Chapter 1. What Is Affiliate Marketing?
Here’s the bottom line: An affiliate program is a win/win situation. Merchants gain the desired actions or consumer sales, and affiliates earn money. But affiliate marketing is not as simple as it seems. Having an affiliate program doesn’t guarantee success. It takes hard work, know how, and a lot of time to make affiliate marketing work for your company. And it’s all worth it, because affiliate marketing is becoming a central component of today’s online company’s operations and a cornerstone of its marketing strategy.
What a difference a year or so makes.
What was unimportant only 18 months ago is now deemed critical to the success of online businesses. In a not so surprising turn of events, dot-coms are now expected to show performance, revenue—and yes, profits! Whereas before it was rational to spend millions of dollars on banner ads, branding campaigns, and sponsorships with little or no return on investment, that type of marketing strategy is being seriously reconsidered.
What’s a Branding Campaign?
| These ad campaigns have the purpose of building awareness of the company in the consumer’s eyes. Nike’s “Just Do It!” is more branding campaign than product advertising. |
If you listen to online marketing managers today, you’d think they’d just discovered that spending millions of dollars on TV, banner ads (see Figure 1.1), and Web sponsorships is not a cost effective way of acquiring customers and reaching profitability. Predictably, these marketing managers are diligently looking for new ways to get a higher return on their online marketing dollar.
Figure 1.1. Banner ads can be placed anywhere on a Web page and come in all sizes. They are used for both brand awareness and as a call to action.
This return on one’s advertising investment goes for any online business—small, medium, or large.
What’s a Banner Ad?
| A banner ad is an electronic billboard or ad in the form of a graphic image that comes in many sizes and resides on a Web page. Banner ad space is sold to advertisers to earn revenue for the Web site. |
Profitability, it seems, has become a trend. Proof of this is the recent boom in affiliate marketing. According to Affiliate Metrix (www.affiliatemetrix.com), 68% of all affiliate programs were launched in the year 2000. For a long time, there have been two camps in Internet marketing: the branding people and the direct marketing people. The branding people believed that it was all right to spend money without results as long as it strengthened a company’s brand. The direct marketing people, on the other hand, held the position that if a company didn’t make money on the money they’d spent, they would go out of business.
Although the camps seem to be in conflict, there is a new way where a business can do both. In fact, this new way is not so new at all, and it was an old-economy company that figured out the solution years ago.