So what is an Affiliate?
Good question. Considering I ask what Affiliate Marketing is when I hire, I guess I should do some explaining too.
Affiliate Marketing is the process in which you work with Affiliates to increase your reach on the web. It is an agreement between yourself and the Affiliate - for sending them traffic (and in most cases, sales), they (the website) agrees to pay you a set amount.
So what's the difference between AM and advertising online? With advertising, you are paying most often for a certain set of impressions or a time period of advertising on a site. In Affiliate Marketing, there's no up front cost to you - the affiliate places the adv (text, banner, article/etc) on their site and you only pay for what comes through.
Sounds great! What's the drawbacks?
Well... it can be hard to find good affiliates. It can be difficult to convert traffic that's going through. It can also get very expensive, very fast. If an affiliate sends say, 1,000 sales through and you are paying 10% off your sale... that's $10,000 you've lost.
Obviously, the last is unlikely, but as you often pay a % of your order, it can be detrimental. Also, more and more often, the Affiliate Market is going to long term customers - i.e. the Affiliate gets paid for every order a referred customer makes. So even if the customer makes 10 orders, the affiliate still gets a % of that. Which is something you would not have to do with a normal advertisement. Lifetime Customer Value (LCV) then is lower for affiliate referrals.
Alright, Affiliate Marketing 101 done. I'll get back to this a bit later.
Affiliate Marketing is the process in which you work with Affiliates to increase your reach on the web. It is an agreement between yourself and the Affiliate - for sending them traffic (and in most cases, sales), they (the website) agrees to pay you a set amount.
So what's the difference between AM and advertising online? With advertising, you are paying most often for a certain set of impressions or a time period of advertising on a site. In Affiliate Marketing, there's no up front cost to you - the affiliate places the adv (text, banner, article/etc) on their site and you only pay for what comes through.
Sounds great! What's the drawbacks?
Well... it can be hard to find good affiliates. It can be difficult to convert traffic that's going through. It can also get very expensive, very fast. If an affiliate sends say, 1,000 sales through and you are paying 10% off your sale... that's $10,000 you've lost.
Obviously, the last is unlikely, but as you often pay a % of your order, it can be detrimental. Also, more and more often, the Affiliate Market is going to long term customers - i.e. the Affiliate gets paid for every order a referred customer makes. So even if the customer makes 10 orders, the affiliate still gets a % of that. Which is something you would not have to do with a normal advertisement. Lifetime Customer Value (LCV) then is lower for affiliate referrals.
Alright, Affiliate Marketing 101 done. I'll get back to this a bit later.
posted by Tired | 7:07 AM
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