Affiliate Marketing

Affiliate managers are those people in a position of managing an affiliate program, and assisting the affiliates of their program in generating more sales. Affiliate managers are sometimes the business owner who created the affiliate program in the first place, but are also sometimes people who have been hired by a business owner to either create an affiliate program and/or manage an existing affiliate program.

An affiliate manager's duties may vary considerably depending on the dedication and success of that affiliate manager. To become an affiliate manager does not require any particular credentials or prior training, even though such training would be an asset. Many affiliate manager's do not do too much to manage their affiliate programs aside from keeping track of sales made by affiliates, as well as writing and sending affiliates their commission checks at the end of each pay period. This is often the low end of affiliate management that is done by business owners that are focussing their main efforts on other aspects of their business, but have created an affiliate program to stay up to date with the latest marketing trends on the internet .

Affiliate managers that have been hired to focus on maximizing an affiliate programs earning potential usually have many more duties, skills, and credentials.

These duties may include:

• Creating or building the affiliate program from the bottom up, or improving it.
• Keeping in close contact with their top affiliates both through e-mail and over the phone.
• Training affiliates in both offline and internet marketing.
• Providing up to date promotional materials for the affiliate programs products or services.
• Keeping their affiliates up to date with new product/service upgrades, enhancements, or launches.
• Motivating affiliates to promote and sell more products/services.
• Recruiting more affiliates into the program.
• Keeping track of sales made by affiliates, as well as writing and sending affiliates their commission checks.
  

Outsourced Program Management

Quality affiliate managers are in short supply for merchants who prefer in-house management. The most seasoned affiliate managers operate as Outsourced Program Managers (OPMs), providing affiliate program management and consulting on behalf of merchants. OPMs traditionally manage multiple affiliate programs, with some maintaining a support staff of affiliate managers which are dedicated to each merchant client.

OPMs often provide greater value and lower costs to merchants than in-house employees. OPMs typically bring a loaded rolodex of existing affiliate partnerships to their merchant clients, and can extend the merchants offer to their personal network if the program is salable. Additionally, merchants find cost benefits in OPM firms, as OPMs operate as independent contractors who do not incur health/401k benefit expenses, office space/computer costs, or training expenses.

OPM fees typically range between $2,000 and $10,000 a month in flat rates, most of which typically operate on a monthly rate and performance compensation hybrid model. Many OPMs also offer consulting services for merchants, including single-run affiliate recruitment, affiliate program optimization, program launch services, and affiliate tools/technology development.

Affiliate marketing is a method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber, customer, and/or sale provided through his/her efforts. It is a modern variation of the practice of paying a finder's fee for the introduction of new clients to a business. Compensation may be made based on a certain value for each visit (Pay per click), registrant (Pay per lead), or a commission for each customer or sale (Pay per sale), or any combination.

Merchants like affiliate marketing because it is a "pay for performance model", meaning the merchant does not incur a marketing expense unless results are realized.

Some e-commerce sites run their own affiliate programs while other e-commerce vendors use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. Some businesses owe much of their growth and success to this marketing technique, especially small and midsize businesses.

Merchants who are considering adding an affiliate strategy to their online sales channel have different technological solutions available to them. Some types of affiliate management solutions include: standalone software, hosted services, shopping carts with affiliate features, and third party affiliate networks.

Revenue generated online grew quickly. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. Many companies hired outside affiliate management companies to manage the affiliate program see (outsourced program management).

According to one report, total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35 billion in sales in 2005. MarketingSherpa's research team roughly estimates affiliates worldwide will earn $6.5 billion in bounty and commissions in 2006. This includes retail, personal finance, gaming and gambling, travel, telecom, 'Net marketing' education offers, subscription sites, and other lead generation, but it does not include contextual ad networks such as Google AdSense.

Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors. The three sectors expected to experience the greatest growth in affiliate marketing are the mobile phone, finance and travel sectors. A lot of different offers from various Advertisers are available to pick from. Hot on the heels of these are the entertainment (particularly gaming) and internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix. Of course, this is constantly subject to change.

The following compensation models are relevant for affiliate marketing.

Pay-per-impression (PPI) / Cost-per-thousand (CPM)

Cost-per-mil (mil/mille/M = latin/ Roman numeral for thousand) impressions. Publisher gets from Advertiser $x.xx amount of money for every 1000 impressions (page views/displays) of the Ad. The Ad can be text (AdSense), banner image or rich media.

Pay-per-click (PPC) / Cost-per-click (CPC)

Cost-per-click. Advertiser pays publisher $x.xx amount of money, every time a visitor (potential prospect) clicks on the advertiser's Ad. It is irrelevant (for the compensation) how often an Ad is displayed. commission is only due when the Ad is clicked. See also click fraud.

Pay-per-lead (PPL) / Cost-per-action/acquisition (CPA) / Cost-per-lead CPL)

Cost-per-action or Cost-per-acquisition (CPA), Cost-per-Lead (CPL). Advertiser pays publisher $x.xx in commission for every visitor that was referred by the publisher to the advertiser (web site) and performs a desired action, such as filling out a form, creating an account or signing up for a newsletter. This compensation model is very popular with online services from internet service providers, cell phone providers, banks (loans, mortgages, credit cards) and subscription services.

Pay-per-sale (PPS) / Cost-per-sale (CPS)

Cost-per-sale (CPS). Advertiser pays the publisher a percentage (%) of the order amount (sale) that was created by a customer who was referred by the publisher. This model is by far the most common compensation model used by online retailers that have an affiliate program. This form of compensation is also referred to as Revenue sharing.

Pay-per-call (no abbreviation exists yet)

This is a new compensation model. No official abbreviation exist yet. Advertiser pays publisher a $x.xx commission for phone calls received from potential prospects as response to a specific publisher Ad. Recently developed call-tracking technology allows to create a bridge between online and offline advertising. Pay-per-call advertising is still new and in its infancy.

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