Tuesday, April 29, 2008

8 Factors to Consider when Choosing Affiliate Programs

There are literally millions of affiliate programs on the Internet today. They're sitting there, waiting for someone like you to sign up and start promoting products. But not all programs will make you the money you want, and not all come from quality merchants. As an affiliate you need to weed out the good from the bad and find what's good for you so that you maximize your profits with less effort.

Affiliate marketing is currently a booming industry as more people quit their jobs to work for themselves at home. As such, an increasing number of merchants are beginning to provide affiliate programs. Many see the benefits of having someone else bring them customers and how cost efficient it can be to not pay salaries and benefits to an in-house sales force. It just makes sense.

I know that it can be extremely overwhelming to new affiliate entrepreneurs and even those who've been in the business for some time to choose the right affiliate programs. For many of us, it's a case of not wanting to waste time with a program that doesn't pay off. It can be a daunting task to figure out what to look for.

The one good thing to keep in mind is that unlike regular business ventures, you don't have to invest a lot of time or money to become an affiliate. If you choose the wrong merchant you can change rather easily without a significant loss. Of course however, we'd like to minimize the number of wrong merchants we join in the first place!

Let's consider 8 important points when trying to choose the right affiliate program.

1.Merchant Quality & Integrity

Every merchant is different. Some respect and value their affiliates, paying them a fair commission on-time for their efforts. Some merchants see affiliates as a free sales force to exploit (they bring me customers and I can pay them almost nothing – Ha Ha Ha!). Other merchants threw up a page on their website about an affiliate program years ago because 'everyone else was doing it' but nobody at the company even knows anything about it today.

Is the potential merchant reputable and honest? Do they have many affiliates or are you going to be the first? Call them, read their FAQ page, or find reviews by other affiliates online. How long have they been in business? If they've been around for a while, there's a good chance they will still be there tomorrow. Their Google PageRank value can be a good indicator of popularity. A '0' usually means a new business or one that websites don't link to whereas a higher number means longevity and more quality inbound links to the site. If you don't get a good vibe after visiting their website, you probably should avoid the program.

If the merchant has quality products that you believe in either because you've heard good things or because you have direct experience with them, you will find it much easier to become an affiliate with that merchant and recommend the product to your customers. If you can't stand behind the product you're selling, then you won't be able to maximize product sales. For example, if you hate fishing, don't try to sell fishing rods just because they're a hot item right now.

2.Commission Payout Amount

Many affiliates look only at the commission payout and decide whether to join the program based on the amount of money. If they're paying 90% commission it must be good right? Wrong! If you never are able to make a sale, then you get nothing! The question you want to ask is if the commission is reasonable for the product(s) you will be promoting. Are they compensating you adequately for the work you'll have to do to bring them customers? Obviously if two affiliate programs are offering the same product, the commission amount may hold more weight but I would recommend still considering other aspects of the program before diving in.

3.Commission Structure – CPA or Residual Income?

The vast majority of affiliate programs online pay you once for each sale. When you bring a new potential to the merchant and they convert, the merchant will pay you either a flat fee or a percentage of the sale. This is known as Cost-Per-Action (CPA) where the merchant incurs the cost when an action is performed (the customer buys, signs up, subscribes, etc.). Residual income however pays you a commission each time a customer buys something from the merchant or for each time they pay for their monthly subscription.

While residual income is very attractive and provides long-term passive income you should look closely at the type of affiliate program offering it. If a customer would never go back to buy anything or if they'd cancel their monthly subscription after the first month, a one time payment might be more appropriate and profitable. If however a one time payment isn't fair compensation because the customer you brought to the merchant would be a long-term client, then residual income is more appropriate. In general, recurring commissions are a better option because they provide income for life to you for efforts you did in the past.

4.Merchant's Website

Many affiliates forget that customers will be diverted to the merchant's website to complete the sale. What kind of website is it? Is it attractive and easy to navigate? The simple question to ask is “Will people buy from it? Would I buy from it?” If the site is amateurish, ugly, illegible, etc., you might be wasting your time becoming an affiliate because the merchant obviously hasn't invested in converting your traffic. Don't forget that you make money when customers buy!

5.Support

Quality Merchants want you to succeed as an affiliate because you are essentially their sales team bringing in customers. Without you they wouldn't have gotten the customer! For some crazy reason, many merchants just don't get this fact - emails go unanswered, the website and creatives aren't updated, and phone calls aren't returned. It shouldn't take you hours to figure out the code to put up a new banner ad on your website or the details about a product. An affiliate manager or support team member should be available to answer your questions and help you make more money.

6.Market Saturation

A high demand product that can only be found in a few places will sell better for you than if it's available at every store on the Internet. You need to ask yourself if you'd be able to compete if you promoted the product. The type of website you develop determines to what degree market saturation will affect you.

If you are devoting an entire new website to the product, it may be difficult to get reasonable rankings and decent traffic because of competition. If you were advertising with PPC like Google AdSense, your ad might not even come up! If you have a niche site, market saturation might be less important because your site is targeted and you're already bringing in traffic that would be interested in the product.

7.Customer Demand

One of the biggest problems with Affiliate Marketers is that they don't know who their website visitors are. They find affiliate programs that they personally think are neat and place the banners on their website. You have to keep asking yourself if the traffic on your website want the product. Can you sell it to your customers?

Do your customers want the product? The closer the ad is related to your site, the easier it will be to get them to buy. Why? Because they're at your site for a reason and are already receptive to your content. Don't fall into the trap of placing just any banner on your site. You already have targeted traffic. What do they want?

8.Pre-made Creatives & Branded Websites

Most affiliates provide banners, buttons, images, text links, and more for affiliates to use. Some even provide complete branded websites that you can upload to your web server. These items make it very easy to start promoting the merchant's products. If you're clueless to graphic design or HTML, consider these items a must. Even if you find making creatives yourself a breeze, be careful you don't land up spending a lot of time making something the merchant has already provided.Most merchants want to see you succeed in promoting their products.

In Conclusion...

By considering the points above, you can avoid some common pitfalls that affiliates encounter. Use common sense, sign up with your favourite merchants, and start promoting products. Be cautious and prepared but don't spend countless hours trying to pick the perfect affiliate program – try a few and see how it goes.