Tuesday, April 11, 2006

4 P's of Internet Marketing for Affiliates

A new cottage industry has been spawned by the Internet. It's called affiliate marketing.

It's the marketing of other companies products and services via specially tagged links on the Internet. When a link is clicked through to a store, and something is purchased by that person, the company pays a commission to the affiliate (typically an individual, or small group).

Affiliates can find customers through paid search engine marketing (PPC, or pay per click), search engine optimization, SEO, banner ads, purchased links on other sites, email and more. All of this is perfectly legal and legitimate - and both sides win.

The company receives new customers and pays only a percentage of each sale or a pre-defined flat fee. The affiliate receives this commission for create thinking and marketing of the companies products or services a new audience.

Affiliate programs, in addition to providing excellent exposure to new markets, also provide an important boost to search engine visibility and traffic because of the large number of links to the sponsor company web site created by the affiliates. Special care has to be taken by the company in choosing an affiliate program to ensure that the links are created properly - or the links will have no value.

How do affiliates find new customers?
Online Portals and SEO:
The best method by many measurements is the operation of online portals. These are information rich web sites about a particular topic that provide links and sometimes reviews to companies for which they have an affiliate relationship. These web sites are highly optimized for search and capture many clicks from potential customers from the search engines. The best web sites have high quality information and provide value to visitors that have an interest in the topic.

Affiliates may build large opt-in e-mail lists where they provide current information and advertising or recommendations for products.PPC:Affiliates are often experts in Pay Per Click marketing. They bid on clicks from certain search terms and send those clicks directly to their sponsors web sites with their special tracking code. Affiliates can often be far more effective in pay per click campaign management than the sponsor company, so there can be a large margin for profit for the affiliate. The sponsor company typically pays a flat fee or percentage per sale, so the affiliate takes all of the risk and work in attempting to purchase customers through efficient targeting of ads in search engines.

Banner and Link Advertising:
Affiliates buy banners or links on popular web sites targeting a specific audience and send the traffic to their portals or to the sponsors web site directly. Affiliates become knowledgeable in the places to buy advertising efficiently and can purchase links on thousands of web sites the sponsor would not know of.

Affiliate Marketing: An established industry
A large affiliate industry has grown up. There are affiliate networks like Commission Junction and LinkShare that provide the affiliate programs for thousands of companies. They provide the merchants with tracking and payment services, and provide affiliates with consolidated reporting and a convenient way to sign up for many programs. There are many smaller vendors that provide easy to set up and inexpensive affiliate program options as well.What are the industries that are benefiting the most?

There are businesses in virtually every industry using affiliate programs to provide a strong channel of online sales through their websites. One look at the Kolimbo Network (requires free affiliate account) will give you an idea of the breadth of this industry.

The most obvious choices for affiliate program adoption are the companies already selling a product or service online, but their are opportunities for way of selling in almost every industry - and the first coveted first-to-market positions in every industry are rapidly being filled.

One industry of note is online content, estimated to be worth $50 Billion Annually.The big money in affiliate marketing, however, are in the markets with the most online activity. The barriers to entry are as large as the profits. Interestingly, the industries that are most active amongst affiliates share something in common. I call these:

The four P's of Internet marketing for affiliates:

Of course there are many others, but these seem to shine amongst affiliates, these industries have even spawed largely attended trade shows and conferences such as the CAC - Casino Affiliate Conference, iDate - Internet Dating Conference, COPHARM, Online Pharmaceuticals Conference and others.

The affiliate industry is maturing
The four P's aside, 'mainstream' businesses in every industry are creating online stores or lead generating web sites that are trackable with affiliate software and reaping the benefits of an affiliate program.

As this industry matures, I see larger affiliate networks, larger affiliates, and more business partnerships. Businesses like my Toronto Internet marketing company are forming partnerships with companies in different industries to bring their products to market online through the use of search engine optimization, pay per click marketing, text link purchases, corporate blogging, e-mail marketing, web analytics speclialties and resources that are difficult and inefficient to maintain inhouse.

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