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affiliate marketing
internet marketing strategies
accurate statistics
traffic visitors
affiliate link
web traffic
rewards
How Affiliate Marketing Works
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This article introduces Affilaite marketing to the newcomer and explains how it works.

An introduction to how Affiliate Marketing works

Affiliate marketing forms a key strand of many Internet Marketing strategies and enables businesses selling products or services online to readily mobilise the assistance of partners wishing to promote their products.

An outline of how Affiliate Marketing works

Affiliate marketing is a practice, whereby a website (or merchant or retailer) rewards an affiliate (or associate or publisher) by paying a commission in return for visitors or customers brought to the site through that associate’s efforts. Thus the affiliate acts as an intermediary who connects buyers with sellers and is rewarded by the seller for doing so. It is conceptually similar to the physical world practice of a principal paying commission to an agent.

How Affiliate Marketing works: the process

Normally this works as follows. A website wishing to attract traffic offers an affiliate link to those visitors wishing to promote their site and products. This offer is taken up by the associate’s signing up to the terms and conditions and providing certain required information in return for which a link is allocated. Each link that is generated is unique and enables the issuer to identify the source of web traffic (visitors, customers) electronically. The affiliate thus earns a commission, which is paid in terms of the agreed procedure.

How Affiliate Marketing works: the basis

Agreements may be based upon the number of new visitors to the website, the value of sales made as a result of an ‘introduction’ or by other less common criteria such as number of clicks, registrations etc.

How Affiliate Marketing works: integrity verification

Surprisingly accurate statistics are available to sellers and affiliates, whereby each party can readily verify business flow, performance and accuracy of commission calculations. Management information can be derived from these sources and presented in a manner to aid business decision making. Google Analytics is an example of an independent provider of such data.

How Affiliate Marketing works as an industry

Instead of approaching websites directly, affiliates are now able to approach intermediaries (affiliate management agencies) who distribute sign them up on behalf of sellers, for example, Click bank and Commission Junction.

How Affiliate Marketing works in attracting affiliates

Commissions are typically far greater than those paid offline and though typically around the 20-25% level for physical products, on Clickbank these can rise to 75% for electronic products.

Now that you understand what Affiliate Marketing is and how it works, you can see how Affiliate Marketing has become one of the drivers that has contributed to the spectacular growth of E-commerce. Affiliate marketing is a sector that is growing rapidly as one might expect alongside E-commerce and the population of Internet users generally. It should therefore not come as any surprise that as of May 2009 there were over 109.5 million websites of which 74% were commercial (.com) sites.


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