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Definition of "Affiliate" or "Affiliate Marketing"
The term affiliate or affiliate marketing refers to sales or marketing usually done on the internet where the owner of a URL, page, or site is paid to place or show other company's offers. Affiliate marketing relies on web site traffic and takes the form of emails, banner advertising, pop-ups, pop-unders, etc.
Advertisers and merchants are typically referred to as "affiliate merchants" and the publishers, salespeople, or web site owners are referred to as "affiliates." An affiliate program gives wider distribution to the affiliate merchant's products in return for compensation based on performance. Performance is usually based on sales, clicks on and advertisement, or the number of times an advertisement is shown.
Affiliates face the daunting task of choosing from among the thousands of available programs to maximize revenue. Comparing the commission rates is not enough; fine print in the contract must be checked for red flags, destination sites and creative units must be analyzed for conversion potential, and the financial strength of merchant partners must be evaluated.
Benefits of affiliate marketing include the potential for automating much of the advertising process (accepting & approving applications, generating unique sales links, tracking & reporting of results) and payment only for desired results (sales, registrations, clicks). Paying only for performance shifts much of the advertising risk from the merchants to the affiliates, although merchants still assume some risk of fraud from partner sites.
Affiliates have traditionally been smaller sites run by individual webmasters and small businesses, but some large companies have integrated affiliate programs into their revenue mix. Some companies even participate as a merchant of their own program and as an affiliate of other programs. Affiliate marketing has contributed to the rise of many leading online companies. Amazon.com, one of the first significant adopters, now has hundreds of thousands of affiliate relationships. It is not uncommon to see industries where the major players have affiliate programs--often structured in a similar manner and making similar competitive changes over time.
Over the last five years, many scam artists created sites that appear to be legitimate "Product Review" sites, but are actually affiliate marketing scams designed to prey on the trust of average computer users. Make sure to research any product and companies suggesting products before making purchases. Two of the many ways to tell if a site honest or a scam are: First, is the site written like a blog with a lot of subjective comments, but little objective or scientific testing. Second, is to review the information presented in the status bar. |
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