Chapter 4entrants to identify unserved market segments and attain dominance A tool time many new, low-budget Web sites are using to generate revenue is affiliate marketing. In affiliate; marketing. one firm’s Web site the affiliate firm’s includes descriptions, reviews, ratings, or other information about a product that is linked to another firm’s site that offers the item for sale. For every visitor who follows a link from the affiliate’s site to the seller’s site, die affiliate site receives a commission. The affiliate site also obtains the benefit of the selling site’s brand in exchange for the referral,The affiliate saves the expense of handling inventory, advertising and promoting the product, and processing the transaction. In fact, the affiliate risks no funds whatsoever. Amazon.com was one of the first companies to create a successful affiliate program on the Web. Most of Amazon.corn’s affiliate sites are devoted til a specific issue, hobby, or other interest. Affiliate sites choose books or other items that are related to their visitors’ interests and include links to the seller’s site on their Web pages. Books, music, and video products are naturals, for this type of shared promotional activity, but sellers of oilier products and services also use affiliate marketing programs to attract new customers to their Web sites.Affiliate CommissionsAffiliate commissions can be based on several variables. In the pay-per-click model, the affiliate earns a commission each time a site visitor clicks the link and loads the seller's page. This is similar to die click-through model of charging for banner advertising, and the rates paid per thousand click-throughs are similar to those paid for banner ads.In the pay-per-conversion model, the affiliate earns a commission each time a site visitor is converted from a visitor into either a qualified prospect or a customer, An example of a seller that might use die qualified prospect definition is a credit card-issuing bank. The bank might decide that its best strategy is to pay affiliates only when the visitor turns out to be a good credit risk. Alternatively, the bank might decide it wants to pay the affiliate only if the visitor is approved for the card and then accepts the card (completes the sale). A site that pays its affiliates on completed sales usually pays a percentage of the sale amount rather than a fixed amount per conversion. Some sites use a combination of these methods to pay their affiliates.Commissions on completed sales range from 5 percent to 20 percent of die sale amount, depending on variables such as the type of product, the strength of the product’s brand, how profitable the product is, and the size of an average order.You can learn more about affiliate programs by visiting an affiliate program broker site that offers affiliate program opportunities for a number of Web sites. An affiliate program broker is a company that serves as a clearinghouse or marketplace for sites that run affiliate programs and sites that want to become affiliates These brokers also often provide software, management consulting, and brokerage services to affiliate program operators, Rakuten Linkshare and Commission Junction are two popular affiliate program brokers. Other
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