Affiliate marketing can reduce unemployment: Read How
Every business wants to make profits by getting as many customers as possible and in the process increase sales. There are many ways to drive sales, and one of them that is very convenient and preferable for many entrepreneurs is affiliate marketing. These open up opportunities for unemployed graduates to take on the role of online entrepreneurs and affiliate marketers.
Affiliate marketing is a prospective strategy of internet marketing and e-commerce, which lies in the shift of responsibility for sales to a third party, in particular to clients, who are rewarded commissions after convincing other clients to purchase products offered by a sponsor (company using the e-promotion tools).
The essence of affiliate marketing lies in encouraging participants (so-called affiliates) that are independent of the advertiser (sponsor) to perform commission-based sales activities by means of affiliate networks.
Most sponsor-affiliate relationships are managed through several major networks. The networks provide the technology to enable the management of affiliate activities, to coordinate tracking activities (when an affiliate sends a potential customer to an advertiser’s website) and to support transactions. They also manage the calculation of the commissions and, in most cases, the issuance of the payment(s) to affiliates and the issuance of invoices to affiliates for payments made.
The networks also facilitate the management of application processing (when an affiliate seeks to join an advertiser’s affiliate marketing program) and the process of providing access to ads (e.g.: banners, text links, product data file, etc.) to affiliates, so they can adequately promote the sponsor’s products. These networks are treated as units that, by facilitating the use of affiliate marketing principles, develop the market.
The most common compensation method is the one where the afﬁliate is only paid commissions for actual sales made. The cost per click method of compensation is not favored by many merchants because there is always the danger of the marketing program not resulting in reasonable sales numbers. An afﬁliate can also just sit around and earn money for actually doing nothing. Afﬁliate marketing is sometimes referred to as performance marketing because of the compensation method.
The key to successful affiliate marketing lies in the construction of a win-win relationship between the three parties – the sponsor, the affiliate and the customer. The sponsor realizes the benefit of a purely commissioned sales force and has a marketing cost that is predictable and spent ex-post. Affiliates have the opportunity to create a revenue stream without investments in infrastructure and know-how. By increasing the effectiveness of online activities, an affiliate focuses exclusively on the optimization of his Internet service (e.g. blog’s Facebook profile, website) in terms of content, structure, navigation, functionality, etc. Clients get reliable information on products from sources other than the sponsor itself.