WHAT IS AFFILIATE MARKETING

WHAT IS AFFILIATE MARKETING?

It is an application of crowd sourcing. Examples include rewards sites, where users are rewarded with cash or gifts, for the completion of an offer, and the referral of others to the site. The industry has four core players: the merchant (also known as 'retailer' or 'brand'), the network, the publisher (also known as 'the affiliate') and the customer. The market has grown in complexity to warrant a secondary tier of players, including affiliate management agencies, super-affiliates and specialized third parties vendors.
Definition
Revenue sharing between online advertisers/merchants and online publishers/salespeople, whereby compensation is based on performance measures, typically in the form of sales, clicks, registrations, or a hybrid model.
Information
The advertisers/merchants are typically referred to as affiliate merchants and the publishers/salespeople are referred to as affiliates.

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.
TYPES OF AFFILIATE WEBSITES

Affiliate websites are often categorized by merchants (i.e., advertisers) and affiliate networks. There are currently no industry-wide accepted standards for the categorization. The following types of websites are generic, yet are commonly understood and used by affiliate marketers.
• Search affiliates that utilize pay per click search engines to promote the advertisers' offers (i.e., search arbitrage)
• Comparison shopping websites and directories
• Loyalty websites, typically characterized by providing a reward system for purchases via points back, cash back
• CRM sites that offer charitable donations
• Coupon and rebate websites that focus on sales promotions
• Content and niche market websites, including product review sites
• Personal websites (This type of website was the reason for the birth of affiliate marketing; however, such websites are almost reduced to complete irrelevance compared to the other types of affiliate websites.)[citation needed]
• Weblogs and website syndication feeds
• E-mail list affiliates (i.e., owners of large opt-in -mail lists that typically employ e-mail drip marketing) and newsletter list affiliates, which are typically more content-heavy
• Registration path or co-registration affiliates who include offers from other merchants during the registration process on their own website
• Shopping directories that list merchants by categories without providing coupons, price comparisons, or other features based on information that changes frequently, thus requiring continual updates
• Cost per action networks (i.e., top-tier affiliates) that expose offers from the advertiser with which they are affiliated to their own network of affiliates
• Websites using adbars (e.g. Adsense) to display context-sensitive, highly-relevant ads for products on the site.
• 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.