The best part about an affiliate is that they work on renumeration. This is a boon for for an ecommerce site, where the ROI is always under pressure and every quarter, the CMO has to justify the spends.
This model started well before SEM, the pioneers were Amazon; where they rewarded every click responsible for a transaction (read the interesting article here). In Europe, Affiliate Network is a very popular Internet Marketing startegy and even preferred over SEM.
Affiliates use a variety of methods to get the clicks- SEO, SEM, Email Marketing, Display banners to send traffic to your site; but the best part is that you pay only for a purchase. Review and recommendations are other few ways to get relevant traffic which converts. The renumeration can be basis Pay per Action (read conversion) or revenue sharing (% of profits).
There are a number of advantages in starting your own affiliate network Vs joining an existing one. These are…
1. The relationship with the affiliate is stronger and can work in favour of the merchant (the entity which pays for a conversion)
2. The afiliate can work as a partner and not just as a publisher in the network (where he can switch to another merchant the next day)
3. The payment rules (last click/first click/distribution of revenues as over last three clicks) is
more flexible and hence few performing affiliates can be nurtured and honed.
4. The payment process is smoother and faster (and hence the affiliates will be happier)
5. They can be used for a variety of tecniques that will help SEO (link sharing etc).
However, developing an affiliate network require a lot of investment in technology and manpower. You will realise over a period of time that it is the relationship that matters and hence the “Affiliate manager” plays a key role in developing the network and maintaining it.
There are also existing affiliate network that you can join (both as a merchant and as a publisher), if you cannot build your own affiliate platform. In India, DGM is the most promising one. They started about a year back, but the superior technology platform, DC Strom, gives them an edge over the others. They are also quite big in Europe.
Which ever route you choose, start you Affiliate Network asap- the sooner, the better ;).
Happy New Year!!