Diagram outlining the steps to the affiliate marketing process
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Jan. 31, 2014

Understanding the Role and the Benefits of Affiliate Marketing

Affiliate marketing gets a bad rap. Some people think it’s a business strategy that empowers robot-crawling ads to surreptitiously mine people’s Internet history through the placement of annoying banner ads. In actuality, affiliate marketing is transparent and so well regarded that millions of people use it to make money and help consumers find the products they’re looking for.

According to the most recent AffStat Report, 51.3 percent of affiliate marketers earn anywhere from $5,000 to more than $500,000.

In order to understand how affiliate marketing helps people make money, it’s important to know what it actually does.

Independent publishers, known as “affiliates,” act as an outsourced digital-sales team and can include anything from a personal blog to a large product-reviews website. Affiliates make money by setting up clickable ads on their websites that lead customers to the main business network. If consumers are successfully converted, affiliates claim commissions through predetermined flat or value-based rates for each lead.

Why Affiliate Marketing Works

Affiliate marketing is successful because it tracks the revenue growth of each lead through data. One of the main criteria for successfully converting leads is to create accurate ad targets. Accurate ads are those that are more likely to incite readers to click on them and buy the product.

Think of a highly trafficked U.S., news website: Most news sites make money through direct advertising (ads they sell themselves), affiliated marketing (ads placed through a network) and subscriptions. Big websites might have their own sales staff but also incorporate affiliate marketing, with ad prices based on the varying value the network assigns to demand levels, size, and audience type. Commissions for leads, obviously, are also based on these criteria.

For example, well-educated readers from a high-income bracket are assigned high lead values because they're more likely to have disposable income and a desire to buy products. The ad network distinguishes these customers through user-tracking technology (like cookies) and assigns ads to appropriate affiliate websites.

This ability to distinguish targets is what makes the business model so attractive, says Crystal Lopez, Lunarpages’ manager of affiliate marketing.

“Having hundreds or thousands of affiliates promote your brand over the ever-growing Internet can reach more of an audience than a company just running their normal marketing efforts,” she says.

Lunarpages uses its own affiliate-marketing program to promote its products, on top of traditional marketing efforts. Lopez says the company reaches its biggest audience through affiliates, which allows Lunarpages to connect with “hundreds and thousands of individual blogs, forums, email, PPC and the like.”

Not All Affiliate Marketing Is Created Equal

While different affiliate networks can make money for their smaller affiliate partners, not all networks are the same. Choosing the right network is a critical decision that should be made thoughtfully.

Lopez says that giving an affiliate a quality brand or service to promote as well as a choice of options of “banners, links, landing pages [and] coupons,” is very important for potential affiliates.

“If you give an affiliate something they can't sell because it's low in quality, or only a few banners to use, and high pricing, they will probably not sign up for your program or will leave shortly after seeing no results,” she says.

That’s why Lunarpages offers a variety of options in its affiliate program.

The expectation of quality service also extends to the business relationship between the affiliate network and the publishers. Lunarpages cultivates a direct, one-on-one connection with affiliate partners that has led to increases in promotions, ranking and sales.

“There is a large percentage now of conversions from clicks due to the increased efforts of our affiliate partners and affiliate-department staff,” she says.

Lopez also says Lunarpages is competitive in the marketplace because its hosting services offer high-commission payout opportunities. The company’s dozens of banners, links and network partnerships mean affiliates can make up to $300 per referral in the program.

Some of the features of the program include varying levels of commissions, including uncapped and multilevel commissions. Lunarpages’ commission table helps potential affiliates decide how much they could make through sales. For example, a starter-hosting program between one and three sales per month can lead to $20 a month in revenue, while a business-hosting program can pay $125 for the same number of sales, primarily because the value of each sale at that point is much larger.

Advanced tracking and reporting tools are also important. Lunarpages tracks affiliate sales through cookies that don’t expire unless they’re overwritten, Lopez says. This means Lunarpages can determine how many visitors arrived on an affiliate website via different campaigns, even within the same session, which is a huge advantage for affiliate marketers.

“In the case when the visitor leaves the site but comes back later to purchase the product, [it gives] the affiliate credit for the sale,” Lopez adds.

A successful marketing strategy depends on the effort and the practical marketing knowledge of the affiliate itself. For example, Lopez says affiliates that use good keywords to properly match their content with their ad business will make the user experience of clicking through an ad for a product way more accurate.

As the affiliate marketing business grows dramatically year after year, it’s important to keep the engines running bug-free. So far, it’s full steam ahead for the Lunarpages affiliate marketing program.

[image: vaeenma/iStock/ThinkStockPhotos]

ABOUT THIS CONTRIBUTOR
Jose is a technology expert with experience in covering cloud computing, startups and enterprise IT.
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