6.8 Selling through Affiliates

Affiliation offers an excellent way of getting your products sold, in two ways, by:

1. Multiplying your selling outlets, and
2. Predisposing visitors to buy your products. Having a third party recommend you greatly increases sales.

But how do you find suitable companies, and set up the software to handle such sales?

Recall the principles. You want your products sold. Another company would be happy to sell your products on a commission basis. Affiliate solution providers bring the two parties together, charging a fee for the matchmaking, and for keeping tabs on sales. Traffic from other sites is redirected to yours, but you only pay commission on sales made, plus a share to the affiliate solution provider. Whatever the link type employed — and it may be a banner ad, a storefront, email or a simple text link — an embedded piece of code identifies the originating site, allowing automated records to be kept for inspection and settlement. Some large and very small outfits still run their own affiliation programs, but the majority of companies have handed over the task to an affiliate solution provider.

By running your own affiliates program you can:

1. Cut out the affiliate solution provider's share of the commission.
2. Set your own commission rates, which is commonly:
   a. a percentage commission,
   b. a flat fee, or
   c. a combination of flat rate and commission.
3. Set your own terms and conditions for payment:
   a. dates when commissions are paid.
   b. minimum to be reached before accrued commission is paid.
4. Set dates when commissions are paid.
5. Decide how many tiers of commission you will pay.
6. Better control the affiliate site content:
   a. ban adult and antisocial material
   b. exclude competitors.
   c. limit participation in other affiliate programs.
7. Dictate affiliate site performance:
   a. minimum traffic.
   b. professional appearance, etc. of the site.

The disadvantages are equally obvious: you have to:

1. Write or purchase the software needed to create links and track sales.
2. Maintain extensive records.
3. Handle queries and difficulties originating at the affiliate site.

Finding the Software

Affiliate solution providers will generally provide the software required — to create links, store records of purchases, calculate commissions, allow commissions to be viewed, and to automatically send out payments. To run your own affiliates, you will either have to buy the software or rent a hosted service. A brief selection:

Finding Suitable Affiliates

It's the job of affiliate solution providers to supply you with a list of suitable candidates, and these will have signed up to common terms and conditions. Making your own list is more problematical, but you can:

1. Research the rates, terms and conditions applying in your market sector.
2. Use search engine and directories to identify possible candidates.
3. Visit the websites of companies concerned to check suitability.
4. Approach the companies with details of your products, traffic and trading history.
5. Negotiate an agreement.

What will you look for in an affiliate? Probably:

1. A popular and professional-looking site that enhances your reputation.
2. Complementary interests: the site has to endorse products its readers want or need.
3. Good customer service: sales may be clinched at your site, but the affiliate should engender a sense of community and trust — check they answer faxes and emails promptly.

What will your affiliates be looking for? Much the same:

1. A fair contract.
2. Quality products or services.
3. Free offers and/or newsletter.
4. Content sharing.
5. In-depth information on your products and services.
6. Regular supply of market-tested copy that really sells.
7. Proper backup for your products.
8. Prompt payment of commissions.
9. Transparent accounting procedures: industry-standard software that allows them to check sales and commissions.

Working with an Affiliate Solution Provider

Dozens of affiliate solution providers exist, some very small and covering only a narrow range of products. Terms and conditions will vary, but all employ an editor to check that your product(s) and company are suitable. Do your homework, therefore, noting in particular:

1. Client list. Ask for testimonials, and permission to approach clients.
2. Fees. Three sets of fees are usually imposed: a setup or initiation fee, a monthly maintenance charge, and a commission on sales. All three vary widely, from nil in some categories to charges in the thousands of dollars per month. Find a provider that won't break the bank if sales really take off.
3. Exclusivity. You are not generally tied to using the one affiliate solution provider, but check should you ever expect to complicate matters.
4. Tiers of commission. Affiliates will want to know if they can introduce others to your product and earn a share of the extra commission.
5. Specialization. Is the provider likely to find you the right sort of affiliate? Check their client list.
6. Setup details. Your affiliates will probably be given a few lines of code to simply paste into their websites, but again ask: anything complicated, involved programming expense, will not be popular.
7. Terms and conditions. Ensure you understand the regulations and can live with them. Your terms and conditions have to match those of the affiliate solution provider — e.g. you can't offer a 'lifetime guarantee' if the provider limits the warranty to 3 months.
8. Check your site. The better providers can be choosy, so make sure your site is looking its best before applying. And get that product page up to scratch. It is to this page that affiliates will link, and the provider will go through its details with a fine toothcomb.

Affiliate solution providers are widely listed on the web.

Current Picture

Most companies employ affiliate solution providers because the numbers are otherwise unmanageable. Popular products today are marketed by thousands or tens of thousands of affiliates, only the smallest percentage of whom will generate sales worth having.

Does that matter? The affiliate solution providers handle the mechanics, and their commissions are high precisely because of the work involved. Nonetheless, research suggests that the companies do best when they take a close interest in their affiliates, helping them with tutorials, catchy ads and intelligent landing pages.

Studies by Marketing Experiments {8} have shown that working with a small band of carefully-chosen partners is often preferable to the scatter approach of affiliate marketing. Partners are serious, learn from each other and exchange information: their success is more closely tied to the fortunes of the product they represent.

Affiliate Fraud

Most affiliates do an honest job, but these are the scams reported of late:

1. Fake transactions: some fraudsters use scripts to generate bogus leads or transactions.
2. Parasites: adware may steal traffic from legitimate affiliates, causing them to move on.
3. Typosquatting: fraudsters set up URLs similar to yours and then 'sell' you back your traffic.
4. Copycats: fraudulent sites steal copy and graphics from a legitimate site and pose as a good affiliate.
5. Spammers: tarnish your brand by sending spam emails purporting to come from you.

Your best defenses are to:

1. Screen affiliates carefully,
2. Flag undesirables and watch for their activities,
3. Monitor affiliate sites and newsletters, and
4. Check for unusual levels or patterns of visitor activity. By especially suspicious of immediate demands for payment, and keep in touch with other affiliate managers. A useful site is ABestWeb Parasiteware Forum.

Questions

1. Why would you sell through affiliates, and what sort of goods and services?
2. What are the advantages and disadvantages of running your own affiliates program?
3. What will you you be looking for in your affiliates? What will they expect?
4. Outline the types of affiliate fraud you may encounter. What countermeasures should you take?

Sources and Further Reading