How to Setup an Affiliate Program and Increase Your Website Traffic and Sales

Do you have a great product or service but find it hard to get traffic to your website? Do you find yourself wondering how you could make yourself more visible on the internet? One of the biggest problems currently facing online merchants is how to get people to their sites to buy their products.

Affiliate programs are one way to address this common problem. Affiliate marketing is a mutually beneficial practice that helps merchants, customers, and "affiliates." You may not have heard of affiliate programs before, but you've definitely seen them. You've heard of Amazon.com right?

What are Affiliate Programs?

An affiliate program is an excellent way of getting other websites to sell or promote your product or service for a commission. Affiliate programs are arrangements between an online merchant website and an affiliate website—the affiliate posts a link to the merchant site and is paid a commission for any traffic or sold items. Posting links with affiliates is an excellent way to sell products online, and it is an inexpensive and effective marketing strategy.

There are three core players in the affiliate game: the merchant, the affiliate, and the customer. Merchants favor affiliate marketing because in most cases it uses a "pay for performance" model, meaning that the merchant does not have to pay a marketing expense unless someone buys the product.

You have no doubt seen links to Amazon.com on tons of sites other than their own—this is because Amazon gets affiliates to post links to individual books for sale on Amazon, or for Amazon in general, by giving the affiliates a percentage of the profits if someone clicks on the link and then purchases books or other items. The affiliates help make the sale, but Amazon does everything else: they take the order, collect the money and ship the book to the customer. Amazon's affiliate program is one of the most successful ones out there.

What are the different kinds of affiliate programs?

There are three basic types of affiliate program payment arrangements:

• Pay-per-sale (also called cost-per-sale): In this arrangement, the merchant pays an affiliate when the link on the affiliate's site leads to a customer purchasing something from the merchant's site.

• Pay-per-click (cost-per-click): In this arrangement, the merchant pays the affiliate based on the number of visitors who click on the link to the merchant's site. The visitors don't have to buy anything, and it doesn't matter to the affiliate what a visitor does once he or she gets to the merchant's site.

• Pay-per-lead (cost-per-lead): In this arrangement, merchants pay their affiliates based on the number of visitors they refer who fills out some requested information at the merchant site, which the merchant site may use as a sales lead or sell to another company as a sales lead.

So why should I use an affiliate program?

• You will become a lot more visible to a lot more people. Because your banners and links are placed on other sites you will greatly increase your online publicity.

• You will have other people marketing your product and services, so it's not all up to you.

• Your sales will increase dramatically.

• You will appear "bigger" than you are and your credibility will be increased.

• It's not expensive or complicated.

What you need to consider before you begin:

If you are interested in getting involved in affiliate programs, the first thing you have to do is decide whether you want to become an affiliate, want to acquire affiliates, or both. If you run a large merchant site and want to increase your sales, you might want to start your own affiliate program. If you run a small content site and would simply like to bring in a little money to cover production costs, joining a few programs as an affiliate would be a good choice. Your best option depends on what aspects of affiliate programs could best serve your site and how much you are willing to spend.

You need to decide what the objectives of your affiliate program are before you decide which option to choose. Some questions to consider include:

• What kind of affiliate program is best for my business; that is, do you want to pay affiliates for actual sales, clicks or leads only?

• Do you want your affiliates to market all your services and products or only some?

• Do you want international affiliates or affiliates from your own country only?

• Do you want to pay a percentage of sales or a flat rate?

• How much are you willing to pay affiliates for sending you business? Industry standard is about 20% of a sale. (Any less than that isn't as enticing for advertisers).

When deciding on which service to use to set-up your affiliate program, think of things from the affiliate's point of view and what's important to them. A key factor to running a successful affiliate program is having happy affiliates. Make things easy for them. Offer different banner sizes, text links, real-time stats and email notifications when sales are made.

Keep in mind that having more affiliates isn't always better. The affiliate marketing experts say that 85% of referred sales will come from a few "super affiliates." So don't be too concerned if you only have a few affiliates. You don't need a lot if you have good ones.

Now, how do you go about actually becoming an affiliate marketer?

Gone are the days when only the "big" sites could set up and run affiliate programs. Today it's easy and there are a couple of ways of doing this. If you have your own merchant account but want an outside company to handle and track your affiliate program, you could use a service like either http://www.linkshare.com or http://www.cj.com but they charge large monthly fees and want you to commit to their program for a period of time.

Large sites develop their own custom software or use packages intended for Fortune 500-type operations. The affiliate software that tracks the sales partners make typically starts at several hundred and can go as high as the thousands. So what are some other options?

One great alternative for the smaller or beginner merchant who wants more control is to buy a software program that lets you start building an affiliate network right away without having to pay monthly charges. Once you buy the software, you upload it to your webserver and follow the provided installation instructions. After it's installed, you'll be able to login to create ad links for your affiliates, track results, and manage their accounts. There are many different software tools with a variety of features.

The affiliate software you choose should be inexpensive and have these features and benefits:

• Start an affiliate program quickly and easily

• Increase website traffic and sales

• Have no fees beyond the initial software purchase

• Unlimited number of affiliates

• Track sales & download Excel-compatible reports

• Monitor affiliate hits

• Easily create, manage, and distribute affiliate ads

• Direct customers to a targeted URL for a specific ad

• Work with your purchase system or PayPal

With software like this, the process is simple. Affiliates sign up for an affiliate program and place the merchant's ads (banner or text) on their sites. If someone clicks the ad on the affiliate website and buys something from the merchant's site, the affiliate gets paid a commission. Starting your own affiliate program is definitely one of the best ways to increase web traffic and sales without any advance cash outlay; only results matter!