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Affiliate Programs : Golden Opportunity or Waste of Time?



AliExpress by Alibaba.com


Now that the idea of doing business over the internet has been firmly established, many potential internet businessmen are searching for the best way to do business. Usually the choice comes down to whether you want to set up your own business and online store, or sign up for an affiliate program.

First of all, let's define what we mean by an affiliate program. An affiliate program is basically an internet business set up by someone else. They could be selling physical goods, education, information or any other products that can be sold online. By signing up as their affiliate, you are helping them promote their business or store. In return, they will pay you a commission for each sale you bring them. The amount of commission varies between different affiliate programs. Examples of affiliate programs include Amazon.com and Wordtracker.

1) EARNINGS

So how does an affiliate program differ from starting your own online store? Let's start by looking at the potential earnings. (After all, the main reason everyone wants to start an internet business is for the money). When you sign up for an affiliate program, you will be paid a commission for each sale you refer to the online store. This commission can range from 5% to 15% for physical products, and possibly up to 50% or more for virtual products such as subscriptions and ebooks.

On the other hand, if you start your own store, your profit can be much higher. For virtual products, your profit can be 100% of your selling price. After all, once the newsletter or ebook is created, you do not need to spend any more effort. When someone buys your ebook, they just download it from your website. If you are selling a physical product, your profit depends on whether you are manufacturing the product yourself, or buying from a wholesaler or dropshipping company. Your profit in this case could easily be more than 40% or 50%.

So, if you only consider the potential earnings, starting your own business is more lucrative than joining an affiliate program.

2) LOGISTICS

However, money isn't everything (Or so they say). When you are starting your own internet business, there are a number of logistic issues you need to look at. Here are a few things you would need to take care of:

a) Create your website

b) Design your product (if you are selling new products)

c) Create your product (if you are selling new physical products, or any virtual products)

d) Set up an online store

e) Set up a merchant account or payment gateway

f) Set up a warehouse or storage space (if you are selling physical products)

g) Have procedures and staff ready to fulfill orders

h) Set up an affiliate program to get others to market the products for you

i) Monitor for fraud

j) Monitor stock levels

As they say, "No pain, no gain". Having your own store pays very well, but requires a substantial time investment from you.

On the other hand, if you sign up for an affiliate program, all you need to do is set up a website to promote the program. All the ads, banners, marketing text etc will be provided to you by the affiliate program. Your only responsibilities would be to get people to visit your website, and hopefully click on the affiliate links to buy the products that you are promoting.

3) CONVERSION

Whether you have your own business or are promoting an affiliate program, the bottom line is the conversion rate, or the percentage of visitors that actually buy something from you. A number of factors influence this conversion rate. Factors as quality of the product, quality of the website, customer support are all important. However, I personally believe that the most important factor is trust.

When a potential customer arrives at your website, he will need to trust your site enough for him to be willing to buy from you. After all, on the internet you are just a faceless salesman. He doesn't know who is actually running the site and whether he will actually get the goods that he orders.

Having said that, one of the key methods of garnering trust is by recommendation and referral. If a store is being referred to or recommended by another website, the potential customer will feel that the store is trustworthy. After all, if the store is not trustworthy, why would the other website recommend it?

This is where affiliate programs shine. When you refer a potential customer to the store for which you are an affiliate, the customer will feel more relieved, since the store is being recommended by your site, a 3rd party. The customer will be more likely to buy from the store, benefiting both the store, and you as well.

There are both pros and cons to joining an affiliate program. You might earn less with an affiliate program compared to starting your own store, but I believe the benefits of not having to be responsible for the logistics makes affiliate programs are very viable "passive" source of income.

Steven is the webmaster of http://www.onlinebiz-help.com - Your Guide To Internet Business. His website contains various resources on affiliate programs and internet marketing advice to help you succeed in your internet business.

AliExpress by Alibaba.com


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Affiliate Programs: What Startups Need to Know About Them  Business 2 Community

Affiliate programs can be the lifeblood that jumpstarts a new business venture. By building relationships with top bloggers and online personalities, you can ...


Publishers say affiliates generate more revenue than other types of marketing - ZDNet
Publishers say affiliates generate more revenue than other types of marketing  ZDNet

(Image: VigLink). The ad tech industry has been in flux the last couple of years. Many publishers have been looking to other marketing and ad options in order to ...


How programmatic auctions are creeping into publishers’ commerce links - Digiday
How programmatic auctions are creeping into publishers’ commerce links  Digiday

It was only a matter of time before publishers' commerce operations started to get a little more programmatic. Over the past year or so, a number of publishers, ...


Twenty-First Century Fox gains as cable revenue rises 10% - CNBC
Twenty-First Century Fox gains as cable revenue rises 10%  CNBC

Twenty-First Century Fox said Wednesday its cable business posted its "highest earnings ever" in the fiscal third quarter. Executive chairmen Rupert and ...


Cable Sees Uptick In Affiliate Fees, Broadcast Retrans Still Strong 07/24/2018 - MediaPost Communications
Cable Sees Uptick In Affiliate Fees, Broadcast Retrans Still Strong 07/24/2018  MediaPost Communications

With national TV advertising remaining flat at best this year, analysts are concerned about lower affiliate revenues in the coming periods. MoffettNathanson ...


Fox Q2: TV Affiliate Revenues Climb 12%, Advertising Down 2% 02/08/2018 - MediaPost Communications
Fox Q2: TV Affiliate Revenues Climb 12%, Advertising Down 2% 02/08/2018  MediaPost Communications

Cable and broadcast affiliate/carriage fees remain the major growing revenue drivers for 21st Century Fox in its most recent reporting period -- with advertising ...


How does revenue work with YouTube, Twitch and Patreon - Polygon
How does revenue work with YouTube, Twitch and Patreon  Polygon

YouTube has a mission: help make their creators money — but not exclusively through ads. At VidCon last week, the company announced a number of new ...


Not Measuring Mobile In Affiliate Marketing? It's Time To Start - Forbes
Not Measuring Mobile In Affiliate Marketing? It's Time To Start  Forbes

Mobile advertising is measured as aggressively as desktop inventory. Except in affiliate marketing, where many brands are likely missing out on millions in ...


Marijuana Company of America Announces New hempSMART™ Website and Sales Platform - Stockhouse
Marijuana Company of America Announces New hempSMART™ Website and Sales Platform  Stockhouse

ESCONDIDO, Calif., Dec. 11, 2018 (GLOBE NEWSWIRE) -- via NetworkWire -- MARIJUANA COMPANY OF AMERICA INC. (“MCOA” or the “Company”) (OTC: ...


Apple Kills App Store Affiliate Program (and Developers Should Worry) - Dice Insights
Apple Kills App Store Affiliate Program (and Developers Should Worry)  Dice Insights

Apple is killing its app store affiliate program, designed to incentivize websites into promoting apps. Now the company says it's better than outside influencers.


Understanding the not-so-glamorous hidden gem of travel marketing - PhocusWire
Understanding the not-so-glamorous hidden gem of travel marketing  PhocusWire

Affiliate marketing is a blind spot for the travel industry.


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