December 6, 1999
Marketing an Internet-based company is made easier and cheaper through an affiliate programAn affiliate program is simply a partnership between Web sites. A net-based company teams with thousands of small sites to sell its good and services. The program's sponsor gets needed visibility in the vast cyberspace realm, while the affiliates themselves can receive a chunk of what the sponsor earns.
Advertising Web sites has become a hefty expense, with some budgets topping $100 million. Forrester Research estimates that spending for online ads will increase from $3 billion to $22 billion by 2004.
This comes at a time when the effectiveness of banner ads, the most-used form of Web marketing, is being questioned. Studies show that click-through rates are dropping. Internet users generally have a set pattern, and banner ads do little to break the routine.
Affiliate programs are becoming the answer. They're a cross between banner ads and links, but with a twist: Sponsors only pay when their ad results in a click through or sale.
The affiliates themselves benefit by receiving commissions ranging from 5 to 20 percent. Some sponsors are generous enough to pay for every click-through.
Affiliates, however, rarely receive more than $100 per year, says Charlie Romero, president of Jump Internet. After all, a 15 percent commission on a $15 book is merely enough to buy a bookmark. Plus, most repeat customers enter the sponsor directly, rather than go through the affiliate.
"They don't receive any windfall, and they never will," says Romero.
That's not always true, says Bernard Sonnenschein, president of Whatadomain.com, which vends premium domain names at prices ranging from $500 to $100,000.00. The company hands out 15 percent commissions when a click-through from an affiliate results in a sale.
"If somebody buys a $100,000 domain name, we'll pay the affiliate $15,000," says Sonnenschein. "No other affiliate program can say that. We'll be paying out about $100,000 in commissions in the next few weeks.