custom links. Graphics, most often hosted on the merchant’s site, are supplied by the merchant or affiliate aggregator.
- 5. Link construction
The publisher incorporates the supplied HTML in web pages and/or constructs links based on the tracking ID that mesh well with the publisher’s content.
The plausibility of the links that the publisher constructs, their relevance to the publisher content, and their ability to provide added value to site visitors are the most important components in determining whether an affiliate arrangement will make money for the publisher.
- 6. Clicking the affiliate links
Visitors to the publisher’s site click the banners or links that open the merchant’s site; these links contain the tracking ID of the publisher.
- 7. Tracking sales
The merchant site tracks sales that are associated with users who have the publisher’s tracking ID. This mechanism is either home-brewed by the merchant site or uses software infrastructure provided by an affiliate aggregator.
- 8. Placing the cookie
Usually the merchant’s site places a cookie on the visitor’s computer so that the publisher is credited for actions that take place at a later point by the visitor. The amount of time depends on the affiliate program, so you should check individual affiliate program details before you sign up.
- 9. Reports and sales commissions
If the visitor takes a desired action—usually by buying something—the publisher is due a commission (often, as specified in the original agreement, there’s a time delay before any actual money is paid in order to handle issues like merchandise returns). Reputable affiliate programs provide an easy mechanism for publishers to keep track of page and click statistics and what they are owed. The tracking software is managed either by the merchant or by a third-party affiliate aggregator.
Banners, buttons, and links provided by a merchant to an affiliate publisher are generally called creatives, a term deriving from the ad agency business. (Yes, I suppose it takes some creativity to make a good banner!) Creatives vary from fancy, splashy graphics in the GIF format (or even made using Flash) to simple text links pointing at a single product.
There’s a great variety in the kinds and sizes of creatives made available by merchants. To generalize, the most common kinds of creatives are:
- Text links
Simple hypertext links.
- Banners
Graphic images, usually laid out horizontally. Sizes vary, but 480×90 pixels and 600×90 pixels are typical.
- Skyscrapers
Graphic images intended for vertical deployment (hence the nickname skyscraper). Typical dimensions are 120×600 pixels.
- Buttons
Small graphical images, typically 120×90 pixels.
- Search boxes
Search boxes combine graphics, HTML, and text to allow your site visitors to search the merchant’s site.
- Custom designs and sizes
The best affiliate merchant programs provide “instant stores” in a format specific to the business of the merchant.
Figure 5-2 shows one of the dynamic “poster store” creatives available to affiliates of AllPosters.com.
The best creative to use depends upon context and individual taste and what you think will work with visitors to your site. It’s worth spending some time experimenting with different creatives to see whether one performs better than another.
Figure 5-2. Merchants with good affiliate programs provide effective creatives, like this “poster store” display from AllPosters.com
Warning
There’s a tendency on the part of people running affiliate marketing campaigns to produce what are—in my opinion—garish creatives: banners and buttons full of movement and special effects. It’s obvious why merchants do this—to get attention—and it is mostly no skin off their noses if an affiliate website looks a little tasteless. But as a content publisher, you should probably avoid these kinds of creatives. Banners that don’t flash most likely work better and won’t overwhelm your site content.
All creatives used in affiliate marketing provide a mechanism for including the tracking ID of the publisher, so the publisher can be credited for sales or other action events.
Affiliate marketing works best when the merchant has high appeal to the demographics visiting a publisher’s site (see Matching affiliates with content). In fact, some of the most effective affiliate links are simple text links to products that your content discusses or recommends. For example, a digital photography website might want to provide a link to a merchant partner selling Canon or Nikon digital cameras.
Warning
Providing links to a specific product for sale by a merchant partner in the context of a website discussion of the product raises ethical concerns about the separation of editorial and advertising content. Most affiliates do it. You’ll have to resolve this for yourself, but I would suggest that you not include positive content about a product unless you believe in your content, and that you not direct your site vendors to a merchant unless you would buy that product from that merchant yourself.
If you decide to use text links to product items, such as a Nikon D300 dSLR camera, eventually you’ll probably need to understand where the merchant’s tracking ID goes in the HTML used for a specific product link, as well as how to link to a specific product within a merchant’s catalog.
For example, here’s the HTML code for an affiliate link to the B&H Photo site that sends the visitor right to the product page for the Nikon D300 on B&H’s website:
<a href="http://www.bhphotovideo.com/c/product/518489- REG/Nikon_25432_D300_SLR_Digital_Camera.html/BI/XXXX/KBID/YYYY"> buy your Nikon D300 from B&H photo </a>
Note
The affiliate program at B&H adds the publisher tracking IDs to the URL for the link. In this example, an actual ID for B&H has been replaced with XXXX, and the ID for the affiliate aggregation software that B&H uses to power their system replaced with YYYY.
The actual link that the B&H code creates looks just like a normal text link, as you can see in Figure 5-3.
In the Nikon D300 example, the product is designated using its B&H product code. The process for creating one of these links is straightforward (although you do have to be careful to get the details right):
Note
It’s perhaps surprising that text links, when correctly written, are probably the most successful form of affiliate marketing. One reason for this may be that the commercial intent of the hyperlink is not as obvious as when a gaudy banner is used.
An interesting point is that you should understand where the graphic (usually a JPEG or GIF file) used in banner and button creatives is located. For example, B&H, as well as most other major affiliate merchants, hosts these graphics itself. However, sometimes merchants do ask you to copy graphics to your own web server.
Usually, this distinction doesn’t make much difference. It’s less trouble when the graphic is on the merchant’s site and it uses less of your own bandwidth. However, if the merchant’s server goes down, then your site looks (and is) broken. This does happen more often than you might expect. True, if the merchant is not serving creatives, it is probably also not selling product, but if a graphic is missing from your site, it looks worse for you than if a link simply doesn’t work.
The relationship between a content website and an affiliate advertiser is essentially like that of a commission-only sales rep to a manufacturer. You’ll want to examine the same areas that a brick-and-mortar independent sales rep would look at before agreeing to carry a merchant’s products. Start by asking these questions:
Does the merchant have a good reputation?
Will the merchant honor its commitments?
Will the merchant stay in business?
Is there a strong—or at least reasonable—connection between this merchant and your content?
Will your customers want to buy the product?
Will your customers feel that you are adding value—as opposed to trying to profiteer—by linking to the merchant?
More specific to the Web, as I’ve mentioned in the context of hosting creatives, if a merchant’s site goes down, then your links will be broken and you won’t be able to earn a commission. You should feel reasonably good about the website stability of a merchant whose affiliate program you join.
As a web “sales rep,” you should also be concerned with (and investigate as thoroughly as possible) these issues:
The amount of commission you will earn per event
The adequacy of the processes for tracking your sales, crediting you, and paying you
The commitment of the affiliate advertiser to support its affiliate program
The appeal of the offerings of the affiliate advertiser in relationship to the visitors to your site
These issues are worth more discussion.
You can (and should) find out the amount of the sales commission when you sign up for an affiliate program. There are a huge variety of commission structures, but you should probably expect a commission of between 3 percent and 10 percent of what the merchant receives, exclusive of shipping, handling, and sales tax.
Note
As one of the biggest merchants on the Web, Amazon has one of the best and most extensive affiliate programs (see The Amazon.com Associate Program). The Amazon.com commission structure tends to be at the lower end of this range; however, note that on nonbook items, Amazon.com is often acting as a go-between, rather than directly selling actual merchandise.
You should take care to note precisely what action items trigger a sales commission. Most of the time, it is a sale. However, some significant sales may be excluded, and it is important to the health of your pocketbook to know this and not promote excluded items.
In addition, some sites may pay commissions for qualified leads—for example, someone signing up for insurance and completing the paperwork—whether or not the product actually sells (with the insurance example, underwriting wouldn’t have to take place for you to receive your commission).
Be on the lookout for commission structures that reward you for good performance. These kinds of programs can add bonus percentages to the commissions you make and can be quite rewarding if you deliver substantial traffic.
In addition, some affiliate programs simply offer flat fees as incentives. For example, a web hosting affiliate program might pay affiliates $90 each time a visitor to the affiliate site signs up for a web hosting contract of a year or more.
Note
$90 is, in fact, roughly the current going sales commission for an affiliate who sends a site visitor who signs up for a web hosting contract. This may seem like a lot to you, but customers tend to feel fairly locked into the company that hosts their web businesses, even when they find the customer service or technical standards don’t live up to what was promised.
One other variation on the affiliate marketing commission sounds a great deal like a multilevel marketing scheme (and probably is one)—not only do you get a commission on sales generated by traffic from your site, you also get a small percentage of the sales of any affiliate you bring in, and maybe even a share of the sales of affiliates that your affiliates bring in.
Theoretically, these arrangements can go on ad infinitum, with potential for both accounting problems and commissions, provided you get in on a scheme like this early. However, remember the old adage that “if something sounds too good to be true, it probably is.” I’m not saying that all such schemes are bogus or that you can’t make money from them. However, this kind of arrangement does not denote the quality and long-term partner you should be looking for.
Also note that, depending upon the program, commission payout usually does not take place right away. Most affiliate programs build some time in for product returns (or buyer’s remorse). Once it is clear that there will not be any returns, it can still be 30 to 90 days before you are paid. The “float” on the money is simply part of the profit to the merchant and you have to build it into your expectations.
Sales and commission tracking is a serious issue. It’s very important to most affiliate site publishers. If you don’t know that transactions originating from your site are being consistently tracked, then you have no way to be assured that you will be paid the commissions you are owed.
This implies that you should be careful to work only with third-party affiliate aggregators (see Benefits of Affiliate Aggregators) or enroll in programs managed by an extremely reliable vendor, such as Amazon.com (see The Amazon.com Associate Program).
Will the merchant support your efforts with good promotions, incentives, and creatives? Ideally, an affiliate relationship is a long-term partnership. You’d like to know that the merchant supporting the affiliate program is in it for the long haul. Merchant support of affiliate programs makes a big difference in the following areas:
To make an affiliate program work well, you’ll want to be able to provide value to your site visitors in terms of special promotions. These promotions often work well if they are seasonal, but it’s really helpful if you can also offer your site visitors a deal that they can’t get anywhere else.
If you put great effort into an affiliate program and perform well, you should be rewarded with incentives. These incentives typically take the form of a step-up in commission after reaching a volume of sale benchmarks.
To keep your site visitors coming back to an affiliated merchant, you need a steady stream of quality, fresh creatives. The merchant should be willing to work with you if none of their existing creatives fit the look and feel of your site design. If the merchant has a large inventory, the creatives should deliver the ability to go straight to a particular item, as well as the possibility of implementing a search through the entire inventory.
Perhaps the single biggest factor in successful affiliate marketing is the alignment of the content of your site with the affiliate merchant’s offerings. In other words, visitors to your site should be genuinely interested in the products the merchant has to sell.
You’ll have a tough row to hoe if you try to sell cosmetics to visitors of a digital photography site, but you should find it easier to sell these visitors digital photo equipment and processing services. Visitors to a site that provides technical services of use to webmasters are likely candidates for web hosting affiliate programs, but unlikely to buy lingerie or refrigerators.
In the brick-and-mortar world, there used to be talk about a salesperson who could “sell ice to the Inuit.” No website can sell as well as this proverbial salesperson, so you need to use common sense and devise an intelligent strategy to provide affiliate links to products and services that are relevant to your site visitors. Relevant links get clicked, goods get purchased, and publishers get their commissions. Relevance and referrals to quality merchant partners get you a long way toward providing added value when you publish links to an affiliate merchant.
More than any other form of website advertising monetization, affiliate marketing requires careful honing of site content with an intelligent choice of partners and creatives.