A Beginner Merchant’s Guide to Affiliate Marketing

lisa Lisa, 15th April 2009

Yesterday I wrote an Affiliate's Guide to Affiliate Marketing - so today I'm doing the same but from the point of view of a Merchant - a retailer or shop owner. As yesterday, there's far too much to it for one blog post, but I'll give an overview here. If you’re considering entering into the Affiliate Marketing world though, give us a shout as we provide consultancy on the subject and can warn you of any pitfalls your particular service/product/site is likely to encounter.

Overview

Affiliate Marketing is the process of paying a commission on items that other website publishers (Affiliates) sell for you.

Glossary

Affiliate / Publisher – an information website, or price comparison site..

Merchant – you.

Affiliate Network – a middle man who can put you and the Merchant in touch and manage the process.

Affiliate URL – the link affiliates use to send a visitor to your website. This link contains code which ties that visitor to the affiliates, so your system knows to pay them a commission.

Commission Tiers – it's normal for you to set different levels of commission as a thank you (and to encourage affiliates further). You may pay for example, 15%, to your best affiliates, when you usually only pay 12%.

Creative – the term used for banners/pictures/artwork affiliates use on their site to promote you.

Deep Linking – this refers to an affiliate linking to a particular page of a your website, perhaps to send a visitor directly to a particular product, rather than to just the home page.

Conversion Rate – this represents the percentage of visitors to your site that actually go on to buy something. If you have a particularly low conversion rate, this may be because your website is difficult to navigate or faulty, so people do not end up placing an order. Therefore affiliates may decide to invest their efforts in promoting a different Merchant with a higher conversion rate, who provides a better customer experience. If this is the case, you need to have your site reviewed from a UI perspective - to find out the User experience. Please contact us to carry out an assessment for you.

Cookie – some information is picked up from the visitors computer when they click on an affiliate URL, and passed from the affiliate site to your site so that you can track where the visitor came from. Cookies have been given a bad press – but they are not all created to threaten/attack people’s privacy!

There can be 2 or 3 parties involved in Affiliate Marketing. In-house Affiliate Programmes.

This involves affiliates getting some code directly from you and placing it on their website. You will have to build a comprehensive system on your site, so that affiliates can log in and get links, creative, and check your balance/commissions.

Affiliates will then send people who visit their site to your site, via their special affiliate link. When they do so, a ‘cookie’ is set on your site, telling it that that computer/visitor came from that particular affiliate. When/if that visitor places an order, code on your site will use that cookie to determine which affiliate needs to be paid a commission.

Example: The beauty website LoveLula.com has an In-house affiliate programme (LoveLula.com is therefore a Merchant).

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I.    Affiliates create an account with LoveLula.com, and get their affiliate URL.

II.    They then then send people to the LoveLula.com website via this link.

III.    LoveLula.com matches that visitor to them and pays them a commission on anything that visitors buys.

IV.    Affiliates log in to their LoveLula.com account (on the LoveLula.com website) to check their balance.

Going via an Affiliate Network.

A Network stores all the programme details (creative, links, commission structures) for  hundreds of Merchants. From an affiliates point of view, it means it is easy to find lots of Merchants to link to, all in one place. Also, to check their balance/commissions earned, they need only go to one place (or just a couple if they are a member of more than one Network). From your point of view, it means you get more exposure as Affiliates are already looking on Networks and receive regular email newsletters of new Merchants etc. Also, affiliates may have more faith in the system (tracking code etc) of a large Network than your site which they have no experience of.

Example: John Lewis uses the Network Affiliate Window (please note: some Merchants use more than one Network – John Lewis are also with Tradedoubler).

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I.     Affiliates create an account with Affiliate Window, and get their affiliate URL.

II.     They then send people to the John Lewis website via this link, (which, without their visitors knowing, goes via Affiliate Window).

III.     Code on the John Lewis website then matches that visitor to them and pays them a commission on anything that visitors buys and reports back to the Affiliate Window system.

IV.     Affiliates log in to their Affiliate Window account (on the Affiliate Window website) to check their balance.

Examples of some Affiliate Networks are: Affiliate Window, Tradedoubler, Affiliate Future, and Webgains.

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