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Web Hosting Provider Explains Affiliate Programs

Most of us go into the world of search engine marketing eyes wide shut. Oh sure, we’ve all heard the stories of instant billionaires (two guys sold YouTube in less than 24 months for $1.8 billion dollars) but that’s why you heard about it. A story like that is newsworthy. A story about another poor site owner losing a bundle on her effort at SEM makes for a much less interesting morning read.

So look, if you’re going to do this (and you are ‘cause that’s why you’re reading this) here is one outside the box tip to increase your return on investment or ROI – 15% to 25%.

Don’t Become an Affiliate.

What? Is this guy nuts? Web hosting provider explains - Affiliate programs, wherein you provide links to other sites for a fee or percentage, are one of the best and easiest ways to start generating income from a site, right? Just sign on the dotted line, choose the size of the banner you want to display and start getting those click-through dollars.

That’s what lots of new site owners do – find a couple of affiliate programs at Commission Junction, sign up and wait for the money to roll in. Sorry folks, it’s not going to happen. Oh, you might generate a couple of hundred bucks a month after your monthly expenses but that’s not life-altering income. That’s a-nice-dinner-out-once-a-month money!

The reason is pretty simple. Companies looking for affiliates (you) already have their affiliate programs in place. Visit Commission Junction to check out the deals that are already there. Some are better than others, obviously. Some pay out a paltry sum for each click-through visitor who performs the desired action, usually making a purchase. And, if the affiliation is a good one, you get a percentage of that first sale and every sale that customer makes in the years ahead. Unfortunately, that’s where a lot of these affiliate programs fall apart.

You’ll get a flat fee for a sale or a percentage of the first five sales and that’s it. Plus, each mother company has its own set of rules and dos and don’ts. Your site – your site – becomes an extension of some larger company and, to see a decent return on your SEM investment, you’ll need lots of affiliate deals, which can quickly make your home page look like a mall shopper’s worst nightmare.

Create Your Own Affiliations

In the real world, there is no Commission Junction. The owner of the local sporting goods store calls the local Nike distributor and places an order. If the store is big enough, or is generating a nice sales stream for Nike, some negotiations can even take place.

Good example: a website catering to pregnant moms started out using PPC and affiliate programs. There are lots of affiliates for this always-changing market segment. And the site owner did okay, but not okay enough to quit his day job.

Then, one day while on his day job, it hits him. He’s buying products directly from manufacturers from 9-to-5, why not do the same thing for his website!?

Not every manufacturer, not every distributor has an affiliate program. Some have never thought of it. Some don’t see the value – the ROI – of giving up a 15% margin to some site owner just for placing an ad on site. In fact, most small companies don’t have affiliate programs even though they make great products.

So, the owner of the healthy pregnancy site rethought his business model based on his real world job, which was negotiating terms with lots of manufacturers and distributors.

When you become an affiliate, there’s no negotiating. The mother company posts its terms and you can take it or leave it. If you contact the sales manager of a small manufacturing company and offer to sell the company’s products on your popular website, well now you have a little wiggle room for a little negotiation.

Reasonable Terms

Most affiliate programs offer somewhere between 15% and 25% on the first click-through sale made by a visitor to your site. That may sound okay for passive income. You don’t have to do anything extra to earn it. But a 25% margin in retail is laughable. Margins in retail usually run between 40% and 50% depending on how much inventory you’re willing to carry at one time.

So, the owner of the pregnancy site visited some local maternity shops, talked with owners of quality, hand-made toy companies, some organic baby food companies and so on – none of which had an affiliate program.

Didn’t matter. When the site owner finally reached the sales manager, the sales manager was happy to find a new outlet for his or her product. And, in most cases, the company was more than willing to negotiate real-world terms. In fact, most of the small companies the pregnancy site owner contacted had never even heard of affiliate programs. The site owner was pretty much able to negotiate his own terms – terms that benefited the manufacturer and REALLY benefited the site owner.

Research and Be Responsible

You owe it to your customers.

If you’re going to develop your own network of small companies, all selling goods through your site, you – the site owner – have a responsibility to make sure that the products you sell are of high quality and are safe.

There’s plenty of resource material on product testing available to the small site owner so don’t cut corners. Also, ask people – friends and customers – what products and brands they prefer. A personal recommendation from a user is worth a dozen sell sheets.

Once you’ve developed a list of products you’d like to sell on site, contact the sales managers of these small companies and introduce the concept, including your terms. You no longer have to accept the terms offered by a large company. You can negotiate your own terms including who’s going to handle shipping and handling, who handles customer care, what margins does each party get and how are those margins calculated? Before contacting a manufacturer you should know what you want:

• Which product or products do you want to sell?

• Who will manage order fulfillment and customer care? (Do you really want 200 crib sets stored in the spare room?)

• What margin will the manufacturer give you on direct sales? (40% is good. Take it)

• What guaranties of quality will the manufacturer make? (100% guaranteed – that’s what you want)

• How will logistics be handled. For example, you want all shipping documentation to show your name and logo – not the name and logo of the manufacturer – so how will you handle that?

There are lots of small companies that don’t have affiliate programs because they never thought of it. But today, the owner of the pregnancy site HAS quit his day job and just bought a new house. How? By creating his own affiliations, just like we do in the real world.

If you want to keep things simple, stick with existing affiliate programs and take what you can get. But, if you want to make the big bucks, do the research, locate the right companies and contact them with an offer they can’t refuse.

The improvement in site ROI will be anywhere between 15% to 25%. You’ll be selling a product that’s unique on-line and you’ll make a profit on every sale you make through your site – forever.

Now that’s an affiliate program any site owner can enjoy. So what are you waiting for. Start researching, start visiting trade shows, making telephone calls and reading through industry magazines to make the contacts you need to create your own affiliate program.

That’s where the real money is.

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Does Affiliate Marketing Work? It Does and Here’s How

Web Hosting and Affiliate marketing can make you a lot of money – in some cases, more than you make on direct sales. The owner of a popular web site for information on women’s health averages $400 a day just in affiliate earnings. And he’s just begun. Adding affiliate marketing to your plan for an on-line business may make a so-so idea a great idea.

What is affiliate marketing?

It’s pretty simple, actually. You become an affiliate of another company that maintains a web site. You place a link to the home site on your “affiliate” site. Then, whenever a visitor to your site clicks through to the home site and performs the MDA (most desired action) you make money.

With some companies, you get a flat fee for each “referral.” Other companies will cut you in on the total spent by one of your customers. Either way, it’s totally passive income (you don’t have to do anything in addition) and it’s a great way to increase the bottom line productivity of your site. If you do it right.

How do I find companies that have affiliate programs?

There are sites that do nothing but hook up web store owners with affiliates. Two of the most popular are Commission Junction and Click Bank. These sites (and others) list hundreds of companies with affiliate programs. On some sites, you can see a list of interested companies. On others, you have to sign up and open an account first, which is no big deal.

Each affiliate agreement is different so be sure to read and understand all of the agreement a company offers. You’ll find companies that are huge, multi-national conglomerates to Pete’s Drywall, all willing to take you on as a partner in selling their goods or services.

There’s another way to become an affiliate – one that can return even more. If you see a product that you think your site visitors would buy, call the producer or the distributor of the item on the telephone or drop the company an email through its company site expressing interest in selling the company’s products on your web site.

It’s not a tough sale because it’s a “no-lose” proposition for the company – it  doesn’t cost them anything – so you’re in a good position to negotiate a good deal. All you have to do is capture the sale, pass on order information to the manufacturer and enjoy your margins on each sale you make. Now, instead of being an affiliate, you’ve become a retailer buying at wholesale (usually 40% below retail) and selling at retail. This strategy has worked well for many successful sites and it’s brought in a lot more companies that now recognize the value of these affiliate marketing programs. This gives you more options, but read on. You don’t want to overdo this thing.

What’s the most desired action (MDA)?

In many cases, the MDA is pretty obvious. The visitor has to make a purchase. If the click-through doesn’t buy anything, you don’t make any money. Some companies identify a customer as “yours” for a period of time – six months to forever – and you receive payment even if the visitor returns a few weeks later.

Sometimes, however, the MDA is something other than making a purchase. In some cases, the MDA is an opt-in. If the visitor from your site signs up for a weekly newsletter you get paid. The home site develops a very nice database of subscribers and now that the company and individual subscriber have a relationship, the company can contact the new subscriber and it doesn’t fall into the spam category. Many companies use newsletters or other products (e-books, for example) as bait to build a subscriber list. They then follow up with a series of auto-responders – computer-managed e-mail campaigns – to solicit additional business from the opt-in.

Finally, the MDA may be the completion of a form. It may be an application for a new mortgage or your opinion on world events. You, the affiliate, only get paid when a visitor from your site completes the form.

From this, you can see that the MDA might be harder to achieve if it’s an opt-in or a form to be completed. These are discretionary actions. They aren’t necessities. You’ll have more success if you become an affiliate of a company that sells products. Often, these are needs-driven sales so you’ll see a higher conversion rate.

How do I know how much I’ve earned?

When you decide to become an affiliate, you register with Commission Junction and/or Click Bank and you open an account. These companies then manage all of the book work for a small percentage, of course, but you know you’re being paid what’s coming to you.

With your registered account, you can also track your progress each month. You can see how much each affiliate is making for you, how many have clicked on the link and how many have performed the MDA.

There’s absolutely no hassles or additional bookkeeping involved. All you’re doing is renting a little space on your site in return for (hopefully) steady revenue each month.

How do I choose the companies that I want to work with?

You have to do your research. Take your time. Compare programs.

For example, you’ll find a number of companies listed on Commission Junction that sell products specifically for children. If your site is “family-oriented,” you could become an affiliate of all of these companies, but some are going to draw more attention from visitors than others. It helps to know what your customers like, and what they want and need.

Now, it’s not a good idea to load up your web site with affiliate links. It makes your home page look cluttered, for one thing. But more importantly, each one of these links is a doorway off of your site. With dozens of doorways to other sites, you may find that you’re losing direct sales in exchange for affiliate earnings. Not a good idea.

You have to grow your business, your mainline, direct sales business, and view affiliate income as an adjunct to your main revenue stream. Chances are, if you load up your site with affiliate links, you’ll lose in the search engine page rank competition, too. Spiders will count up those links and, if there are too many, identify your site as a “links farm” – a site that simply contains links to other sites in order to generate PPC and affiliate income. Basically, a waste of time for the search engine user and a big no-no for site owners.

Limit the number of companies with which you partner. Select the company that offers the best terms and has the widest brand recognition within a particular product category, i.e., children’s toys, children’s furniture, kids clothes and so on. This, of course, assumes the site is kid-related, which gets us to another critical consideration when selecting companies with which you might do business.

Don’t become an affiliate of a company that sells products that aren’t related to the topicality of your own site. If you sell home furnishings, a link to a tire company, no matter how good the terms, is not going to do you any good.

First, it’s not going to generate many click-throughs because the visitors arriving on your site are looking for drapes or a couch, not snow tires. Second, and more importantly, search engines take a very dim view of this type of non-related link. Remember the prime objective of a search engine is to deliver relevant, useful results to its users. Well, if you have a link to a tire manufacturer on your home décor site, spiders will determine that’s a useless link and you’ll get spider-slammed.

Stick with links that will actually help your visitors further their searches, but don’t overstuff your site with affiliate links. It won’t deliver the desired results and you may get hurt in your PR.

Affiliate sales are growing and more site owners are using them to grow their bottom lines. Just move with care, read the complete affiliate agreement and don’t turn your site into a links farm. Follow those simple guidelines and watch your revenues grow – fast!