Affiliate marketing

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Affiliate Marketing is a popular method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber, customer, and/or sale provided through her efforts. It is a modern variation of the practice of paying a finder's fee for the introduction of new clients to a business. Compensation may be made based on a certain value for each visit (Pay per click), registrant (Pay per lead), or a commission for each customer or sale (Pay per sale), or any combination.

Merchants like affiliate marketing because it is a "pay for performance model", meaning the merchant does not incur a marketing expense unless results are realized.

Some e-commerce sites run their own affiliate programs while other e-commerce vendors use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. Some businesses owe much of their growth and success to this marketing technique, although research has shown in general the increase to be approximately 15-20% of online revenue.

Merchants who are considering adding an affiliate strategy to their online sales channel should research the different technological solutions available to them. Some types of affiliate management solutions include: standalone software, hosted services, shopping carts with affiliate features, and third party affiliate networks.

Revenue generated online grew quickly. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. Many companies hired outside affiliate management companies to manage the affiliate program (see outsourced program management.) Today, affiliate marketing is the single fastest growth industry on the Internet. It’s also true that affiliate marketing is one of the fastest and most creative ways to make money and have a career on the Internet.

In fact, research shows that affiliate marketing is the most cost-effective way to generate online sales. As per market statistics, affiliate marketing in terms of total sales generated mainly through the affiliate networks, was worth close to a billion in the UK alone, combining the figures for the last two years. This of course is excluding white label and self-administered schemes. Besides, the affiliate solution providers confidently expect their own revenues to grow between 50%-75% in 2005-2006, and also confidently expect their own revenues to grow between 40%-75%.

Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors. The three sectors expected to experience the greatest growth in affiliate marketing are the mobile phone, finance and travel sectors. A lot of different offers from various Advertisers are available to pick from. It only takes a look at the increase in size of affiliate directories^[1] to realize that Affiliate Programs are not a novelty anymore, but standard. Hot on the heels of these are the entertainment (particularly gaming) and internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix. Of course, this is constantly subject to change.

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