What is Affiliate Marketing and How it Works?

Affiliate Marketing is a method of marketing which advertiser’s uses to make the most of their returns on the investment through one or more affiliates or associates. In the present Indian Internet marketing scenario, Affiliate marketing plays a central role.

As one may notice a fewer number of people going outside to play cricket due to a shortage of playground they play cricket on their notebook or computers. So if a company is thinking of booming without internet marketing, they will go 10 years back then. Their competitor and affiliate marketing is an essential part of internet advertising.

Affiliate Marketing works for

Advertisers

In a layman’s language one who has the end manufactured goods or the services, i.e. if a person is looking for a job in India, he may go to Google and type jobs in India, and the first site in the results he may get for example is jobsindia.com. This site may not have any jobs a person is looking for, but one can see a banner on that site say Monster.com where again one can come across so many job options. Banner is just like hoarding, but it’s on the internet. So you can say Monster is an Advertiser or promoter.

Publisher

Now let’s talk about how an Affiliate / Publisher can promote Advertiser in affiliate marketing.

Display Advertisements
Affiliate/Publishers can promote advertisers through banner post on their site. Banners are obtainable in different formats i.e. GIF, JPG, Flash etc. These are offered by the Affiliate Programs with the exceptional tracking available for the affiliates to follow the performance of the promotion in the Affiliate programs panel. Most of the affiliate programs do provide real-time tracking and it is always suggested to verify the tracking by yourself just to be confident that your leads are tracking 100%. Banner advertisements work in diverse model. Pre paid Ads where in advertisers recompense for certain amount for a fixed period of time. For advertiser it is very significant to check the status of the sites before going for the contract. It is also essential to ascertain what demography they want to target i.e the area they really want to focus. They may perhaps use sites like Alexa to see the traffic quality and the demographic of the traffic.

Email Marketing
Email marketing is a very vital way of getting quick results for your promotions and is universally used by the publishers to make some fast money, and the affiliate programs do provide ways and means to do so efficiently. All the publishers require, in this case, a database of email addresses of the demographic area that they are targeting for leads. There are many systems obtainable on the market to send the emails. Few who are recommended can be Email brain and vertical response.

Newsletter/RSS feed
Newsletter or RSS feed is a high-quality method of keep posting your subscribers about the latest promotions and other updates. That is an excellent way to get in touch with the visitors those who have visited your website repeatedly. They can even sign up for the services or product you want to endorse. Affiliates are using this to promote diverse programs at the same time.

PPC (Pay per Click)
PPC also called as pay per click is a decent way to advertise the product if the site is not optimised for search engines. Publishers/Advertisers use this to obtain traffic by bidding on the most frequently used keywords. Publishers may take help of Google Ad words to see what keyword is visitors are looking for on search engines for their niche. PPC is done on Microsoft ad Center, Google Ad words and Yahoo Search. Publishers pay for clicks to search engines.

SMO (Social Media Optimization or Social Media Marketing)
Today most of the people spend their maximum time on the Social networking sites. So if your product doesn’t have a presence on sites like Facebook, Twitter or MySpace etc. it will be hard to make brand awareness. Social media marketing on sites like Facebook can be done in a particular way like by creating pages for your product, so it reaches the general public. Advertising that page on Facebook using Facebook ads where it becomes more comfortable as you know every little feature of the user, for instance, their interests, sex, location and age etc. A Twitter account can be used to inform all the followers of all the changes made or new updates on the sites, and there are numerous ways to do get traffic to these sites.

Media Buying
Media buying is when publisher promotes the products or services from the affiliate programs using other sites when they acquire space in the form of banner advertisements, or they use other affiliates those who promote for them by taking a fixed price from the media buyer.

Online Forums
Forums are an excellent way to keep your visitor occupied, and they can express their opinion about your product and services. Publishers create massive traffic for affiliate programs using this method. Forums are available for free on the net which you need to embed and frequently update your user just by putting a link in the form of posts.

Word of Mouth
Word of mouth has always been a first-class way of marketing. It is used both in online and offline marketing by the publishers to promote the product among people they know and to create a viral. For example, Affiliate can extract their friends from the email they use and promote any website to them, and they can create a viral of it.

Mobile Marketing
With the inclusion of 3G in India and the world now Advertising through mobile phone is picking up with the publishers every day. There are millions of users those who are joining the Mobile Internet. As there is less contest right now in mobile marketing, it makes an excellent alternative for affiliates money to convert this traffic in to real. Mobile marketing is growing, and lack of information in this space makes it a feasible option.

Viral Marketing
Viral marketing is the finest way of marketing when you want to spend a lesser amount of money. It is an effective way for those Affiliates/Publishers who don’t want to spend a lot of amount on developing a site. They can create a Viral through emails social networking sites through sending messages on the Mobile. As mentioned, it is a cheap way to market the product or services.

Affiliate Marketing Model:-

There are different ways of affiliate marketing offered by affiliate programs available for the Affiliates or publishers. However, it all depends on the product which Affiliates have opted for. Different models work differently for affiliates. Affiliates are more concerned about cost per impression as it is not demanding for action from the visitors where as advertisers are keenly interested in CPA or revenue share as it is result oriented and achieving ROI is possible.

CPM (Cost per Thousand Impressions)
Cost per thousand impressions is one of the most preferred models opted by the publishers as it never demands action from the visitor. It is calculated on the basis of Thousand Impressions. For example when you open a website you see a pop up coming and even if you opt out of the pop up, you are still counted as one impression. From an advertiser point of view it is a method in which they are at a higher risk as there is no certainty that whether the campaign will convert or not. CPM is more suitable for those advertisers those who want to do more of branding then looking for sales from the campaign.

The total money spends on a CPM deal is measured by multiplying CPM rate by the no. of CPM. For example, 1M views or impressions at Rs.10 CPM are equal to Rs.10,000 total amount.

Almost all Indian Affiliate Programs Offers CPM to their affiliates because in India, still, not many internet visitors are ready to buy products online.

CPC (Cost Per Clicks)
Cost per click requires an action from the visitor that can only be generated just by a click of the visitor. It is much safer affiliate model for the affiliate programs as it requires an action which shows the intent of the user in the product or services. Therefore it is much secured than CPM for Advertisers but the rates of CPC are much higher than CPM. However there is lot of click fraud happening on the internet. People clicking on the desired product may land up on other product or other place. So it is always recommended for affiliate programs to give this model to those affiliates or publishers who do not indulge in these activities. For Example an advertiser present an affiliate that he is going to pay RS 10 for 20 clicks from the publisher.

CPA or CPS (Cost per Acquisition or Cost Per Sales)
Cost per acquisition is one of the best models for the advertisers and affiliate programs love to give these offers to the affiliates with the growing trend of people buying products online as they get better choices .Advertisers can achieve their ROI in this method as there is an action required from the visitors that ends up in a sale. However publishers in India are bit reluctant in picking up an offer for CPA as Indian internet users are not that eager to buy products online. CPA pays well to the affiliate as it can go very high. There are few things which advertiser has to take care of while giving out a CPA to make sure that the traffic is not an incentivized traffic if that is what they are not looking for.

For Example, CPA is typically very high from the minimum purchase on the site. Rs.100 on a minimum purchase of RS 25

CPL (Cost per Lead)
Cost per lead is growing fast in upcoming markets like India as the user has to just sign up for the services. He doesn’t need to buy anything, and later on, the sales team can put in all the efforts to convert those leads into an actual purchase on the site.

Revenue Share
Revenue share is best for those affiliate those who are looking for recurring income from the affiliate program. It happens where multiple purchases are made by the visitor. Publishers can receive money time and after so a click paying you money for years is an opportunity which should be grabbed with both hands. In a way, a publisher is a partner in the profits made by the advertiser. For example, if a publisher sends user to a shopping site and if he is on a revenue share of 25% and the visitor buys shoes of Rs. 1000 that means the publisher gets Rs. 250 and on the second purchase same user buys a pen of Rs.100 again the affiliate get a 25% share. So as long as the user stays on the site and keeps buying the Affiliates gets paid.

Pre Paid Model
In this model, advertiser just pays a set amount to an affiliate for a spot on a site, or maybe they pay for example for email shot of 1000 emails. In this case, the affiliate doesn’t have to worry about the results of the campaign, and the advertisers are not worried that they have to pay a significant amount on the purchases made by the user on the merchant’s site. However, the advertiser has to be sure of the traffic which the publisher is generating.