Contextual Relevancy The Affiliates that are successful are those who are becoming ever more context-centric and offer contextual relevancy That is, what’s being offered to site visitors closely matches content of site itself. Place product or service in context and more people will buy. An affiliate site would be more effective selling video games than lawn mowers on a site targeted to teenagers. It’s about presenting right message to visitors in right place at right time.

After sale reporting and transaction Affiliates like to see their transactions in detail on a daily basis to measure performance of their investments. A detailed reporting mechanism for everyday sales, product names, and product categories are a very important part of successful program. Affiliates use these statistics to optimize their offering and marketing methods.

Also paying your affiliates on time and offering alternate payment methods is a must.

Wrong Assumptions about affiliate marketing

Wrong Assumption 1: Having many many small sites promoting my product in mass will bring success to my affiliate program. It is not about how many affiliates you have, what really counts is how many affiliates producing significant results. Identify which affiliates are producing results and work with them closely to bring their revenue up.

The 80-20 rules applies: 80% of revenue is probably coming from 20% of your affiliates. Your results will be dependent on finding right partners, big or small, that drive results.

Wrong Assumption 2: Affiliate programs will get new customers automatically with a low acquisition cost. Affiliates are becoming smart business entities day by day and they have a wide variety of offerings to choose from. They also understand value of traffic their sites are getting. They know that in their focus market segment good traffic is costing more, because it is worth more.

You get what you pay for. As a merchant, create a process that generates performance for both merchant and affiliate. To do that, you need to identify sites that will perform, based on their contextual relevancy and amount of traffic, and make sure you pay them enough to make it worth their while. It’s not as easy as mythology might suggest, but if you do it right it will certainly be worth your while.

Wrong Assumption 3: Action or Performance-based marketing has no risk. Straight media buys offer more control than performance-based marketing. Affiliates may be offering content and promoting your products, but there is a chance that quality of consumer is not what you expected. There is a chance that they will produce more then you have budgeted for. There is a chance that your product will be misrepresented by affiliate.

By playing an active role with program and handpicking your affiliates, you can minimize all of these risks. Paying on results sound lucrative to merchant, but affiliates need to make their fair share of revenue, too. Commissions work when risk on both sides is evenly weighted.

You don’t get that performance by putting a link on World Wide Web and hoping for best. You get it by taking control of your affiliates as a serious reseller channel.

Wrong Assumption 4: Since I have an affiliate program running I will not have to buy advertising on a CPM basis. Affiliate programs often can generate 30 percent of overall revenue if merchants focus on them. Obviously, other 70 percent comes from somewhere else.

So companies must know how to live in both worlds (Pay per performance and pay per impression). CPM can be countered productive if you don’t know performance metrics behind campaign.

However, if you know number of new customers acquired and amount spent on media buy, you can determine if this meets your acquisition cost goals.

Your affiliate technology will allow you to track these metrics in a turnkey way to determine whether buying on CPM makes sense for you. You may find buying on CPM is cheaper than paying CPA.

Win-Win One of reasons affiliate programs are so popular is that that offer a win-win situation for both merchant and affiliate.

Merchant’s Win: The merchant’s cost for advertising a particular product is mostly limited to commission paid to an affiliate, and merchant only has to pay when a purchase is complete.

This is superior to banner advertising, where merchant pays—purchase or no purchase. Impressively, amount paid to an affiliate for a purchase through an affiliate link is probably only 10% to 20% of cost of that sale through banner advertising.

Affiliate’s Win: The site owner should make money if enough visitors click on affiliate links and make purchases. The affiliate doesn’t have to go through setting up e-commerce functions, taking credit cards, or shipping products. They just join affiliate programs and let someone else do “hard stuff.”

By Yatin Patel Published in http://www.siliconindia.com August 2003

4. Spend money wisely. The Internet is loaded with scams and bad information. It is really easy to be tricked into blowing money on "get rich quick" schemes and information that you can find in free resources. I personally have spent thousands of dollars needlessly. But do not get me wrong; I am not saying there are no legitimate affiliate promotion services or information products out there: I am saying that vast majority of them do not work as well as they say they do. So hold onto your cash. When you find a product that multiple people have personally recommended to you, then consider buying it. Otherwise, conserve your cash for purchasing services or products that will produce hard, definite results, such as email leads for your newsletter or phone leads you can contact personally to promote your program.

5. Remember that your success is dependent on your choices and your work alone. If you get upset about not becoming successful with a specific affiliate program, do not blame program--blame yourself. Do a thorough analysis of what you could be doing better and how you could be making quantitative progress every single day. There are people who do not pay any money at all for promotional services and yet are still able to make a living just from using free tools on Internet. If they can do it, there is no reason at all why you cannot. Joining a marketing group or forum in your field will help you realize this reality. Seeing and talking to people who are succeeding in your field will remind you that it is entirely possible to make money online without having a million dollars to begin with.

While there are some "secrets" to getting more sign-ups and site visitors, bigger part of affiliate program marketing is following a sound business plan. If you keep five concepts I have listed above central to your marketing campaign, you will not fail. But, if you continue to market sporadically--switching from product to product and method to method--you will never break out of that 97% who never make money.