What Is Affiliate Marketing – A Simplistic View ?

This post is mainly aimed at those who have never heard of “affiliate marketing” ever in their lives.

All you super affiliates and affiliate gurus may chide the simplicity of the post.

But, it is not meant for the pros.

Affiliate marketing consists of three kinds of participants namely – merchants(vendors), affiliate programs(mediators) and publishers(authors).

Affiliate Merchants

Merchants are in simple terms, sellers. Merchants use affiliate marketing as a medium to “sell” their products or in other words “enhance” their sales.

In other words, any entity that sells goods or services online (directly through an online channel) is a merchant.

Most merchants are online shopping portals, online gift solution portals, online domain hosting providers, online service providers.

Most merchants will have a payment gateway on their site which will allow you to directly buy products online using credit card or any of the online wallet services like Paypal as the payment method.

Some big merchants in India are Make my Trip, Yatra, Cleartrip, Ferns and Petals to name a few.

What do affiliate merchants get out of affiliate marketing?

Well in two words, increased sales.

If a merchant has many sites which advertise their products, it will naturally get enhanced traffic as the “entry points” to the merchant site increases with every site that promotes the merchant’s products.

Affiliate Programs

Affiliate programs act as mediators (middlemen) between publishers and merchants.

They act as focal point of interaction between merchants and publishers.

A merchant signs up with the affiliate program and offers variety of links, banners and visual aids for publishers.

A publisher also signs up with the affiliate program to gain access to the merchants’ banners.

One question that might arise is – Why do merchants need affiliate programs?

Can they not have a direct affiliate system on their web site?

It all boils down to “leaving it to the experts.” If you have a tooth ache,  you’d prefer going to the dentist rather than using a pincer to pluck it out.

Affiliate programs have great experience of handling merchant accounts and merchant sales.

They have access to advanced tacking systems and added expertise which might not be available to the merchant “in-house”.

Hence the need to rope in affiliate programs.

Affiliate programs usually charge a fixed fee for a merchant to register with them.

Some might even work on a revenue sharing basis depending on the sales made through the program.

An affiliate program does not charge the publisher, it makes all its money from the merchants.

Some big American affiliate programs are Commission Junction, NeverBlue Ads, Click Bank, Webgains USA

A complete list of affiliate programs in India is available on this very site.

Publishers

Any person running a blog/site is a publisher like affiliate tips which is itself a publisher.

A publisher uses affiliate marketing to monetize his site/blog.

As mentioned earlier, a  publisher promotes products of various merchants (through an affiliate program) and earns a “commission” for every sale that the merchant makes through the publisher link.

A publisher tries to leverage his traffic into sales, thus earning commission on every sale the merchant makes through his referral.

The entire process from the point of view of a publisher can be summarised as:

1. Register with an affiliate program.

2. Browse all the banners, links and aids provided by various merchants registered with the affiliate program.

3. Select relevant links and display them on your web site/blog.

4. If a user clicks the link to visit merchant site, a visit is recorded by the tracking system of the affiliate program.

5. In case of a purchase made by the visitor from the merchant side, a fixed commission (ranging anywhere from 5-50% ) is credited to the user account at the affiliate program.

6. Affiliate programs have a fixed payout threshold. If the user commission exceeds the payout threshold, the affiliate program pays the publisher via Check or online wallet systems like Paypal.

This is just enough to get you started.

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