The complete guide to setting up Lucrative affiliate Programs in 2020

affiliate marketing

Affiliate programs have become even more popular now than before. In a 2019 report in the Affiliate Summit Affstat Report, 49% of all respondents said that they had been an affiliate since 2012. This means that many new people have jumped into affiliate marketing and will likely continue to do so as long as it remains a lucrative and mutually beneficial form of marketing.

Of course, as a merchant, you will have to create an initial plan for making affiliate programs and gaining affiliates.

But what is the secret formula behind successful affiliate programs?Let,s dive right in.

Planning

Choosing an affiliate program model’s components for your company may seem like a daunting and complicated task at first. After all, competing online is competing globally, and though this competition has grown enormously, you still have the chance to compete in a global market even as a smaller company.

Successful affiliate programs are all about the marketing techniques you use and the networks that you create.

One of the first steps to doing this is choosing the appropriate affiliate program components.

Create a Program Model for your affiliate programs

There are as many models for affiliate programs out there as there are shapes and sizes. Here, we will list some of the popular components to an affiliate marketing program model.

  • Offers on Affiliate Sites – offering your product or service as a natural component of the affiliate’s website
  • Banner Advertisements – using graphics and text and perhaps even animation to draw viewers to your site
  • Text Links – use words rather than graphics to draw the visitor to your site
  • Embedded Commerce – having your affiliate sell your product on their site so that the customer never leaves the affiliate’s site but you still get a sale or action
  • Email – allowing affiliates to promote your product or service via emails to their own customers
  • Pop-Ups – ads that literally “pop-up” in a separate window and prompt the viewer to visit your site or provide you with information such as an email address, usually in return for a gift or promotion

The most important aspect of these components, and when to place them, is to use them in context between you and your affiliate. Let’s take a closer look at each of these and see which ones might fit your company’s and consumer’s interests.

Create sticky offers for Affiliate sites

By far, one of the most popular and well respected components of affiliate marketing is having graphic or textual offers placed on affiliate website pages. One example may include a website about certain books that offers an Amazon box or graphic to actually go buy the book.

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The reason this type of model is so popular is because there is a common context between affiliate and merchant. Though the affiliate may not necessarily sell the book, it offers that book through Amazon. We would expect this to be the case, too, because the affiliate’s site visitors may already have a vested interest in the item.

What’s more, this type of component is also well respected because of its subtlety. Unlike pop-ups or large banner advertisements, the offer does not feel forced upon the potential consumer. It is simply an option, and if the affiliate site has good content, it will most likely feed those users through to the merchant. Affiliates then get paid a commission if the sale goes through.

Design Banner Advertisements

Websites often have reserved space on their pages for banners. Most likely, the reserved space is on the perimeter of the pages, though some web pages might have banners in the middle of the page and between its content.

Banners are images and graphics that are placed on the affiliate’s web site pages. The banner links directly to a merchant’s home page or other similar page when it is clicked. The purpose of a banner advertisement is to entice the user to click on it. The banner likely has the name of the merchant and perhaps a promotional offer beneath it.

Designing great banner ad requires great creative skills. Take for example this banner ad from Liberty University.By reassuring prospective students they’ll enjoy the flexibility of online classes and the advantages of a physical campus, the marketers at Liberty effectively erase some of the skepticism surrounding their offer.

The complete guide to setting up Lucrative affiliate Programs in 2020 1 | Viralify Growth hacking and digital marketing agency

Below are some of the most common specifications for Affiliate banners size and weight (based on IAB recommendations):

The complete guide to setting up Lucrative affiliate Programs in 2020 2 | Viralify Growth hacking and digital marketing agency
Banner specifications for affiliate programs

The banner advertisement might also be advertising a product or other kind of service, and yet other times, it might just have the name of the company with a catchphrase. Sometimes a banner for a service might send the viewer to a specific page that has application or interest form to fill out. Even actions like this can lead to an affiliate getting paid by a merchant.

Additionally, there is another way that an affiliate gets paid.

This refers more to a CPA (cost-per-action) model. Merchants can optionally have a CPC (cost-per-click) model where simple clicks will garner a commission for the affiliate. Simple clicks, however, do not translate into concrete actions. A customer could click on a banner ad and never make a purchase or fill out a form.

Affiliate programs can,t work without a text link strategy

Text links are often found in the content of an affiliate’s website. Simply put, there are hyperlinks where, when a user clicks it, it takes him to the merchant’s home page or to an online form. The work in a way that is very similar to banner advertisements.

The biggest, and most valuable, difference is that the text links are placed within the body of the web page and within its content. This provides a valuable opportunity because the advertisement is not all about spectacle.

An affiliate could provide some kind of testimonial or story about why a product or service is great. The benefit is that the greater amount of detail allows for more authenticity and better reputation. Having this component to affiliate marketing programs is very beneficial.

Consider Embedded E- Commerce

Sometimes, an affiliate does not want a user leaving his site even though he has an affiliate agreement with a merchant.

When an affiliate sends traffic to their paying merchant, they may end up losing users. To alleviate this problem, some websites have come up with the solution to embed a merchant’s products into their own website. This way, the affiliate does not lose their users and the user can still make a purchase through the merchant if they please.

In Viralify,s case, we had talk something like this.

The benefit of having an embedded commerce model is that exposure by both affiliate and merchant is shared simultaneously. However, if may not be the most beneficial model if you are offering a service instead of a product because the person never actually sees your website. They may not take the action you need from them if they don’t see your site and read the information that will help convert them to a customer.

Email works… even now!

Affiliate marketing can also be implemented in more than just websites. Email is another online property that can utilize affiliate marketing. Where websites are static and passive, email is an active and dynamic means of online presence. Affiliate marketing and email marketing can cross paths at this juncture.

Here,s a great example from Michelle Scroeder leveraging the power of Email in affiliate marketing.

Affiliate Email Marketing: Why Building A Subscriber Base Is ...

Some companies offer affiliate programs that lets email users use a code in the signature of their messages. The code might be a graphic image or hyperlink, but whenever a recipient clicks on it, the sender of the email receives a commission.

Of course, it is not only common email users that use affiliate marketing within the content of email messages. Affiliate websites that send out a newsletter to their subscribers may also place lines of code into their messages advertising a fellow merchant. They might do this in the same fashion as the example above, or they might throw in graphic or images within the bulk of the email that contains a hyperlink to a merchant’s website.

Email subscribers, however, are wary of clicking on things like that unless they feel that it is a reputable link to click on. If you think about doing affiliate marketing through email subscribers, be sure to provide some kind of incentive and valuable content to entice them to click on a link. Some incentives you might offer are exclusive rewards or discounts for buying through the merchant.

How about Popups?

Affiliates might have a problem with traffic leaving their website. One of the ways they alleviated that problem was to provide embedded commerce from other sites. Another way that affiliates are able to alleviate this problem and keep people on their pages is to have pop-up advertisements.

Pop-ups are separate windows or browser tabs that pop open whenever a certain action is taken on a website or a certain page is opened. The benefit for the affiliate is that is can provide an advertisement as per their merchant’s request, and they still have the user remain on their website.

The disadvantage to this, however, is that most Internet users see pop-up advertisements as annoying and inconvenient. Most big companies and websites will not likely have pop-up advertisements because it will drive away customers more often than not.

Set up Tracking and reporting

So far we have been talking about building up lists and establishing yourself within affiliate marketing circles. Though a large part of the marketing campaign has been completed, you must keep up the work by creating tracking reports to measure how well you and your affiliates are doing.

This is a crucial part of the marketing strategy because you want to make sure that you are making the most of your affiliates’ abilities and their own marketing strategies. And just as well, tracking reports are for both affiliate and merchant to ensure accurate tracking of payments and performance.

What is an affiliate Tracking Report?

Whenever you print out or create a digital tracking report from your computer, it has a few components representing key info about the affiliate’s performance on his website. Depending on which software you use for these reports, the affiliate program is capable of producing a number of data points.

  • Total Compensation
  • Compensation Earned for Each Sale or Lead
  • Number of Sales or Leads
  • Appropriated Shipped Orders
  • Number of Click-Throughs
  • Number of Impressions

Confused of terms? Let,s dig down the details.

Total Compensation

This number represents the amount of money that your affiliate earns for each sale that they have referred to you. This will be a very important piece of data for both the affiliate and the merchant, so proper record-keeping on both ends is a must.

The complete guide to setting up Lucrative affiliate Programs in 2020 3 | Viralify Growth hacking and digital marketing agency
Keep a record of tracking reports for the accuracy of payments and for accountability.

This data point is a good example of the next point we would like to make: make sure you provide a tracking report to the affiliate on a regular basis. This will not be the only data point your affiliate is concerned with, but it is one of his most treasured numbers since it represents his income. Making sure that both parties keeps a record of this and other numbers ensures an accurate count for appropriating funds. It also helps to keep around in case there is any type of discrepancy during payments.

Keep in mind, however, that compensation earned is not necessarily what the affiliate will make in the end. Elements such as sales taxes, shipping, handling, returns, exchanges and tax deduction can reduce the amount an affiliate makes in the end.

Compensation Earned for Each Sale or Lead

This is a more specific number referring to the amount of compensation earned on each individual sale. This is an especially important number in case you have made an agreement with the affiliate to compensate them an extra commission on certain products.

The payment, however, is only paid out once the order has been shipped. Actions and leads do not mean that an affiliate will get his compensation. Tracking reports will show this number alongside the total compensation number for review and comparison. Again, make sure these reports are produced on a regular basis.

Remember, too, that customers don’t always purchase from a site the first time they view it. However, there are some affiliate programs that will use “cookies” to track a customer who may have arrived at your site the first time by an affiliate ad but didn’t make a purchase at that time. If they then later return and make a purchase, the “cookie” makes certain that the original referring affiliate gets credit for that sale.

This is a very attractive feature to offer an affiliate since it means they get credit for the sale even if the customer didn’t purchase from you the first time they visited your site. But you’ll want to negotiate the length of time that customer remains “marked” for that affiliate before the affiliate would no longer receive credit for a sale.

Tracking this information will also need to be an automatic feature of your affiliate marketing software; you would have no way to do it otherwise. Information on these sales should be part of your regular reporting for the affiliate and for yourself as it provides valuable information on your customers’ behavior.

Number of Sales or Leads

Another vital number from the batch, this number is the cumulative total of sales or leads made in a certain period of time. This number does not show any dollar amounts, only the quantity of actions taken by an unknown quantity of users in a specific period of time.

These numbers are important to both the merchant and affiliate because they help you see who is taking action. Both parties can use this data and form their marketing campaigns around it. But numbers alone will not completely tell the story. Depending on the types of forms or actions you provide the customer, you can learn quite a bit about individuals or groups.

Some merchants provide the affiliate with a form for users to fill out while others simply have a information on the things the groups and individuals purchase. Other merchants might provide the affiliate with a link to join an e-newsletter or a club.

Now, a merchant or affiliate can look at the number of sales in comparison to the data they collected from their customers through various forms. By comparing the data and the number of sales, the merchant can figure out more detailed demographics about their customers which they can then use to determine how much product to put in place for a certain age group, for example.

Meanwhile, the affiliate can use the same data to look at another data point, such as click-throughs. He might use that to see if his placement of ads is effective.

Appropriated Shipped Orders

A simple number, this represents the amount of orders that have been shipped in a certain period of time. This number is also used in conjunction with compensation on each sale made, so as to make sure that each sale pays the appropriate amount of money to the affiliate. This could be the standard rate for commission or extra commission for selling a specialty item, for example.

Number of Click-Throughs

This number is very indicative of how well your text link or banner ad is performing. Click-throughs are the number of visitors that came upon your site through your affiliate site. Of course, clicks do not necessarily mean sales. There are a number of factors that affect whether or not a visitor wants to purchase something.

Number of Impressions

This number refers to the amount of times that a user simply sees a product/service offer. At first, this may not seem like much, but it is worth a lot more than what you might think.

From this number, you can determine how effectively your ads or links are working, especially if you are creating tracking reports on a regular basis. The number of impressions can be compared to the actual number of visitors coming to the site, which can be viewed through a web-analytics program. If the number of impressions is low, but traffic is high, than the placement of your ads could use adjusting. If it is the other way around, you are doing very well with ad placement.

Of course, other numbers like click-throughs and number of sales are just as important, and they must all be used together to build a big picture.

Other Data Points

In addition to all the data points we just listed, there are also pieces of affiliate tracking software that produce more in-depth numbers on your reports, such as conversion rates, keyword searches, referral reports, among many others. Depending on the software you use, you may have to pay extra to get these features.

Set up a lucrative Payment plan for your affiliates

Payment plans between affiliates can vary greatly. This could be a result of the affiliate’s desires, but it can also be because of the payment plan agreed on with the original affiliate agreement that you made earlier. There are also smaller things that you will negotiate with the affiliate concerning payment plans, like frequency of payment and whether you will cut them a larger check for higher sales.

Types of Affiliate Payment Programs

The payment program you choose for your affiliates is highly dependent on the type of product or service that you are selling. Some programs work better than others for certain products, and they call for paying a commission based on the most likely type of action or lead they can get.

Let,s discuss the types of payment programs that affiliates can be paid through and what suits the relationship between merchant and affiliate.

  • Pay-per-sale
  • Pay-per-lead
  • Pay-per-click
  • Customer Acquisition
  • Residual Earnings
  • Two-Tier Affiliate Programs

Pay-per-sale

This type of payment program is a simple payment system that pays a fee to the affiliate every time a sale is made on the merchant’s website as a result of a referral. The system is simply commission based, with some offering the commission as a flat percentage, regardless of how much inventory was sold. Some, however, have a sliding-scale for their commissions. This means that the more referrals an affiliate makes, the higher percentage commission they receive.

Pay-per-lead

There are some programs available that produce leads for affiliates and merchants.

But what is a lead?

A lead is a potential customer that a merchant can follow up on (for example, from a survey he took or a contest he entered) to try and sell to later on.

This type of model works much better when the merchant has a product that does not sell well on the Internet. Cars for example, are one inventory item that is well-suited for this model.

Pay-per-click

Another simple payment program, it simply means that an affiliate gets paid a small fee whenever one of his users clicks on the merchant’s links or banners, regardless of whether the customer takes any further action. The advantage for affiliates is that they get paid regardless, but this is a disadvantage for merchants because they must pay, even if they do not complete a sale.

This type of payment program, however, is not used as often these days because of past fraudulent behavior by affiliates that manipulated their payments by having other people click on the banner or ad just to inflate their pay.

Customer Acquisition

Otherwise known as bounty programs, affiliates only get paid once for each customer they refer to their merchant’s site. This may sound a bit like the pay-per-sale model, but it differs in that the customer that is referred signs up for some kind of account for the merchant.

In that sense, it is like the merchant collected a bounty from the affiliate.

Large websites often do this with smaller websites who offer the same kind of inventory. The larger merchant will pay the smaller affiliate to purchase a referral.

Residual Earnings

Much like the Customer Acquisition model, Residual Earnings works in a similar manner. This time, though, the affiliate does not get paid only once for the referred customer, such as when a customer signs up to a monthly membership program that charges a regular fee. The affiliate would get residual earnings every month that the customer remains enrolled in the program.

His pay is spread out over a more long term scale and he usually gets paid significantly less as time goes on. However, the earnings can add up significantly if customers remain members or subscribers for a long enough period of time.

Two-Tier Affiliate Programs

Two-tier programs work by affiliates referring other affiliates on with the same merchant. Affiliates who sign another on with their merchant receive a commission for every referral they bring. Additionally, if the referred affiliate, in turn, refers someone else, the original affiliate receives another sum of money, though smaller than for someone they recruited themselves.

Setting up Payments plans for affiliate programs

Let’s look at some of the factors that go into deciding how and when an affiliate is paid for his referrals or leads. Here are the common factors that merchants take into consideration:

  • Minimum Payment
  • Payment Frequency
  • Sliding Commission

Minimum Payment

Merchants must decide on a minimum amount that an affiliate must earn before cutting a check for those earnings. This could be as low as a few dollars or it could be significantly higher. Either way, the affiliate has to earn that minimum amount of money in order to get paid at all, so this could be seen as an incentive for the affiliate to make money and do the work he signed on to do.

After all, you do not want poor performing affiliates on your team. Of course, it must be a moderate balance so that the affiliate believes the minimum amount of earnings is possible to earn, yet a high enough amount to provide the affiliate with enough incentive to do the work needed to provide you with new customers.

Payment Frequency

Usually, the payment frequency merchants pay to their affiliates is monthly and sometimes quarterly. Doing monthly checks allows the delay in check processing to give you some time in case there is a problem with revenue that needs to be fixed. For example, if a customer purchases a large order and then returns it all, you will have time to adjust the affiliate’s pay to make up for that return.

Sliding Commission

Some affiliates get paid per sale, but if they increase their sales a significant amount, they get paid an even higher percentage of commission for the sold item. This is quite an effective payment plan to have because it gives affiliates an incentive to give you referrals. Their incentive is that they will get a higher payout to do so. Your affiliates will work harder, and you will then reap the benefits as well with more traffic.

Think them through, and as always, have the patience to experiment some with trial and error until you know what your customers want and will respond to.

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