One of the many ways to generate income from the internet is with Affiliate Marketing.  This is one of the single most used methods of earning income using the internet.  There are many who make their entire personal income from this marketing method.

One of the principal reasons for affiliate marketing’s success is the low cost to be engaged in opportunity.  If you have a computer, a website, you have most of what is needed to generate income.  Add some advertising, or directing some of your followers to other websites where they can purchase items is all it takes.

While it may seem to easy to be true–it isn’t.  However, with little effort you may only receive little reward.  Serious income potential will, no doubt, require more effort and knowledge–neither of which is beyond your capability.

So, just what is Affiliate Marketing?

The world of commerce–buying and selling–is basic.  We all do it–we are involved when we go to the mall or the grocery store to purchase something.  In e-commerce the principles are the same:  bringing sellers of goods and services to willing buyers.  As an affiliate marketer you help in this “bringing willing buyers to sellers” for which you get paid for your effort at bringing the two parties together.  We learn about these products or services we wish to buy by word of mouth, or from advertising.

Your job as an affiliate marketer is to help drive customers (website traffic) to the merchants or e-commerce sellers who will pay you, as the initiator, a commission on the completion of a sale or service.

What you have as an affiliate marketer is a “revenue sharing agreement” with the merchant.  Your responsibilities are to advertise and promote their products or services.  You do this on your website using relevant advertisements and articles.

Affiliate marketing in a nutshell is becoming an advertiser on your website(s) for others offering goods and services for sale.  You in turn receive a “commission” for directing your website followers to these businesses in the hopes of these referral’s make a purchase.  There are additional opportunities with this process which we will discuss — for now you need only  know the basic  concept to get started.  Below is a flow chart that illustrates the process thanks to Wikipedia:

As you can see by this simple illustration the concept and process is very simple.

Simply stated, affiliate marketing is an internet marketing based revenue sharing program. You are paid for letting your website become an advertising medium for other businesses. Your website is reaching potential buyers of products and services these providers would be happy to pay you to have access to.

While this program appears to be too easy to be true, be assured that to be truly successful will require a great deal of effort on your part.  Keeping your website fresh and filled with appropriate and usable content will be a challenge . . . not undo-able, but will take focus and effort nonetheless!

· CPA – Cost per action

· CPC – Cost per click

· CPM – Cost per mille

Let’s define a little more each of these compensation options.

CPS – Cost per sale:

The majority of affiliate marketers are paid using this model.  Often referred to as “pay-for-performance.”

With this payment structure, affiliate marketers post advertisements on their website(s) from other online marketers or businesses. As viewers to their website are redirected to the advertiser’s online site via linking, and purchase something, the affiliate marketer receives a commission from the advertiser.

The significant advantage to this practice is the mutual benefit to each side of the opportunity:

• The only expense to the online marketer is to pay the referring affiliate marketer for sales made. Because the online marketer’s advertisement is exposed to potential customers on other than their own website(s), they gain greater exposure—more so than they would have had on their own. Because the affiliate marketer’s website is generally focused on a specific theme of mutual interest to the online marketer and browsers to their site, referrals are more targeted potential customers . . . which is what the online marketer is seeking. The conversion of referrals to customers, however, becomes the responsibility of the online marketer–which can be a draw back for the affiliate marketer.
• The advantage to the affiliate marketer is in not having to deal with the issues related to selling a product, i.e. maintaining inventory, shipping, collection of monies from sales, etc. Affiliates income opportunity rests with their placing advertising on their site that can provide referrals to the advertiser(s). The affiliate’s challenge is to keep their site filled with good content to draw browsers who could become potential referrals to the online marketer. The online marketer’s advantage is not having to pay out addition money to advertise, and only pays on completed sales–a “win-win” situation.

CPA – Cost per action:

Affiliates being compensated with Cost per action (CPA) often referred to as “lead-for-subscription,” like the cost per sale (CPS), receive a commission from the advertiser after a sale is made, but the referrals must take some additional qualifying action—such as signing up for a demonstration or newsletter, as examples. The challenge and risk for the affiliate marketer is in providing content interesting enough, and directed towards encouraging those who browse their site, into taking the necessary action to receive their compensation. In this process the affiliate marketer is directing more potential “qualified” prospects to the advertiser. One would expect a higher “closing ratio” from this additional effort, but not necessarily.

CPC – Cost per click:

This method of creating income for affiliates has diminished over time due to click fraud. The affiliate marketer is paid only when a searcher clicks on an advertisers listing which results in connecting to the advertiser’s website. Google Adsense has a cost per click (CPC) program. Advertisers use keywords and keyword phrases that are relevant to their marketing to help better target referrals, or those who click through to their site from another website (an affiliate site). The quality of your website and the amount of traffic it receives will have a lot to do with your income potential.

CPM – Cost per mille:

Cost per mille only requires the affiliate marketer to make their website available for posting advertiser’s ad on your website. The amount of payment is based on the number of impressions made. Mille (represents a unit of one thousand – 1,000). Hear again, traffic on your site makes the difference. Advertiser’s make the assumption that exposure by itself will create the flow of sales they seek, and are willing to pay you to post their ads for this exposure.

Multi Channels of Payment:

There are programs, limited as the may be, are created with sub-partners or participants, where payments can be made to affiliates who “sign-up” other affiliates for the same program.  The ”top” affiliate in this tiered program can receive additional commissions for business directed from the affiliates they signed-up.  This isn’t a program most affiliate marketers will be engaged in.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.

This entry was posted on Wednesday, May 13th, 2009 at 11:15 am and is filed under Affiliate Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.