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Traditional Affiliate Programs |
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What is an Affiliate Program?Affiliate programs-also known as associate, referral, and partnership programs-are typically a marketing arrangement between a merchant web site and any other site (affiliate) to which the merchant pays a commission for referring customers through a link. For example, when you perform a search on Yahoo, a box appears in the results prompting you to find books from Amazon on that subject. Clicking that box will transport you to Amazon's site; if you purchase a book, Amazon will pay Yahoo a commission on the sale. In this example, Yahoo is acting as an affiliate for the merchant Amazon.Why do Merchants create Affiliate Programs?Due to the high cost of customer acquisition, and the downward trend in effectiveness of banner advertising (current click-through rates average just .67%), affiliate programs have become extremely popular with merchants, especially retail merchants, because they are strictly based on pay for performance. Unlike advertising, there is no cost to the merchant for placing a banner on their affiliates' sites-the merchant only pays the affiliate when one of their users follows the affiliate link to the merchant site.Because each affiliate represents an additional point of presence on the web for the merchant, an affiliate program quickly multiplies the number of storefronts available to the public, extending brand awareness for the merchant and increasing the likelihood that consumers will find their site to purchase products and services. Why do Affiliates join these programs?Individuals or companies with websites containing content about a specific theme, or appealing to a specific community, join Affiliate Programs to make money by utilizing space available on their site. They provide a valuable service to their viewers by providing links to buying opportunities at merchant sites, which sell products relevant to the content or community of their site. For example, a website about skiing may be an affiliate for ski equipment manufacturers, general sporting goods sites, and adventure travel agents. This ensures that the viewers of the site are well qualified to become buyers of the products offered by the merchants. And by providing this service, affiliates increase the utility of their site, attracting return visits and new viewers while earning a commission for the sale they referred. |
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