This is a question that troubles many and the answer to it is what people are dying to know. I would say affiliate marketing is the magical bullet of marketing and merriment. It is one of those things you hear about, but don’t know much about it.
So, let us begin from what it is.
Affiliate marketing is a revenue sharing model that’s akin to a realtor selling a house. The realtor gets a commission for finding the buyer and leading said buyer to the house if a sale happens. However, the house then has to sell itself. This is the place where the analogy falls through.
Thus, if you consider affiliate marketing for a site, it is a business that rewards anyone who helped bring a “customer” to the site. Visitors are one of the biggest problems websites face. So, affiliate marketing can be a good solution to this problem.
You might have experienced building a website with zero visitors. There are 152 million blogs, and so, there are hundreds of blogs which has zero audience/traffic.
For a merchant, affiliate marketing is very useful. You only pay for an actual sale for the most part, not just visitors. Therefore, you will have to pay for the visit if a blogger sends someone to my site, but they don’t actually buy.
To go with statistics, about 80% of affiliate programs use revenue sharing. Another 19% use cost-per-action and the remaining one-percent use pay-per-click or cost per mille.
So, if you ask me what the disadvantage is, I would say, it depends. Here are some options for using affiliate marketing as a merchant.
These are basically the middlemen that allow bloggers/affiliates to find merchants and see if they’d like to promote their product or site. The blogger will use a specific link or banner if they do, which has a tracking code that goes to the merchant’s site. The use of this unique code is that you can understand how the network keeps track of the referring blogger to ensure they receive proper compensation.
There will be different sizes of networks and they typically focus on different niches. However, all of them provide the ability to track sales. It also gives an accounting system that takes a percentage of the sale to pay the referring blogger. The network also takes a certain percentage of the sale. It depends on the network how big that percentage is.
Commission and Fees
It is great to receive a boost in traffic. But, you should also think about how much does it actually take from the bottom line. I am going to give 8 affiliate options along with their associated fees here.
1. Rakuten Linkshare
One of the biggest and oldest affiliates is Linkshare. It has clients like Macy’s, Walmart, and Sephora. So here are the LinkShare merchant fees:
- One-time fee of $2,500
- Monthly fees from $500 to $3,000 based on sales volume.
2. CJ Affiliate by Conversant
This affiliate is around since the late 90’s and is one of the other large affiliate networks. It has clients like Home Depot, HSN and Turbo Tax. Their fees are as follows:
- One time fee of $3,000
- Deposit of $3,000
- Renewal fee of $500.
- Cost per sale is about 30%. But, you pay $500 less the actual fees due for that month if your monthly fees are less than $500.
This is another large affiliate network. It focuses on digital media products like ebooks, online membership subscription, etc. ClickBank is also popular with entry-level merchants. So, it has no approval process. There merchant fees are:
- One-time $49.95 activation charge.
- No monthly charge, but there is a $2.50 pay period processing charge for every payment that ClickBank issues to you.
- ClickBank effectively keeps 7.5% of the sale plus $1 each time you sell a product
4. Share A Sale
This affiliate is a fairly large network with nearly 4,000 merchants & 700,000 affiliates. The website of ShareASale feels a little less formal . ShareASale merchant fees are:
- $550 one-time network access fee
- $100 minimum deposit
- 20% transaction fee based on payout rate
- $25 monthly minimum if your account doesn’t generate at least $25
There are 50,000 affiliates that focus on software & online services for Avangate. They also have a lot of products and services. Their fees are:
- There is no startup fees
- 3.99% + $.99 transaction fee
This affiliate is more on the economical side. It has a paired down website. E-Junkie has nearly 8,500 merchants and thousands of affiliates. The pricing model of E-Junkie makes up for their no frills website. So it is free to start. Also, they don’t have a per-sale commission. Their merchant fees are:
- There is no setup fee
- There is no transaction fee
- $5/month for 200MB download storage
- Plans starting at $20/month and up. Also, E-Junkie supports an optional Remotely Hosted Downloads feature to have us pull your download files from any Web server.
They have over 400,000 affiliates and claim to get over 1,000 new affiliates every day. They are super affordable, which is a very good feature. PayDotCom has a pre-set 50/50 split for merchants and affiliates. If you purchase bulk services up front, they offer discounts. The PayDotCom merchant fees are:
- Free Vendor/Affiliate Accounts
- Sale price $.01 — $10 has a $1 fee ($.80 discount)
- Sale price of $10.01 — $20 has a $2 fee ($1.60 discount)
- Sale price over $20 has a $3 fee ($2.40 with discount)
If you need an alternative to joining a network, it is to go it alone with your own tracking software. The advantage is that there is no setup or network costs, and therefore, you can offer affiliates a better rate. But, the disadvantage is that you’re not in front of a large pool of affiliates. Another thing to note is that it is hard for affiliates to trust that they’ll get paid properly from a rouge merchant.
8. Post Affiliate Pro
This is an affiliate software program that can track any referrals and record payouts. However, this program can’t actually process any financial transactions. Its fees are:
- $199 one-time fee installed on your own server
Things to Remember
Everything has a bad side that can ruin the good side. In this case, it’s been reported that affiliates have advertised a non-existent coupon for a store/merchant and then claimed a commission on a sale that the store would have made anyway.
“Cookie stuffing” is also there, where a visitor of a site gets a third-party cookie placed on their computer from an entirely different website, mostly without them knowing about it. The ‘cookie stuffer’ is paid a commission if the person goes to the target website and buys something.
Finally, some affiliates engage in shady and unscrupulous actions which are similar to a hired gun. They sell their services (and audience) to the highest bidder. This can be in either of the following forms:
- By not disclosing their affiliate relationship
- By recommending the product that pays the highest commission without recommending the superior product or one that’s ideally suited for the reader.
- By finding ways to cheat the system
- By dropping a merchant and their product whenever presented with a higher competing commission.
- By mentioning 10 different competing products each month as they test out new affiliate programs.
There are some merchants and site owners who have gotten to the point where they only approve affiliates on a per-case basis. This is potentially by lowering sales, but they still know that the sales are on the up and up.