Understanding some affiliate terms

When you’re shopping for affiliate programs, you run into words or phrases associated with the affiliate process. Some you may recognize, and others are probably new to you. Become familiar with these concepts so that you can understand what’s involved in participating in a successful affiliate program:

• Advertiser: A company or site that wants other sites (affiliates) to sell its merchandise
• Affiliate: An individual, a company, or a site that’s paid money to promote another company’s products or services
• Affiliate network: A single company that oversees affiliate programs for multiple vendors and then recruits and approves affiliates on behalf of the companies they represent
• AutoRenew: A feature that automatically renews an affiliate’s account upon expiration of the original term or length of time
• Cookies: Technology used in coordination with web browsers to store information about a specific user
• Cost per click (CPC): An amount of money an advertiser pays a site each time a visitor responds to an ad (specifically, by clicking a link or an ad)
• Creatives: Advertising material (usually such items as banner ads, links, e-mail content, and pop-up ads) that you, the affiliate, use to promote items to visitors
• Merchant: Another term for advertiser
• Pay-for-performance: The process of rewarding a company or website (usually with money) for driving traffic to another site
• Publisher: The company or site that wants to be an affiliate
• Qualifying link: An approved link given to an affiliate to place on a website to earn commissions
• Required URL: The specific website address where affiliate links must point to earn commissions for referred traffic, or visitors
• Subaffiliate: Another site that’s managed under a single affiliate account; anything other than your primary website that’s added to your account
• Tracking tag (or tag): A device, usually a link, given to an affiliate to keep up with the success of a campaign; allows visits to be tracked
• Unique visitors: A specific number of individuals who visit a site within a certain period, usually counted in a daily or monthly time frame

Types of affiliate payments

Not all affiliate income is equal. You can add different types of links or offers to your website, and each translates into a different level of payment. In other words, some actions are worth more money to advertisers. Here is a breakdown of the common affiliate payment types:

• CPA (cost per action): Just like it sounds, CPAs are determined by some sort of predetermined action that a visitor takes in relation to the affiliate promotions you offer on your website.
• CPC (cost per click): This payment is based on the amount of traffic you send to the advertiser’s or merchant’s website after the visitors clicked a link on your site.
• CPL (cost per lead): Often associated with product trials, you are paid when someone completes a form and becomes a lead for the merchant. Leads are particularly important for B2B (business-to-business) companies and, depending on the type of offer, CPLs can have a high payout.
• CPS (cost per sale): You are paid when someone purchases a product or service after clicking a link or an ad from your website. CPS payments are also usually higher because they result in a sale.

Finding an affiliate program

Affiliate-marketing programs are broken into three common sources, or places where they originate:

• Retail sites: Plenty of traditional retailers offer bona fide affiliate programs. Among some of the bigger names are Target, The Container Store, Nordstrom’s, and Lands’ End. Of course, each one is using an affiliate program to drive sales of its online business, not its bricks-and-mortar version. One way to locate stores with affiliate programs is simply to make a list of your favorites and do the research. The process takes time, but it’s worth it. Alternatively, you can search for your favorite retailers in an affiliate network (which manages affiliate programs for many different businesses). Most major retailers use an affiliate network to manage their program.

  A store with an affiliate program may identify the opportunity on its website. Look for the Affiliates tab on a site’s home page, or sometimes on the About Us page. However, some large retailers may not publicly promote their affiliate program. For those, you’ll have to depend on finding them listed in an affiliate network site — keep reading to learn more about these.

• Established online vendors: Many branded names that are best known for delivering products through their Internet presence cater to affiliates. Topping the list are e-commerce giants Apple iTunes and Dell (computers).

• Pay-for-performance networks: In addition to searching independent sites, all-in-one sites can save you time. Pay-for-performance networks have assembled hundreds or thousands of affiliate-marketing programs under one roof.

  An advantage of using a network is that you can apply for multiple programs at one time, and you can manage an unlimited number of your affiliate accounts in one place. Because major retailers often use networks to handle their affiliate programs, you’re privy to exclusive promotions reserved only for the networks’ affiliates. Networks are also a good way to locate category-specific programs, such as security software or gardening supplies, or to find lesser known products and services, such as e-books targeted to small businesses or coupon offers for pregnant women.

  The networks on this list offer affiliate programs for just about everything under the sun:

  • ClickBank: www.clickbank.com
  • CJ Affiliate by Conversant: www.cj.com
  • Pepperjam: www.pepperjam.com
  • Amazon Associates: http://affiliate-program.amazon.com
  • Rakuten Marketing: www.marketing.rakuten.com/affiliate-marketing

When you’re signing up as an affiliate, visit any community message boards set up for affiliates. Find out what tools other affiliates found successful. If you’re assigned to an affiliate-marketing manager, don’t hesitate to drop an e-mail and ask for suggestions based on your site’s core audience.

Illegal affiliations

Participation in any illegal affiliate programs is limited by the governing laws of your home state or country. You must know the law and then abide by it. To avoid becoming an outlaw, follow these safety tips:

• Always read the terms and conditions of the affiliate agreement. Affiliate programs might disclose legal caveats to you in easy-to-find warnings on their sites, but more than likely you find them in the fine print. Read agreements carefully to determine your potential liabilities for participating.
• Look for clues to the country of origin. Affiliate programs run from foreign countries, or without a U.S. base of operations, may be a sign that the activity isn’t permitted stateside. Or when you sign up for an affiliate program, you may be asked to enter your country of origin. After doing so, watch for a message or special instruction that serves as a disclaimer about doing business in particular countries.
• Conduct a search. Although this tip isn’t foolproof, you can start verifying the legitimacy of a program by doing a simple search. Enter in a search engine the name of the company you want to do business with or the type of program (online games, for example). Especially if it’s a hot topic, you quickly find any red flags.
• Investigate the company. Although some specific products or subjects may be off-limits, sometimes you run into blacklisted companies. Participating in an affiliate program with one of these companies can label you as “aiding and abetting.” If something seems questionable, don’t hesitate to check out the company further. Start with the Better Business Bureau Online at www.bbbonline.org.
• Check with authorities. The U.S. Department of Justice has information on a handful of questionable Internet activities, including online gambling and selling prescription medication online. Visit the site at www.usdoj.gov. The Federal Trade Commission is another source for validating illegal affiliate operations. You can access it at www.ftc.gov.

Questionable affiliations

Affiliate programs that are technically legal but considered somewhat shady or distasteful are a sore spot. The “shady or distasteful” part of that description may sound like a line from the Leave It to Beaver generation, but it holds true.

These affiliate-marketing programs aren’t completely on the up-and-up because of the validity of their offerings or their operational practices. For example, if a program has a long list of complaints registered by unhappy customers and affiliates, this company is skirting disaster. Or maybe the program is connected to obscene or pornographic products and there’s a question about how the material is being distributed.

For lots of reasons, think twice before affiliating with these types of organizations. Be aware that your site’s name and reputation become linked with any program you promote. With that advice in mind, here’s a list of red flags to watch for when you review affiliate programs:

• No money-back guarantee is offered. Be wary of programs that don’t provide product guarantees or some form of money-back guarantee to customers. As a prospective affiliate, this one definitely presents a red flag. You can get stuck holding the bag and taking the blame when your referred customers get burned.
• Returning a product is especially complicated. Nobody likes to deal with returns, but reputable companies offer return policies. Usually, you don't need an act of Congress to make the exchange!
• Corporate information isn’t readily available or verifiable. Legitimate companies place contact information prominently on their websites. You can also cross-reference and verify company information by using domain-registration services and other affiliations.
• Affiliates or customers are unhappy. Monitor the parent site’s message boards, or other community message boards, for tales of broken promises and disastrous customer service.
• No support is offered. The purpose of an affiliate program is to use other sites to drive more traffic and customers to your product. A company with that goal in mind provides resources and support to help affiliates be successful. Newsletters, contact information for technical support, links, banner ads, and other marketing materials are the norm in legitimate affiliate programs. If these items aren’t mentioned, trouble might lay ahead.

• A sign-up fee is required. Signing up for most affiliate programs is free. If you have to pay to join or have your application “screened,” run!

• Scam associations are obvious. You may find a company with no complaints that promotes the type of material that is often labeled as a scam or shows up on consumer watchdog lists. Work-at-home programs and business opportunities are often among the list of top offenders (although plenty of legitimate ones exist, too).
• Legal proceedings have been initiated. Although you might not have any concrete information, check for lawsuits that have been filed against a company or any pending legal proceedings that might point to fraud in the making. You can check with the Better Business Bureau online or call your state's attorney general’s office. This information might also show up in an Internet search.

Another source of telling information is a company’s affiliate agreement, along with its policy for accepting affiliate marketers.

Look for affiliate programs that adhere to strict guidelines. A legitimate program typically turns down approval of a site or cancels an affiliate agreement that has any of these characteristics:

• Inactive URL: Because your site cannot be verified, the domain may not match what you entered or your site may be under construction.
• Trademark infringement: You have references to registered names or logos on your site.
• Mismatched information: The information you provide doesn’t match your tax information, business license registration, or domain registration from other, legitimate resources.
• Questionable content: Your site contains pornography or obscene information; contains hate-oriented information; distributes or links to illegal substances; promotes gambling activities; or is otherwise deemed questionable.
• Questionable recruiting: Affiliates who plan to market a program by using aggressive e-mail campaigns can violate anti-spamming laws.

Based on your state of residence, you may not be eligible to participate in an affiliate program. California and other states passed a law requiring the collection of taxes on all online sales, regardless of whether you have a physical location in the state — and they extended this law to cover affiliates. For that reason, major online retailers (such as Amazon) have pulled eligibility of affiliate participation to businesses and individuals residing in these states, which also includes Connecticut, Rhode Island, Colorado, Illinois, Arkansas, and North Carolina. Doing this helps Amazon avoid penalties for tax collection oversights and the creation of complicated tax collection procedures to cover all their affiliates.