Best Online Business Models, Part 3: Affiliate Marketing

Last time we introduced look at business models of selling physical products, what it is and why you should have one.

You can do that using an existing offline business or you can just sell physical products online. You make arrangements with manufacturers and you create Web pages that sell products.

There is a close cousin to that second business model and it is one of the best and most popular business models used today.

This “cousin” gives you some of the same advantages:

1. You don’t have to create and manufacture products
2. You don’t have to worry about product delivery
3. Your customer service requirements are small
4. Your share of the profits is good

It also provides new benefits:

1. You don’t have to create as much of the marketing, if you don’t want to
2. No quotas or purchase obligations
3. No requirement for handing payment processes, refunds, etc.

This model is so successful that I personally have met people earning many millions of dollars every year using this model almost exclusively and many more earning a nice, consistent income month after month.

I’m talking about …

Affiliate Marketing

That is, selling other people’s products on commissions.

In particular, earning commissions – really more like referral fees – selling other people’s digital products is a powerful business model and really, even if it isn’t your primary business model, you should be using it.

Very simply… you get prospects through you marketing efforts and you send them to the sales pages of the products you are promoting. If they buy you get a commission or referral fee; for digital information products this is typically around 50% of the price of the product.

Virtually all successful online business have a network of affiliates promoting their products and most are always looking for more; a good 50-75% of my sales come from affiliates.

This is such a larger topic I can’t possibly cover it here but I will go into a little depth because of its importance.

How It Works

As I said, being an affiliate are simple, here are the most basic steps:

1. Find a product you want to sell
2. Sign up as an affiliate for that product
3. Get your affiliate link
4. Place your affiliate link: on your blog or Web site; in your e-mails; in your ads; in your newsletter; even at the end of articles or in your forum/blog comment signature
5. Collect you affiliate commissions

There are some advanced techniques like capturing the lead, cloaking your affiliate link, etc. but the affiliate marketing business models remains the same.

There are 3 primary things that you can get paid for:

1. Paid for a Sale: this is the most common way and you get paid a percentage of the money from each sale that comes from someone that clicked your affiliate link.
2. Paid for an Action: this is a more general case than paid for sale. You get paid when someone who clicked on your affiliate link does some specified action. That action may be a sale but it might be signing up for a newsletter or making a telephone call or many other things.
3. Paid for a Click: this is where you are paid just for having someone click your affiliate link.
4. Paid for a View: this is where you are paid just to show a company’s ad.

Benefits of the Affiliate Marketing Model

I’ve mention many of the benefits above: no product creation or manufacturing; no product delivery/logistics hassles; few customer service requirements; most of the sales and marketing material are done for you; no quotas, no collecting the money and issuing refund; and the profits can be very good.

Other benefits include:

1. No limit to the number or type of products you can sell
2. No limit to the number or type of markets (niches) you can sell into
3. Low setup costs
4. Huge number of options to choose from
5. No geographical restrictions

Finding Products to Sell

You can approach individual companies and join their affiliate programs, there are thousands of them, or you can use some of the affiliate network companies.

Here is a list of some of the major ones:

• http://www.Advertising.com (Top 100 online advertising)
• http://www.AffiliateFuel.com (this is has some strict acceptance policies)
• http://www.ClickBank.com (thousands of affiliate products)
• http://www.ClickXchange.com
• http://www.ClixGalore.com (has some useful tools)
• http://www.CJ.com (Commission Junction)
• http://www.DarkBlue.com (a different way of doing things)
• http://www.iWhiz.com (this is has very strict acceptance policies)
• http://www.LinkShare.com (lots of major companies)
• http://www.PrimaryAds.com
• http://www.Search4Clicks.com (has an education orientation)
• http://www.ShareASale.com

If you do a Google search on “affiliate network” you’ll see over 1,000,000 pages are found!

There are some affiliate directories you can also look at:

• http://www.AssociatePrograms.com
• http://www.AffiliateTip.com
• http://www.AffiliateScout.com
• http://www.AffiliatesDirectory.com
• http://www.AffiliateSeeking.com

Just find products that are appropriate for your site, interest, list, etc., check to make sure the sales page is one that will convert the leads you send it well, that the offer is exceptional and their commission rate is good.

Other things to check for are:

• Minimum commission payout
• Frequency of commission payout
• If the program is two-tiered
• What the qualification criteria are
• How they track links
• How long is the customer linked to you

Business Model Components

Partners: You’re key partners are, of course, the product owners themselves. If you do some of the advanced affiliate marketing then you also have some additional partners that will provide you products and services for the online component of your business. Examples include: Web hosting companies; Autoresponder companies; technical design, development and maintenance companies; etc.

Key/Core Activities: New key or core activities will be getting prospects to click you link, that is, traffic generation..

Key/Core Resources: Key resources will be you ad copy writers and your traffic generation team.

Costs: You’ll have some costs to pay you resources as well as for ads costs if you buy advertising. Some of the advanced techniques will have costs for Web sites and customer management services.

Offer: You don’t have much control of the product offer but, using advanced techniques, you can “sweeten” the offer yourself.

Client Relationships: The most basic form of affiliate marketing means you have no customers and aren’t concerned about any relationships.

Distribution Channels: This isn’t applicable to this business model.

Customers: Basic affiliate marketing means there are no customers for you – remember you get a commission/referral fee – but the customers for your product merchants can usually be almost anywhere in the world.

Revenue: Your revenue will not be tied to your local economy or the limited number of products and services you can offer. You can also easily have multiple streams of revenue that were impossible to do with just an offline business. They will be, however, tied to the ability of the product vendors to convert the leads you send them.

Conclusion

Affiliate marketing is probably the easiest and most popular business models for an online business.

It isn’t type to a market segment/niche, it isn’t tied to a geographical area, it isn’t tied to the type of products, it is a very flexible and powerful way to start.

For many people, it is the best way to start.

Remember it is as simple as:

1. Find a product you want to sell
2. Sign up as an affiliate for that product
3. Get your affiliate link
4. Place your affiliate link: on your blog or Web site; in your e-mails; in your ads; in your newsletter; even at the end of articles or in your forum/blog comment signature
5. Collect you affiliate commissions

Are you doing affiliate marketing?

Why or why not?

Leave me a comment and let me know.

Talk soon,

The “Shameless” (but “Ethical”) Marketer
http://www.Twitter.com/DavidHusnian
http://www.8-8-8Sale.com
http://www.MusicForInternetMarketers.com
http://www.SecretsOfGoogleAdwords.com
http://www.MadMondaySale.com
http://www.2ForTuesdaySale.com

O.Y. If you want to learn more about starting or improving an online business using the affiliate marketing business model then, as a special gift for readers of this blog post, use the coupon code AFFILIATE50 to get 50% off the Affiliate Marketing package or the Affiliate Marketer’s Success Pack — go to http://www.8-8-8sale.com/#ListOfProducts and click the blue Affiliate Marketer’s Pack item.

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