Tuesday, November 6, 2007

Multi tier programs

Some advertisers offer multi-tier programs that distribute commission into a hierarchical referral

network of sign-ups and sub-partners. In practical terms: publisher "A" signs up to the program with an

advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher "A"

attracts other publishers ("B", "C", etc.) to sign up for the same program using her sign-up code all

future activities by the joining publishers "B" and "C" will result in additional, lower commission for

publisher "A".

Snowballing, this system rewards a chain of hierarchical publishers who may or may not know of each

others' existence, yet generate income for the higher level signup. This sort of structure has been

successfully implemented by a company called Quixtar.com, a division of Alticor, the parent company of

Amway. Quixtar has implemented a network marketing structure to implement its marketing program for

major corporations such as Barnes & Noble, Office Depot, Sony Music and hundreds more.

Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Referral

programs beyond 2-tier are multi-level marketing (MLM) or network marketing.

Even though Quixtar compensation plan is network marketing & wouldn't be considered 'affiliate

marketing', the big company partners are considered and call themselves affiliates. Therefore, you may

argue that the Quixtar company is the affiliate marketer for its partner corporation.


From the advertiser perspective

Pros and cons

Merchants like affiliate marketing,[17] because in most cases, it is a "pay for performance model",

meaning the merchant does not incur a marketing expense unless results are realized, excluding the

initial setup and development of the program. Some businesses owe much of their growth and success to

this marketing technique, one example being Amazon.com, especially small and midsize businesses.

However, unlike display advertising, affiliate marketing is not easily scalable.

Implementation options

Some merchants run their own affiliate programs (In House) while others use third party services

provided by intermediaries to track traffic or sales that are referred from affiliates. (see outsourced

program management) Merchants can choose from two different types of affiliate management solutions,

standalone software or hosted services typically called affiliate networks.

Affiliate management and program management outsourcing

Main article: Affiliate manager

Successful affiliate programs require a lot of maintenance and work. The number of affiliate programs

just a few years back was much smaller than it is today. Having an affiliate program that is successful

is not as easy anymore. The days when programs could generate considerable revenue for the merchant even

if they were poorly or not at all managed ("auto-drive") is over.

Those uncontrolled programs were one of the reasons why some of the not so positive examples of

affiliates were able to do what they did (spamming,[18] trademark infringement, false advertising,

"cookie cutting", typosquatting[19] etc.)

The increase of number of internet businesses in combination with the increased number of people that

trust the current technology enough to do shopping and business online caused and still causes a further

maturing of affiliate marketing. The opportunities to generate considerable amount of profit in

combination with a much more crowded marketplace filled with about equal quality and sized competitors

made it harder for merchants to get noticed, but at the same time the rewards if you get noticed much

larger.

Internet advertising industry became much more professional and online media is in some areas closing

the gap to offline media, where advertising is highly professional and very competitive for a lot of

years already. The requirements to be successful are much higher than they were in the past. Those

requirements are becoming often too much of a burden for the merchant to do it successfully in-house.

More and more merchants are looking for alternative options which they find in relatively new outsourced

(affiliate) program management or OPM companies that were often founded by veteran affiliate managers

and network program managers.[20]

The OPM are doing this highly specialized job of affiliate program management for the merchant as a

service agency very much like Ad agencies are doing the job to promote a brand or product in the offline

world today.

Types of publisher (affiliate) websites
Companies and websites in affiliate marketing
Companies and websites in affiliate marketing

Affiliate sites are often categorized by merchants (advertisers) and affiliate networks. The main

categories are:

* Search affiliates that utilize pay per click search engines to promote the advertisers offers

(search arbitrage)
* Comparison shopping sites and directories
* Loyalty sites, typically characterized by providing a reward system for purchases via points back,

cash back or charitable donations
* Coupon and rebate sites that focus on sales promotions
* Content and niche sites, including product review sites
* Personal websites (these type of sites were the reason for the birth of affiliate marketing, but

are today almost reduced to complete irrelevance compared to the other types of affiliate sites)
* Blogs and RSS feeds
* Email list affiliates (owners of large opt-in email list(s))
* Registration path affiliates that include offers from other companies during a registration

process on their own website.
* Shopping directories that list merchants by categories without providing coupons, price comparison

and other features based on information that frequently change and require ongoing updates.
* CPA networks are top tier affiliates that expose offers from advertiser they are affiliated with

to their own network of affiliates (not to confuse with 2nd tier)

Finding affiliate partners (advertisers)

Affiliate networks that have already a number of advertisers usually also have a large number of

publishers already. This large pool of affiliates could be recruited or they might even apply to the

program by themselves.

Relevant sites that attract the same audiences as the advertiser is trying to attract, but are not

competing with the advertiser are potential affiliate partners as well. Even vendors or the existing

customers could be recruited as affiliate, if it makes sense and is not violating any legal restrictions

or regulations.

Finding affiliate programs (publishers)

Affiliate programs directories are one way to find affiliate programs, another method is large affiliate

networks that provide the platform for dozens or even hundreds of advertisers. The third option is to

check the target website itself for a reference to their affiliate program. Websites, which offer an

affiliate program often, have a link titled "affiliate program", "affiliates", "referral program" or

"webmasters" somewhere on their website, usually in the footer or "About" section of the site.

Past and current issues

In the early days of affiliate marketing, there was very little control over what affiliates were doing,

which was abused by a large number of affiliates. Affiliates used false advertisements, forced clicks to

get tracking cookies set on users' computers, and adware, which displays ads on computers. Many

affiliate programs were poorly managed.

Email spam

In its early days many internet users held negative opinions of affiliate marketing due to the tendency

of affiliates to use spam to promote the programs in which they were enrolled.[21] As affiliate

marketing has matured many affiliate merchants have refined their terms and conditions to prohibit

affiliates from spamming.

Search engine spam / spamdexing

There used to be much debate around the affiliate practice of spamdexing and many affiliates have

converted from sending email spam to creating large volumes of autogenerated webpages, many-a-times,

using product data-feeds provided by merchants. Each devoted to different niche keywords as a way of

"SEOing" (see search engine optimization) their sites with the search engines. This is sometimes

referred to as spamming the search engine results. Spam is the biggest threat to organic search engines

whose goal is to provide quality search results for keywords or phrases entered by their users. Google's

algorithm update dubbed "BigDaddy" in February 2006 which was the final stage of Google's major update

dubbed "Jagger" which started mid-summer 2005 specifically targeted this kind of spam with great success

and enabled Google to remove a large amount of mostly computer generated duplicate content from its

index.

Sites made up mostly of affiliate links are usually badly regarded as they do not offer quality content.

In 2005 there were active changes made by Google whereby certain websites were labeled as "thin

affiliates"[22] and were either removed from the index, or taken from the first 2 pages of the results

and moved deeper within the index. In order to avoid this categorization, webmasters who are affiliate

marketers must create real value within their websites that distinguishes their work from the work of

spammers or banner farms with nothing but links leading to the merchant sites.

Affiliate links work best in the context of the information contained within the website. For instance,

if a website is about "How to publish a website", within the content an affiliate link leading to a

merchant's ISP site would be appropriate. If a website is about sports, then an affiliate link leading

to a sporting goods site might work well within the content of the articles and information about

sports. The idea is to publish quality information within the site, and to link "in context" to related

merchant's sites.

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