Affiliate Marketing

To reward partner companies for introducing new clients. Explanation of Affiliate Marketing.

What is Affiliate Marketing? Description

It is a promotion method that can be used to reward partner companies for introducing new clients. It can be seen as a digital form of franchising or as an electronic joint venture. The Merchant normally delivers advertising banners and web links to their affiliates. Also the Merchant grants a commission. Normally in return for a click-through to their website, subscription to their service, or purchase of their products which is generated via these links. Affiliates place a tracking code for these ads into their web pages. Each time a visitor on the affiliate's website clicks towards the website of the Merchant, that transaction is registered online. Compensation for the Affiliate may be made based on:

Pay per click. A certain value for each visit.
Pay per lead. A certain value for each registration or for each qualified registration.
Pay per sale. A certain value for each customer or sale.

Origin of Affiliate Marketing. History

Affiliate Marketing can be seen as the modern variant of paying finder's fees to individuals or organizations who introduce new prospects or clients to a business. In July 1996, Amazon.com launched an associates program that became a huge success.

Usage of Affiliate Marketing. Applications

Online advertising.
The approach is most effective when placed in context with quality content.
Some third parties such as LinkShare, Commission Junction and also Google offer affiliate networks and provide services such as tracking, reporting, affiliate recruiting, payments, sending out end-of-year tax forms, and responses to webmaster queries.

Strengths of Affiliate Marketing. Benefits

For the Affiliate:

Offer additional products or services to their visitors.
The opportunity to earn money from their niche audience by up selling or cross selling. Without the need to invest in logistics, financial fulfillment, or back office administration.

For the Merchant:

No payment is due to an Affiliate until certain results are achieved.
Typically low-cost and cost-effective.
Targeted advertising into appropriate niches.
To get a measurable means of advertising their products or services.
Extend reach of brand.

Limitations of Affiliate Marketing. Disadvantages

Some affiliate marketers have been accused of spamming to promote their programs. Either in the form of email spamming or by creating multiple websites with the purpose of generating artificial traffic from search engines (spamdexing).
Websites made up purely or predominantly of Affiliate links are usually regarded negatively as they do not offer any quality content.
Note that most people don't purchase during their first visit to a website. A cookie can ensure that a referral is registered. If the referred person makes a purchase on a future visit, the original referrer will still be credited for the sale.

Final Remark

At the top and bottom of this page, you can see a remarkable example. You can find some well-known Affiliate Marketing companies which advertise here themselves via this method.