4 Questions You Need to Ask Yourself When Starting an Affiliate Marketing Program

POSTED BY , UPDATED ON March 25th, 2014

Affiliate Marketing 101

If you are thinking about starting an affiliate marketing business, then you might have a lot of questions…or, should. It’s a great opportunity for the right person, with the right amount of determination and drive to set it in motion. Many people have gone before you in this journey and can offer a lot of advice for anyone starting out. In fact, I just listened to a Coffee Talk podcast by successful Internet marketer, James Martell, who dedicates a lot of his career to helping others become successful. In this podcast, he interviewed Sarah Bundy and Carolyn Kmet, both pioneers and success stories in the affiliate marketing industry.

 

Just a Little Background on Them…

Sarah has an affiliate marketing blog called www.SarahBundy.com, which was listed in the top 25 affiliate marketing blogs for 2012. She also has several successful businesses in her resume for the Internet business world, as well as sharing her wealth of information at www.TheSchoolofInternetMarketing.com.

She is the founder of All Inclusive Marketing (AIM), where she currently hangs her hat. Also, look for her first book to come out soon, titled ‘The Art of Performance Marketing’.

Carolyn started in the industry back in 1999, and has a vast amount of experience she readily shares with others. She has worked for many popular and successful businesses in the industry filling the position of Client Services Director for www.ShareASale.com as well as the Director of Affiliate Marketing for www.Groupon.com, and is now working closely with Sarah at AIM.

Now, let’s get to some of the information they shared, especially what questions they feel you should be asking when considering this career move:

 

Question #1 – What is Affiliate Marketing?

Perhaps this is the first question you should be asking, just so you know for sure what it is you will be promoting. And, speaking of promoting…that plays a big role in affiliate marketing.

An affiliate will promote a product or service through their website, which is actually sold or performed by another person or website. If you place the product or service on your site and a consumer makes a purchase by clicking on the link, you will make a commission on the sale. You can get your very own affiliate site, pre-made for you. If this interests you then check out this Human Proof Designs article service review.

A more specific example of this would be; someone (Person A) has an online business…let’s say for this example that it’s a site to order bank checks and other financial items. Another person (Person B) has their own site, hopefully relating to finances, with a link to the site that sells the checks. When a consumer clicks on that link and makes a purchase, Person A pays a commission to Person B.

In other words, Person B can make money on a sale that they are simply promoting…not hosting, warehousing, or shipping. Person A is doing all that work.

 

Question #2 – Who are the Key Players?

In most any business or ‘partnership’, there are key players. It is no different in affiliate marketing. In fact, there are several that play a role in a successful affiliate program. Take a look:

  • The Merchant: is the one who actually has the inventory to sell, either a good or service
  • The Affiliate or Publisher: main goal is to drive traffic to the merchant, mainly through search engine marketing, blogs, and social media
  • The Affiliate Network: is a fancy name for a 3rd party tracking platform for transactions. ShareASale, Commission Junction, LinkShare, Google Affiliate Network are some of the big players
  • The Affiliate Management Agency: is an outside agency that will manage, as a service so you don’t have to manage it in-house

So, you can see there are several roles to be played in an affiliate program. If you are interested in any other area, there are courses you could take to hone your skills, just as with an affiliate. James offers a few of these, as well as other avenues of information such as the Coffee Talk podcasts that I listened in on with Ms. Bundy and Ms. Kmet.

 

Question #3 – What is a Merchant Going to be Looking for?

You might be interested in knowing what a merchant is looking for in an affiliate, since you will be approaching them and asking them to trust you. They will want to see what you are all promoting on your site, and if your site is relatable to their product. In other words, if they are selling dietary products, and your site is all about various wood products, they might not see a lot of sales going through your site.

Also, they will probably want a little history of your sales and how much you have sold, and what your conversion rates are like. So, you will want to know your conversion rates…which is the rate that a ‘click’ actually turns into a sale. Most merchants want to see a minimum of 1-2% to work with you.

They also might like it if you have multiple ways of driving traffic to your site. Working with social media sites such as Facebook, Twitter, and Pinterest can boost your traffic, and will impress merchants.

 

Question #4 – What Does It Cost?

While all the above questions are important, knowing what to budget for before you start is vital. There is no point to getting started, if your budget can’t swing it.

First, plan on anywhere from $30,000 to $90,000 per year for an affiliate manager…someone who will manage your program for you. You can cut costs by having someone in-house manage it, but you will probably be missing out on the experience, background, and resources that an affiliate management agency can provide.

Second, you will need a launch fee for an affiliate network, which will run anywhere from $650 to $5,000, depending on who you go with, such as ShareASale ($650) or Commission Junction ($5,000). If you are just starting out, you might consider going on the lower end.

And last, expect to pay about 1-12% of commission…if you are acting as the merchant.

 

In Closing

If you are thinking about entering the world of affiliate marketing, then these questions should help guide you to know if you are making a wise decision before you even start.