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How do Affiliate Programs Work?

By:   |   Jul 08, 2018   |   Views: 20   |   Comments: 0

When it comes to marketing, every business aims to makes more from a marketing strategy than it needs to invest. From that perspective affiliate programs could be accused of attempting to have their cake whilst eating it!

A merchant website only pays when the marketing of their website or the affiliate product has been a success. So the merchant gives a commission to the affiliate only when the desired outcome is achieved. This may be diversion of a certain amount of traffic to the website, sales of affiliate products or leads that it gets because of the traffic it receives from the affiliate website. Compare this to conventional advertising programs where the merchant would have to pay with no guarantee of results.

What are  Affiliate Programs?
Affiliate programs are basically a marketing arrangement between a merchant and an affiliate who successfully directs traffic to the merchant website. Affiliate programs are also referred to as associate programs. An affiliate program requires the affiliate to link his relevant and related website to the merchant website and direct traffic its way.

How do Affiliate Programs Work?
Affiliate programs allow the merchant website to benefit from traffic that is already interested in its products before they actually view the webpage that the affiliate website links them too. This promotes the website in a manner that no other internet marketing strategy can.

Affiliate programs have different criteria of payment. The affiliate program may have a €˜pay-per-sale' policy, where the affiliate receives a commission only when a visitor from his website buys a product on the merchant website, or a €˜pay-per-click' criterion, in this case commission is paid for the number of people who clicked on the link to the merchant website.

The affiliate may also have a €˜pay-per-lead' policy wherein the commission is paid only after the visitor from the affiliate website provides a €˜lead' or required information on the website of the merchant.

Affiliate programs may also be two-tiered and the affiliate would then receive a commission for referring another affiliate. While the residual programs allow affiliates to earn when visitors form there website make regular or repeated buys on the merchant site.

Affiliate Programs and Affiliate Networks
A merchant website may choose to handle the administration of the affiliate programs by itself. But this requires a fair amount of dedicated time and effort, especially as a real time tracking system is essential for an affiliate program .

Therefore most merchants prefer to use an affiliate network that not only lists them on its directory, but also handles the tracking process. The affiliate network is like a broker that handles the payment and other business processes between the affiliate and the merchant. Affiliate networks usually charge 20% of the commission as their fee for ensuring the affiliate relationship runs smoothly.

Affiliate programs can be a win-win marketing option for both the merchant and the affiliate.

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