Affiliate Programs ... A Not THAT Easy Start To Your Own Online Business (Part One)
Posted on July 7, 2000
by Elena Fawkner
Where is all the help I'm supposed to get. I have been
buying ezine and classified ad builders and signing up for
Echecks and Virtual credit cards. In the meantime I have no
business and no ads set up. When does all this happen?
Let's go here. I spent all day on this. I'm running out of
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I kid you not, this is the sum total of an actual email that
hit my inbox this week. Not only did I not know this person
from Adam, this was the first and only email I had ever
received from her and to this day, I have no idea what she's
talking about. Presumably, she signed up for one of the
affiliate programs I promote from my site and was asking, in
her own inimitable style, for my help. Although I am always
ready and willing to help anyone I can, this is most
definitely NOT the way to go about asking for it. Needless
to say, I let her know what I thought of her approach in NO
The attitude displayed in this person's email to me (and she
is by no means an isolated example) exemplifies why so many
people fail to make a success of their online businesses.
Leaving aside the utter rudeness of the approach, notice the
impatience, the expectation to be up and running in a day,
the HURRY, the apparent belief that real world principles
such as courtesy and good manners don't apply online (they
do). Think this person is going to last the distance? What
kinds of tactics do you think she is capable of resorting to
in pursuit of the almighty dollar?
So, let's take a realistic look at affiliate programs, what
they can and can't do for your business and how to maximize
your chances of creating a successful, long-term business
What is an Affiliate Program?
An affiliate program (also known as a reseller, associate,
referral or partnership program) is essentially a
revenue-sharing arrangement whereby you, the affiliate,
receive payment from the owner of a product or service that
you promote on their behalf.
Affiliate programs are an excellent way for the new internet
entrepreneur to start an online business.
Types of Affiliate Programs
There are various types of affiliate programs.
The most simple involves you, the affiliate, placing a
banner ad, graphic or text link at your site which is linked
to the site of the business you are promoting. This link is
coded with your unique affiliate ID so that the site visitor
is recorded at the target site as having originated from
your site, thereby allowing you to be credited with the
Payment is generally a fixed percentage of the sale value
(commission) or "pay per click", where the affiliate is paid
a certain amount for every time a site visitor clicks on the
link at the affiliate's site, whether or not a sale is made.
The more sophisticated affiliate programs are multi-tier and
allow the affiliate to earn commissions not only on the
traffic they directly refer to the target site but also a
proportion of sales generated by their sub-affiliates.
Benefits of Affiliate Programs
The greatest benefit of affiliate programs is that when you
are just starting out in your own online business you don't
have to worry about creating your own product or service.
You just promote someone else's and get a share of the
revenue pie for your efforts.
You also don't have to concern yourself with warehousing,
transport or logistics headaches. All of this is handled by
the business whose products/services you are promoting. All
you need concentrate on is driving traffic to that
business's website. This means that a high proportion of
your revenue is profit.
The owner of the product/service is also responsible for
collecting payment, customer service and the myriad other
details that come up on a day to day basis in running the
Disadvantages of Affiliate Programs
The main and obvious disadvantage of affiliate programs is
that it is the owner of the product/service who earns the
lion's share of the profit on the sale.
You're working on commission. You will NEVER earn by way of
affiliate program commissions as much as you can earn by way
of profits from producing and selling your own
As a result, affiliate programs represent a high opportunity
cost when you consider what you could earn if you instead
channeled the time and energy you spend on promoting
affiliate programs into creating and promoting your own
For this reason, it does not make sound business sense to
rely solely on affiliate program income for the longer term
growth of your business.
Instead, think of them as a way of dipping your toe in the
water when you're first getting started, and a nice little
sideline once you've created your own product/service. Do
NOT build your business around affiliate programs with the
intention this will always be the backbone of your business.
You'll be stunting your own growth if you do.
[More on Affiliate Programs in the next issue (Issue #146):
- Choosing the right affiliate programs for your business
- Making money from affiliate programs ]
Elena Fawkner is editor of the award-winning A Home-Based
Business Online ... practical home business ideas, resources
and strategies for the work-from-home entrepreneur.