Things can get pretty confusing for website owners who are trying to monetize their existing traffic through affiliate marketing. Choosing the right offer out of thousands can become a little intimidating, if you don't know what to look for. Always remember if your ads are not relevant to your audience you will not succeed with affiliate marketing.
Here are some guidelines to further explain how to earn an income through affiliate marketing:
Commission Structure: The commission is generally the percentage of a sale that is paid to the affiliate for referring a customer. The commission percentage can range from the low single digits to more than 50%. (E-products generally have the highest commissions since the margins are close to 100%.)
Some offers will feature unique wrinkles in the commission structure:Multi-Tiers: While most commissions are a flat fee, some offers will pay out different percentages depending on sales volume.
Bonuses: Some merchants will offer bonuses for reaching certain sales thresholds, creating another opportunity to generate revenue for major affiliates.
Creative Options: Networks will generally provide a preview of the creative files a merchant has before you sign up. There are a couple elements of ads to evaluate:
- Technical aspects, such as size
- Overall quality
The first point is straightforward enough; affiliates need to identify offers that include ads that will fit easily into their site. For example, if your site has only 300×250 ad units you’ll want to stick only to offers that have a 300×250 ad.
Cookie Length: Affiliates receive credit for a conversion by placing a cookie on the computer of visitors they send to a merchant site, allowing the network to attribute sales to specific partners. Many merchants will give credit for a sale to an affiliate even if the sale comes after the initial visit to the site. For example, assume:
- Visitor clicks affiliate link on publisher site;
- Visitor browses merchant site, but doesn’t buy anything;
- Visitor returns to merchant site (by typing in URL) a week later and completes purchase.
Estimated Earnings: Many networks provide metrics on the earnings of other affiliates with certain offers. The standard metric is EPC, or earnings per click. This unit is generally presented as the total earnings for every 100 clicks received. An EPC of $97 means that for every 100 clicks on an affiliate link to that merchant, affiliates are generating $97 in revenue.
Reversal Rates: Reversals refer to completed sales for which the commission is cancelled and returned. This can happen for a number of different reasons:
- The order was cancelled by customer (and refunded by merchant);
- The transaction was a duplicate (i.e., customer card charged twice);
- The transaction was fraudulent;
- A violation of the merchant’s affiliate policy was committed.
Pricing Models: Affiliate marketing compensation arrangements generally fall into one of three categories:
- Pay-per-sale (most common)
- Pay-per-lead (somewhat common)
- Pay-per-click (pretty rare)
The fact is success will only come if you are running affiliate marketing ads that are right for your audience. Finding the best offers that pay out the best commissions will become easier to spot over time.
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