The Versa Blog

What’s Affiliate Marketing and How Can My Company Get Started?

September 4, 2012

Being an affiliate marketing company, we often jump right into the nitty gritty details of affiliate management in our blog postings.  Well, sometimes it’s good to take a step back and give a broader overview of the channel.
How affiliate marketing works
The basic premise behind affiliate marketing is that one company has something to sell and another company has a website or marketing effort that can generate traffic.  Each side wants to generate revenue – this is where affiliate marketing comes in.  An affiliate program partners the two companies so that the company with something to sell (the advertiser) and the company with traffic (the affiliate) can work together.  So how does money exchange hands?  Well, in most programs the advertiser will pay (commission) the affiliate for referred traffic that converts into a sale.  Most often the payment to an affiliate is based on a percentage of the sale amount.

Affiliate Marketing Company

The affiliate network
Now that we have two companies that want to work together, how is this relationship facilitated?  This is accomplished through the involvement of third-party affiliate networks.  The affiliate networks handle all tracking and commission distribution.  They also provide additional features and functionality such as; communication tools, media hosting, reporting, application processing, etc.  Affiliate networks are a critical component of every program and represent the link between the affiliate and advertiser.
Affiliate media (in a bit more detail)
Media is advertisements that affiliates use to promote an advertiser’s website and products.  Affiliate channel media can come in the form of banners, text links, product data feeds and digital rich media.  Banners come in various sizes and can be either static or animated.  Text links are just as they sound, they are text that is turned into a hyper-link so that a consumer can click on it.  Product data feeds combine images and text which described specific products that the advertiser sells.  Digital rich media is more advanced and has dynamic functionality such as search boxes, widgets, etc.
Affiliate tracking (in a bit more detail)
Affiliate tracking mainly works off of cookies and pixels.  It all begins with the advertiser placing a bit of code (a pixel) on the order confirmation page of their shopping cart.  This code will record all affiliate sales and the specific affiliate that should be credited.  At the beginning of the tracking process the affiliate network imbeds code into the program media (media as described in the above section).  When an affiliate selects a piece of media from the advertiser’s affiliate program, the tracking code along with the image or text is placed on their website. When a consumer clicks on that piece of media a cookie is set on their browser.  The cookie tracks when the consumers clicked on media and if they made a purchase on the advertiser’s website.  When a purchase is made the consumer will reach an order confirmation page where the advertiser has already placed that bit of code (pixel).  The pixel then “fires” and references the cookie information to determine what affiliate should be credited for the sale.  The pixel relays this information to the affiliate network.
How to manage an affiliate program
Now that we understand how an affiliate program works, let’s shift the focus to how a company can manage their affiliate program.  This can be done in one of two ways.  The program can be managed internally or an external, outsourced, company can be leveraged.  In most cases, as you would assume, we recommend outsourced management.  The reason is simple.  Affiliate programs are extremely complex and take expertise to manage.  Most companies don’t have this type of experience in-house and so, for the fullest return, an outsourced affiliate management company is contracted.  Aside from the area of expertise, affiliate management companies have relationships with thousands of affiliates which are applied to the programs they manage.  Here at Versa Marketing, our account management team has cultivated relationships with the industries top affiliates.  This relationships are tapped for every program that we manage.

Affiliate Marketing Companies - Image
So what would an external affiliate management company, such as Versa Marketing, provide?  Below is high-level overview of our affiliate services.
First, we help companies structure their affiliate programs properly.  This involves determining the affiliate commission (10% vs. 20%) and the program restrictions.  We also selected the right network to launch with.  There are many different affiliate networks options and we have the knowledge to select the best networ based on the advertiser company and type of product.  Once those items are flushed out, we facilitate the entire network launch process.  This includes everything from, working with your technical team on tracking, to completing the network profile, to creating the program communications.  We also develop the media that your program will need – banners, textlinks, product data feeds, etc.
Once the program is launched we manage all of the maintenance aspects for your company’s program.  This would include items such as; application vetting, responding to affiliate questions and monitoring for fraud.  We provide reports to your company on a regular basis so that you can see the performance of your affiliate marketing program.  Basically, we ensure that your program is well maintained, running smoothly and that you’re informed.
Last, but certainly not least, is our affiliate recruiting and engagement.  This is by far, the most important aspect of any affiliate program.  Which makes sense, because affiliates are the ones who drive traffic and ultimately sales to your website.  We allocate almost 75% of our overall management to this area.  We work with affiliate across multiple marketing spectrums, including; blogger, coupon, loyalty, reward, content, niche, social media, shopping comparison, paid search and email affiliates.  These are the real drivers of any programs and we have access and relationships with thousands of them.
If you have ever contemplated launching an affiliate program for your company, give us a call.  We’ll discuss the pros and cons and examine whether an affiliate marketing program is right for your company.  More often than not, affiliate programs represent a potential new revenue stream and customer acquisition channel.  But programs must be, launched, managed, maintained and optimized expertly.
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