Coming to a Web Store Near You - Affiliate Marketing

(Web Tactics by Peter Greene - InfoStar.com)

How quickly has the Web become an accepted media? Let the numbers give the answer. In 1998 Media Metrix studied that question and here is what they found. In the U.S., it took 40 years for radio to have 50 million listeners, 13 years for television and 13 years for cable television to have 50 million viewers, and it has taken the World Wide Web (Web) only 4 years to reach the 50 million user mark. Today, according to a CommerceNet/Nielsen Media Research study puts the number of Internet users over 92 million in the U.S. and Canada.

What strategies are businesses using to increase sales from their online stores? One strategy that sticks out and has become readily accepted is affiliate marketing. Affiliate marketing may be familiar to some; it is very similar to network marketing. Amway uses network marketing to promote its multi-billion dollar a year industry. In cyberspace it is Amazon.com that has made Internet strategists and business planners take notice of online affiliate marketing. Amway has noticed this online strategy too and is about to launch their Web presence with Quixtar.

Today, Amazon has over 300,000 "compensated" affiliate member Web sites that point to it for commissioned or referred online purchases through Amazon's bookstore. An Amazon.com affiliate's referral or "commission" varies from 5 to 15% of the purchase price excluding shipping and taxes. Affiliate marketing has played a huge role in helping catapult Amazon to Internet eCommerce (electronic commerce or EC) stardom and infamy. It forced several bricks and mortar retailers to play their hand at EC and to move quickly. Lots of people notice your business model when your stock trades at $300 a share and you are losing money!

Amazon.com competitors Barnes and Noble and Borders have affiliate marketing programs. Other popular Web stores that also have affiliate marketing programs include CDNow, Sharper Image, JCrew, Dell Computer, eToys, JC Penny, 800-Flowers, ESPN, CBS Sportsline and others. In case you haven't noticed, basically anything sold online can utilize an affiliate marketing program. You just have to understand what it is all about and how to manage it!

How does online affiliate marketing work? It is your sales force on the Web. It is a your hyperlinked network of affiliated Web sites that direct Web surfers and shoppers to your Web store to look, browse and buy! The process begins by having an affiliate member Web site direct or "link" a Web shopper to your Web store to investigate making a purchase and then to actually buy an item; the whole process is tracked via software or a service. The affiliate management software or service records the number of visits, purchases, and the eventual commissions that you have collected which are due payable to your affiliate member Web sites.

What are some of the issues with setting up an online affiliate marketing network? First, you will need to select a product or service to facilitate the management and tracking of your affiliates. Second, how much will you reward (commission) your affiliates for bringing in new Web customers. Third, can your present staff and accounting system handle your new eCommerce component for timely payouts to your affiliates. Fourth, how often will you pay your affiliates - monthly or quarterly; and what will be the threshold before you will pay them - $10, $50 or $100? Fifth, you and your affiliates must typically agree to an affiliate marketing contract; what are the legal issues for your business to consider? Six, will this alter or affect any of your pre-existing sales channels? Managing an affiliate network of potentially thousands of Web affiliate relationships can prove to be burdensome. Additional problems can arise when tracking and reconciling affiliate commission payment on returned goods. Furthermore, affiliate retention and affiliate network growth are two very important considerations for perpetuating a successful affiliate marketing plan.

There are many online resources for you to access to help understand and evaluate online affiliate marketing. Logon to the Internet and point your Web browser to WEBHITZ (http://www.webhitz.com/) and select the WebMaster Menus. The Affiliate Marketing links are accessible via a pull-down menu on the top left. Simply click on the down arrow to make your selection. To access the top most Web site in a category like "Make Your Site Sell" simply click on GO. There's a lot to read and absorb!

Direct your questions to Peter Greene, InfoStar.com, 7637 Farmington Way, Madison, WI 53717, 608-833-8432 or via email mailto:pgreene@infostar.com.

Peter Greene is the CEO of InfoStar.com (http://www.infostar.com/), editor of e.bill Magazine (http://www.ebillmag.com/) and teaches classes on Web marketing and EC. Peter is known for his monthly public radio talkshow on computers & technology. Copyright Peter Greene, 1999 All Rights Reserved.

Notable Web resources cited:

Media Metrix - http://www.mediametrix.com/

CommerceNet/Nielsen Media Research - http://www.nielsenmedia.com/

Amway - http://www.amway.com/

Quixtar - http://www.quixtar.com/

Amazon.com - www.amazon.com

Webhitz - http://www.webhitz.com/

Make Your Site Sell - info.sitesell.com