Part 2 : Understanding the concept of affiliate marketing

With online affiliate marketing so new, are some of the problems simply due to merchants and affiliates not really understanding the concept, how to exploit the opportunities, and how to manage programs?
You are totally on target. So many merchants have no idea how to structure programs and just throw their programs into the market with little creative thought. Many affiliates do not have the traffic or the skill set to drive sales or leads for the merchants. Many merchants are under the illusion that they put out a program and affiliates will come en masse to drive sales and leads. No way. Mass affiliation is on the way out and the focus on quality is now chic. It all boils down to the development of solid relationships. This has always been a key factor for a successful business.

Program management is another important factor. One of the things we now offer at affiliatehelp.com is personalized training and creative deployment ideas for merchants. In some cases, we manage programs and handle all relationship development. This was a natural outgrowth of our business. I think the biggest advantage we have is that we started at the bottom, walking in the shoes of the smallest affiliate. We understand all the trials and tribulations from both sides. We know the pain of the merchant and the frustration of the affiliate. In some ways I am still practicing as a psychiatric nurse! In this case both sides just need a little therapy and understanding to make things work.

Can you point us to any merchants doing a good job, and explain why?
Cyber Rebates at Linkshare. They present appealing offers to a large base of consumers online and have a unique appeal. I favor Commission Junction as a solution provider because they focus on convenience for the affiliates and provide liquidity through payment aggregation. Virtualis has put forth great effort in developing and training their affiliate force, and are currently reaping the benefits of their work. There are many others, but these stand out as commonly accessible programs. Some of the best programs stay private and prefer to stay that way. Exclusivity is one of the perks they grant their affiliates.

And what about the affiliates - why are 95% of the sales being made by 5% of the affiliates? What should the other 95% be doing better?
First, it is important to understand that the merchant usually makes the sale- not the affiliate. Many merchants complain that their affiliates are not making sales when in fact they have forgotten their role as merchants. Affiliates pre-sell the product and get the traffic to the merchant. Many merchants simply lack the skills to convert the sale. Naturally certain products sell better online. Pharmaceuticals, informational products, intangibles, services, unique products and digital products are easier to sell and often have higher margins.

Everyone wants to pin success on traffic, which is part of the problem but not the whole problem. First of all it is important to understand that some websites just will not do well with revenue sharing. Many webmasters lack the skill-set needed to really implement revenue sharing on their site. Many individuals falsely believe it is the road to quick riches.

There are many other sites that could embrace revenue sharing but do not want to. They are still garnering large impression payments and have no desire to work on performance. This will change in the future as people begin to focus on performance and not perception. Some sites will never implement affiliate marketing because they feel it will impede their objective focus.

Continued...