What exactly is affiliate marketing? It involves having others market and sell for you. It’s a web-based system that allows you to reward referrals by sharing your profits.

In addition to having an affiliate program, you can also become a publisher. That means you’re selling someone else’s product on your site for a percentage of profits by becoming an affiliate. For example, if there are specific books you typically recommend to your customers or clients, you can become an Amazon affiliate and receive a small percentage of the profits generated from book sales off of your website.

How it works

Affiliates place an ad on their site with a link that has a special code designed to keep track of purchases made generating from their site. After a previously disclosed period of time, affiliates receive the percentage of sales made.

So, basically, someone can promote your product or service and receive a cut of sales coming from their website or email list… or you can promote someone else’s product or service and receive a percentage of their sales.

Affiliate programs

In order to allow your clients or customers to become affiliates, you’ll need to find a program provider to use. There are a lot of providers, including 1ShoppingCart, LinkShare, Clickbank, Shareasale, AffiliateX, CommissionJunction and E-junkie.

These providers will let you approve those who apply to be affiliates, and keep track of payments. Many will take care of payments for you.

Make it easy to affiliate

If you have clients with blogs and email lists of their own who are passionate about your product, make sure to let them know about your affiliate program. Although they may be marketing their own materials to their email list, if they’re truly passionate about your product or service, they’ll spread the word.

You should clearly spell out the terms of your program, including whether there’s a minimum cash amount people must earn to cash out and how long it generally takes to get paid.

To increase participation, simply increase the percentage of profits they receive for sales generated from their site. You can make things easier by including several sizes of banner ads for affiliates to place on their websites, or compelling copy they can use.

A word about ethics

One potential pitfall with affiliate programs is spamming. People interested in a quick moneymaker may decide to send unsolicited emails to everyone they know, which could reflect badly on your business. Make sure you’re selective about who you allow as an affiliate. Some businesses go so far as to only allow current customers as affiliates – assuring that their affiliates are knowledgeable about the product.

Legally, the Federal Trade Commission has certain expectations in place. Bloggers who are affiliates of a product must disclose that when they write endorsements or testimonials. So if you’re writing a glowing review of a product with which you are affiliated, make sure to let your readers know. You can do that by writing something along the lines of: “I receive a small percentage of profits from purchases made off of this sale.”

Another word of warning: You may want to have measures in place to assure that people have purchased a product before becoming an affiliate – so they’re not using your program for a partial refund on the first product they bought from you!

Is it effective?

Like all types of online marketing, affiliate programs take time and effort. If you’re working on creating a program to have people market your products for you, it may take some trial and error before the program is truly effective. Sometimes it’s easier to provide a free sample or a video instead of having an affiliate link directly to a product or service for purchase. Affiliates can still get the percentage of profits from sales that were originally generated from their site, but instead of trying to sell for you, they’re offering something to their readers for free.

If you’re considering adding affiliate links for your customers, a good bet is to sign up for affiliate programs and link to products you already recommend.

For example, if you have a web design business and know that your clients will need to get hosting services, you can affiliate with one or more that you like. If you collaborate with someone else who provides services that complement your own, you may consider affiliating with each other – so you both benefit from cross-promotion.

Affiliate programs work best when they’re extremely targeted, and the demographic of the affiliate and the publisher line up well.

Bottom line: The amount of time and effort you put into an affiliate program – either as an affiliate or a publisher – will determine what you get out of it.

This post contributed by guest author, Yael Grauer. Grauer is a Minneapolis-based freelance writer and editor. Find her online at Yaelwrites.com.

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© 2014, Contributing Author. All rights reserved.