Affilliate Marketing
A lot a clients have been asking about Affiliate Marketing recently so I have written a few words to highlight what we at www.ju2.com see as the important issues you need to be aware of.
A recent report from e-consultancy.com put the value of UK sales generated from the affiliate network channel will be between £1.1bn and £1.35bn in 2005 rising from £600m in 2004.
Wikipedia.org defines affiliate marketing as follows:
"Affiliate Marketing is a popular method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber and/or customer provided through his efforts. It is a modern variation of the practice of paying finder's-fees for the introduction of new clients to a business. Compensation may be made based on a certain value for each visit (Pay-per-click), registrant (Pay-per-lead), or a commission for each customer or sale (Pay-per-Sale).The most attractive aspect of affiliate marketing, from the merchant's viewpoint, is that no payment is due to an affiliate until results are realized."
Affiliates use banner ads or other forms of advertising to attract traffic to a merchant’s website. Through their expertise in paid search or search engine optimisation they calculate there earnings per click and sell their traffic at a higher price than they pay for it.
Amazon.com is often credited as being the first company (merchant) to set up an affiliate scheme and they still run their own affiliate program. However, most e-commerce vendors use third party services provided by intermediaries called Affiliate Networks. See Affilaites4U , Affiliate Window , Affiliate Future Link Share, OMGUK and Zanox
Why use a network? To start with economies of scale! Networks are an attractive option for merchants because they save on administration, they can deal with hundreds of affiliates, they handle all the tracking, have anti fraud capabilities and collect all the fees. Affiliates also like networks because they are a single point of contact but more importantly they can be confident that the tracking and commission reporting is accurate and trustworthy.
Commission and fees paid out to Affiliate Networks in the UK is expected to reach £83m in 2005. Some networks charge set up costs (anything from 0 to £5,000) and/or monthly management fees. (0-£500) On average expect to pay between from 5% and 8% of total sales to your network although costs vary. Compare this to what your paying Google Adwords or Yahoo! Search Marketing and you may find that Affiliate Marketing might be worth investigating.
A recent report from e-consultancy.com put the value of UK sales generated from the affiliate network channel will be between £1.1bn and £1.35bn in 2005 rising from £600m in 2004.
Wikipedia.org defines affiliate marketing as follows:
"Affiliate Marketing is a popular method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber and/or customer provided through his efforts. It is a modern variation of the practice of paying finder's-fees for the introduction of new clients to a business. Compensation may be made based on a certain value for each visit (Pay-per-click), registrant (Pay-per-lead), or a commission for each customer or sale (Pay-per-Sale).The most attractive aspect of affiliate marketing, from the merchant's viewpoint, is that no payment is due to an affiliate until results are realized."
Affiliates use banner ads or other forms of advertising to attract traffic to a merchant’s website. Through their expertise in paid search or search engine optimisation they calculate there earnings per click and sell their traffic at a higher price than they pay for it.
Amazon.com is often credited as being the first company (merchant) to set up an affiliate scheme and they still run their own affiliate program. However, most e-commerce vendors use third party services provided by intermediaries called Affiliate Networks. See Affilaites4U , Affiliate Window , Affiliate Future Link Share, OMGUK and Zanox
Why use a network? To start with economies of scale! Networks are an attractive option for merchants because they save on administration, they can deal with hundreds of affiliates, they handle all the tracking, have anti fraud capabilities and collect all the fees. Affiliates also like networks because they are a single point of contact but more importantly they can be confident that the tracking and commission reporting is accurate and trustworthy.
Commission and fees paid out to Affiliate Networks in the UK is expected to reach £83m in 2005. Some networks charge set up costs (anything from 0 to £5,000) and/or monthly management fees. (0-£500) On average expect to pay between from 5% and 8% of total sales to your network although costs vary. Compare this to what your paying Google Adwords or Yahoo! Search Marketing and you may find that Affiliate Marketing might be worth investigating.
posted by Jim at 11:20 AM
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