So, lets look at the big picture here. It helps most people to visualize the big picture before they drill down to specifics and details, so let’s look a that now. Affiliate marketing involves three major entities, each an independent portion of the whole:
1. A retailer, wholesaler or service vendor who wants to generate more customers and business via their website.
2. An affiliate network that contracts with these businesses to bring them customers.
3. Affiliate marketers then set up their internet marketing to deliver these customers through the affiliate network to the vendor.
Now, the retailer knows that they can spend a fortune to do their own online marketing, but along with that expense is the overhead of maintaining many websites and having to monitor their results. They approach an affiliate network, offering them compensation based on their ability to deliver customers. The affiliate network does just what their name implies, building a network of affiliate marketers who are each building sites and blogs to market the products and services the vendors have placed with the network.
We know what the retailer has to gain, and that they get their income from the end customer transaction. But how does the rest of the process work, and how are affiliates and their networks compensated? The beauty of affiliate marketing is that everyone wins when the internet consumer does what we want.
1. The consumer locates an enticing offer or link at an affiliate marketing site.
2. They click on it, ending up at the retailer’s site, but with a tracking code that shows where they came from.
3. This code indicates the affiliate marketer and their network.
4. The retailer has contracted to pay the network a set amount or percentage for each conversion.
5. The affiliate network takes a small commission off the top, paying the agreed amount (or “payout”) to the affiliate marketer.
This is a really democratic system, as there are no conflicts of interest. Everybody involved wins, even the consumer, as they end up with the product, service, or free trial they want. They affiliate marketer (you) isn’t the bottom of the chain, they’re the beginning. Without your efforts placed into building excellent web sites and blogs, search engine strategies to get the consumers to them, and the right content to get that click, nobody wins. When we succeed, our affiliate networks get paid well, so they want to help us in any way possible to succeed in developing our sites, blogs, and other marketing venues. They are competing among each other for the business of the vendors and retailers, as well as higher payouts from them based on their performance but, their performance is dependent upon ours as the affiliates.
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