Levels in Affiliate Marketing

Affiliate marketing is a performance-based marketing strategy wherein your affiliates (or your marketing men, advertisers) will not get compensated unless they have realized a desirable results- in other words, if they have generated sales. They will never get paid for advertising your products, only when they were able to generate sales, leads, downloads and subscriptions. Again, only after they have raised revenues. Their compensation may come in forms like payments, or commission by percent or by bounty.

It is in his own discretion to create a site and collect marketing and advertising materials which may include banners, an article or two or a web ad. In his own, he may devise marketing strategies to attract customers to buy the products and services listed in his site. Once a buyer decides to buy from his products, the merchants or the manufacturer then gives him commission based on the quantity and size of the product/s bought. Only then will the affiliate gain.

Compensation scheme in affiliate marketing varies, from one strategy to another. For example, amazon.com may offer 15% commission for every book sold, depending on the terms and conditions, which applies. Other merchant like the LendingTree is giving a $14 bounty for every approved or qualified application. Moreover, financial companies like the NextCard offer $20 for every enrolled cardholders.

Affiliate marketing works in three levels: the merchant, the search engines and the affiliate.

For the merchant, the benefits of affiliate marketing is1) they have no investments whatsoever for affiliates, 2) affiliates do the advertising for them and their products, 3) they are guaranteed of a continuous stream of sales revenues through links, downloads, subscriptions, registration and actual sales. Through these, marketers or merchants have shifted the advertising costs and risks to the affiliates. However, they still have to deal with the risks coming from their advertising partners. In a sense, merchants are online businesses, which sells services and goods.

Nowadays, nearly all the merchants employ the use of affiliate marketing strategies, and in some cases even affiliate networks. Running an affiliate network may not be that complex, nonetheless it may require some time to develop as it might drive the merchant to create the technology to tract the revenues of the affiliates involved in the network for transparency.

Due to the fact that marketers are now more focused on the performance-based marketing strategies, online selling such as affiliate marketing is becoming to be viewed as the future of capitalization and the likes.

The network affiliates are the intermediaries between the merchants and the affiliates. In away, they act as the middlemen wherein all transactions and sales revenues are monitored. There are many intermediaries out there to choose from but the merchants already provide intermediaries.

On the other hand, the affiliates act as the salesmen and in some ways the product advertisers. They do the marketing, selling and the advertising of the products they endorse. In essence, the merchants rely on the affiliates and in return, the affiliates represent the marketers. The affiliates then earn through their generated sales. However, the merchants have zero investment on them, meaning they are not liable for any support of any forms. Affiliates will then get paid if buyers purchase from them in forms of commission and bounty, depending on the agreement made between them and the merchants. Commissions will be generated through referrals of leads, sales and subscriptions.