The basics of affiliate programs.

I kind of just jumped into it. Gave a few definitions and maybe did not give a good basic understanding of what Affiliate programs are. So I want to cover a little more of the basics. Of course you can click on some of the links on my sidebar and read about the programs themselves. I really think it is important for you to have knowledge to make Affiliate marketing work and that is why I started this blog.

A few fundamentals.

Affiliate programs are called by different names. They are sometimes called referral programs, partnership programs, and associate programs. But the basic function, no matter what they are called, is to generate income by referring your visitors to the web sites of advertisers.

You may or may not actually sell something (a good or service) on your website. Your site may just be for information, as this blog is. If you do not actually sell anything with your site that is OK, you can still get paid commissions for producing transaction for your advertisers (or merchants). What exactly a transaction is, and the amount of your commissions is a function of the rules of the affiliate program that you participate in.

Most affiliate programs are for merchants who sell goods or services, but there are programs that reward transactions such as signing up for newsletters, downloading a screensaver or completing surveys.

Many affiliate programs pay a percentage of the sales generated when visitors to your site make a purchase at the advertisers site. As an example, if a program offers a 10% commission rate and you send a visitor who purchases $100.00 of goods or services, you will earn $10.00 in commissions. Different programs have different commission rates. eBay has one commission rate and Amazon has another. You can get rates of as little 1% for high priced items and up to 50% for other lower value items.

Programs pay per lead, while others pay per sale. If you bring a prospective customer to your advertisers site and they pay you a fixed "finder's fee" for the chance to complete the sale. This a typical in the financial services affiliate programs.

There are many other payment models, far too many for me to describe. And I am learning them as I go. It seems like daily I see a new one. My advise is to read and understand the model of every potential program that you are interested in. Some affiliate programs offer different rates for different links. Which even farther complicates understanding the models.

Depending on which affiliate program you join the programs operate in different ways. Some programs are stand alone programs and are administered by the advertiser. The Amazon program is like this. Other programs are administered by an Affiliate Network, Commission Junction and Linkshare are two examples of this. And there are big and small net works in-between.

The networks keep track of the commissions the affiliate earns and provides links and other support that is needed to operate as an affiliate. They track the traffic coming from your site and record when transactions happen. I will discuss this all in more detail in a future post.

To sum it all up. Affiliate programs vary in the way they operate and the commission rates, how they are tracked, rather they are part of a network and so on. But the point is that you have to really understand the program that you are interested in to get the most out of them.