Affiliate marketing is a method of marketing products through affiliates, who earn a commission for each sale they provide. Affiliate marketing is connected with, and often used together with, other forms of internet marketing, including search engine marketing, pay per click advertising and email marketing. Affiliate programs use a cost per action (CPA) model, where nothing is paid for ad impressions of clicks, but actual leads and sales.
The Advertiser's Side
Advertisers, who use affiliate marketing to get sales, often see affiliate marketing as a superior form of online marketing. The main reason for this is that affiliate marketing is completely performance driven. If one of the affiliates can provide no sales, he will not be paid anything. The advertiser only needs to pay some of the profit he makes. If done right, affiliate marketing ensures that advertising costs are always below real revenue, so every sale will make real profit.
Another benefit over other forms of marketing is that the costs to launch an affiliate marketing campaign are very low. If the advertiser wants to recruit very many affiliates, other forms of marketing may be necessary to market the affiliate program for potential affiliates. However, to launch a small campaign it may be enough to add the program to some free affiliate program directories.
The Affiliate's Side
Mane affiliate programs are free to join, so they can easily be made profitable. Every sale from these programs is profit for the affiliate. Many programs exist, where the share of the affiliate is actually higher than 50% of the final price, so the potential to profit is huge. Some programs offer recurring payments, and can build into streams of residual income.
As compared to pay per click (PPC) advertising, affiliate programs are in many ways a better way to monetize a web site. Affiliate programs usually have no policy that forbids encouraging clicks, on the contrary: writing favorably of the product is encouraged and expected. The advertisement can also be more easily blended with content, since affiliate link are often included in articles about the topic.
Affiliate Directories
Affiliate directories act as a connection between advertisers and potential affiliates. Advertisers list their programs in the directory, and potential affiliates search the directory for affiliate programs that fit their web site theme.
There are many free directories to look into, but the most successful, and largest directories are paid, or take a commission. The most popular include ClickBank, Commission Junction, and ShareASale. These are used by thousands of advertisers and affiliates.
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Non-US Resident doing online business in US
By: Umar | 11-11-2008
Hello Tracy,
I am a resident of Pakistan and looking forward to start an online hotels reservations business in US. 90% of my clients would be from US. The revenue generated from the business is to be classified as "Brokerage Proceeds" because I am only brokering hotel deals between hotels and guests via global GDS system(through active marketing). My Question Is: Is it Ok to file a W8-BEN tax form in this case, and is it true that I don't have to pay any taxes in US because my income is from brokerage proceeds?
Thanks in advance for your help.
Umar
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