• product development expenses
• advertising costs
• inventory to maintain
• overhead expenses (salaries, physical location, etc.)
In other words, affiliates do not have millions at stake.
But you do have one big risk...
If a merchant or backend provider goes out of business, it takes you with it. Let’s talk briefly about how to minimize this risk...
After you review the affiliate directories and backend providers, you should have a good selection of programs. How many programs should you choose? How do you know which ones are solid?
You don’t, really. Yes, you can weed out the dogs by doing the basic research outlined below. But most of us just don’t have the ability or time to thoroughly analyze a company, its financials, and its business model… and then predict success or failure.
So your best bet is to spread your business among as many programs as possible that fit with your Site Concept. But there are some important qualifiers to this policy...
1) If you represent 10 programs, don’t put them all on the same KeywordFocused Content Page. Work in only the few that are tightly relevant to the content of each page.
2) Pick the best-of-breed from each category of merchant. For example, if you plan on representing a Net marketing company, SiteSell would be the obvious choice (ahem!).
If you plan unusually heavy support for a given category of product, you might want to represent the best two merchants. For example, suppose you foresee hundreds of book links on your site. It might be a good idea to choose the best 2 online bookstores -- if Bookstore A and Bookstore B fit with your concept and both seem to be stable companies, then use these two. No more, though...
3) Don’t choose too many programs. Tracking each program takes time, so 10 programs is probably a good balance. If any one of them dies, you don’t lose too much.
4) Your best results will come from focusing on a smaller group of quality programs (from within the 10). Their products must...• be excellent
• be complementary with, even enhance, each other
• fit your concept
and...
• be from a rock-solid company. Since you will give these companies more attention than the others, you must feel very comfortable with their business prospects.
Here’s the bottom line...Things happen. So protect yourself by choosing a variety of affiliate partners.
Of course, you can also reduce your risk by weeding out the dogs through some basic research...
Find the good programs and eliminate the dogs by considering the following plus signs, minus signs, and red flags. Let’s start with the plus signs, signified by +, which means “good things to look for.” Here they are, in the approximate order of importance...
+ High quality product or service -- Remember, it’s your reputation that is on the line (and online!). Don’t recommend products that UNDERdeliver.
+ Ability for affiliate to link straight to individual products, rather than just to the home page. (If the visitor has to find the product that you recommend, your Conversion Rate plummets.)
+ Type of payment model... Pay-per-sale and pay-per-lead are good. This is true “performance marketing.” If your referred visitor delivers the desired response, you get paid. What about “pay-per-click?” See red flags below.
+ Affiliate Support...• Detailed traffic and linking stats
• Notification by e-mail when a sale is made
• Useful marketing assistance -- provides traffic-building and sales-getting tools
• High-quality newsletter that educates, trains, and accounts for amounts earned
• Professional marketing materials available
• Affiliates receive discounts on products
Great affiliate support is important for a “between the lines” reason, too. It indicates a high degree of commitment to the program and its affiliates.
+ Pays good commission -- Hard goods have lower margins than digital ones so their commissions will be lower. Still, you should make at least 10% (hard goods) or 20% (digital goods) on any product that you recommend. Don’t be scared off by low-priced products if they offer a good % commission -- the lower dollar value per sale is offset by the higher sales volume.
+ Must be free (no charge) to join, no need to buy the product. + Lifetime commission -- If the program pays a commission on future sales of other products to customers that you refer, this is a huge plus.
+ Two-tier commission -- If the program pays a commission on affiliates who join because of you, this is also great.+ Lifetime cookie -- Do you receive a commission if the person you referred returns and buys within one month? Three months? The cookie that tracks this should not expire.
+ Restriction on number of affiliates -- You won’t find many of these. But if you do find one, grab it.+ Monthly payment, with reasonable minimum.
Do all those plus signs have to be present? No. But the more, the merrier.
Minus signs are definite detractors. Naturally, if you are unable to give a + to any of the criteria listed just above, consider its absence to be a minus. And watch out for these negative factors...
— Slow and/or poor support.— Unethical conduct of any kind.
— Reports of late (or lack of) payments.
— Allowing SPAM, or seeming to send SPAM themselves.
— Defective affiliate-joining process. Hey, if they can’t get this right...
— Clauses in the agreement that you find unacceptable.
• Example -- If lifetime customers are important to you, then a clause that allows unilateral termination or modification of the agreement at any time by the company without just cause effectively makes the lifetime commitment of no value.
• Example -- No exclusivity (i.e., you should be allowed to represent more than one book vendor).And perhaps the most worrisome factor of all…
— “The dark side” of affiliate programs. Is the program really just a way to legally bribe folks to recommend overpriced, UNDERdelivering products in order to collect excessive commissions?
There is a commission that is “just right” for each product. If the commission is too low, it is not interesting enough for affiliates. If it is too high, it’s a consumer rip-off. (Excessive commissions also push the price of the product up to levels that cannot survive for long in the competitive Net marketplace.)
Your job as an affiliate is an important one. You deliver high-value content that gains the confidence and trust of your visitor/reader. You include recommendations and referrals to your new friends as part of your service and content. Recommending anything less than sterling products is simply sophisticated, subtle fraud. Not the way to build up your primary service business.
If you find products that fit your theme but that don’t deliver quality, sell the distributor advertising on your site. This way, you don’t compromise your ethics or your reputation because the customer recognizes advertising for what it is... a promotion. Nothing wrong with that at all, because her “guard is up.”
Bottom line...Don’t allow yourself to be bribed into recommending such products -- in the long run, your reputation will be ruined. And so will your business.
On the other hand, when your visitors are rewarded repeatedly by your rich recommendations, they will increasingly like you and respect your judgment and they'll keep coming back for more!
Red flags
are warning signs...
“Pay-per-click” method of payment. In this method, you get paid whenever a visitor clicks on your link. No purchase or lead-generation necessary. Unfortunately, it’s wide open for abuse -- very sophisticated folks create incentives to get thousands of people to click on their links. But the visitors could care less about the products being promoted. The scam is virtually unstoppable. And merchants end up paying for nothing.
So merchants cancel or change the program. Microsoft’s Clicktrade used to offer pay-per-click backend programming for merchants. Microsoft dropped it due to the level of fraudulent activity that hurt merchants.
In theory, pay-per-click affiliate programs are a good idea. Unfortunately, they attract "scam artist affiliates." Sooner or later, merchants seem to throw in the towel against the onslaught. So be wary -- this kind of affiliate program tends to dissolve or mutate into a different model.
Multi-tier commission . This is online Multi-Level Marketing (MLM), which is perfectly legal. Do your due diligence to make sure, of course, that a multi-tier program is not an illegal pyramid scheme. If the “game” is to earn income by signing up others, you are most likely dealing with a pyramid. Many people confuse honest, legal MLM with dishonest, scammy pyramid schemes.
With MLM (also known as Network Marketing), it becomes as important to build a strong downline as it does to sell product. Also, MLM companies are subject to numerous regulations (to prevent them from becoming pyramids, basically). Not all online companies are complying (or even know about this!).
Watch for a big shakeout with many of these companies going belly-up. If multitier interests you, I would recommend that you check out established offline MLMs that are now online. Or... investigate all others extremely carefully before you decide to invest a lot of time in these.
Poor or little info about affiliate program available. What kind of priority could it have?
Dead links on merchant site.
No clear anti-spamming policy visible on site.
Site that promotes “get-rich-quick” gimmicks.
Financially unstable. You can lose a lot of momentum if a company goes under, especially if you are banking on lifetime customer/2-tier promises. Alexa serves as a wonderful final check in two ways…
1) Its stats indicate how successful a program is.
2) The related links suggest good competing merchants.
Use the following steps…
Search It! > Popularity (STEP 1) > Alexa Ranking (STEP 2) > name of a site (STEP 3)
Google uses the quality (and to some extent, the quantity) of IN-pointing links to measure the importance of a page. The higher the score, the more highly Google regards the page. A score of 5 or higher indicates a certain degree of success.
Search It! > Popularity (STEP 1) > Google PageRank (STEP 2) > name of a site (STEP 3)
Well done! You've grown and pruned a list of affiliate programs for your Site Concept. This will give you an additional income stream. Following the principle of using more than one basket for your eggs, you have spread your programs among several merchants.
Power Tip -- If you want to jump-start your monetization, select two or three high quality affiliate programs that meet the criteria above. Then add in Google AdSense as a secondary income source. With many of the best features of an affiliate program, AdSense allows you to monetize quickly and simply. More about AdSense below…
Now you want to diversify further and take full advantage of what the Web has to offer, so you will investigate other potential income streams…