Affiliate Marketing 101

Online marketing can be costly. If you are not a fortune 1000 company and do not have a well known website, how are you going to get customers to you site? There are three common methods that online marketers will use to get traffic:

1. Search Engines - In the past, a new website could obtain significant traffic from search engines alone. Website designers would utilize "meta-tags" as a way increase your rankings based on the keywords consumers were searching for. This method alone is now outdated and won't get you very far. There are too many websites and the search engines now have different criteria they look for when ranking your listing.

   Most search engine traffic is now paid for on what's known as a bided Pay-Per-Click (PPC) basis. This means that you to bid an amount for a keyword based on where you would like to appear in the search listings for that particular keyword. This is a quick fix to get you immediate traffic, but will it provide an ROI? Depending upon your industry and keyword, you bid amount for a top spot could be up to $25.00 PER CLICK!!! Obviously this will not provide an ROI for many people. It's a loss leader to be listed as the #1 site for a specific keyword. In short, PPC search engines will provide traffic, but there are certainly significant costs and risks that can be incurred. (we provide an ROI tracking and bid management tool for PPC buys - check out KeywordMax)

2. Email & Website CPM Buys - CPM stands for Cost Per Thousand. CPM buys mean that your paying a flat cost for every 1,000 people who view your advertisement. CPM buys can be effective if they are targeted to the right audience, however, the problem with CPM buys, is that you are assuming all the risk. If your banner or email advertisement doesn't generate one click or one sales, you still pay the CPM rate. The bottom line is that CPM buys need to be approached with caution, as it may be risky.

3. Affiliate Marketing - Affiliate Marketing is arguably the most inexpensive and efficient way to promote your products and/or services. The concept of affiliate marketing is very much like having a bunch of commissioned salespeople on your staff.

   It starts with a "Merchant" who has a product/service to sell online, or is trying to obtain customer lead information online (i.e. mortgage applications). This Merchant will create an offer for other website owners to promote for a commission. These website owners are typically known as "Affiliates" or "Publishers". The affiliates/publishers will promote the offer on their website, newsletter, or other marketing initiatives to drive traffic and ultimately sales or leads to the Merchant's offer. Typically this offer may be promoted by a text link, a banner image, HTML, pop-up's, or just simple product images. For more information on what an Affiliate program is, go to AffiliateManager.net.

So you've decided to start an affiliate program and you have affiliates who want to promote your offer. Nothing will kill your affiliate relationships like not paying affiliates the correct amount they're owed. Affiliate tracking is typically tracked through what is known as "Cookie" tracking. Cookies are those little data packets that sit on your computer. They are used to store information about you or your website browsing tendencies. For example, when you go back to a website and they have a "Welcome Mr. Customer" posting on their web page, they are typically doing that by reading a specific cookie that was placed on your computer at a previous time when you submitted information on that particular website.

There are several ways to track affiliate sales, but the standard method off tracking sales and affiliate commissions can be broken down as following:

1. The merchant puts a 1x1-tracking pixel on the confirmation page of their shopping cart. This is the page that a buyer hits after they've completed a purchase. Within this tracking code, your technical team needs to dynamically place the "total sale amount" and "transaction ID" variables that are generated through your shopping cart. Your shopping cart should provide you with documentation about affiliate program tracking.

2. Once you have done this, you will provide your affiliate with different creatives to promote your offer. Again, these creative can be things like product images, banners, text links, or HTML links. These creatives need to have a "Tracking Link" that will place a cookie on the user's computer and notify you that someone clicked on an affiliates creative. This way you can track all clicks even if they didn't produce a sale.

3. When the user clicks on the creative and is directed your site, if they complete a purchase, they will eventually come to your confirmation page. When they hit this page, the 1x1-tracking pixel is automatically activated and searches for the cookie on the user's computer. If it finds that cookie, it passes back the sale amount and transaction ID of that order, along with the information in the user's cookie (usually the affiliates ID #, the creative they clicked on, and the time and date that they clicked the creative). Generally, the cookie on the users computer can set for a specific time so that an affiliate may get credit for a sale if the user were to originally click on an affiliate creative, not buy anything, but come back to the site directly at a later date to purchase something.

4. When the sale amount and affiliate information is passed back to your tracking system, your system should be able to automatically calculate the affiliates commissions and generate a real-time report. This all depends on the tracking system your using. A system like DirectTrack™ does all of this tracking and reporting in real-time. It also gives you the option to not track sales or leads in real-time, but rather on an import method so that a merchant can verify sales or leads before approving commissions.