The Affiliate Marketing business model

So far in this series on how to monetise a high traffic website, we’ve been dealing with subscription, advertising and marketing opportunities. These are fine, but as I’ve said many times (see: Real money), I don’t think these models will last the test of time. What the Internet (in the Western world) needs to learn to do, is earn some real money selling real stuff.

And affiliate marketing is one of the easiest types of ecommerce selling. Financial advisors and mortgage advisors have done it for decades – selling other people’s stuff.

The reason affiliate marketing is the easiest type of e-commerce is because websites with high traffic, or low traffic with well-targeted traffic, can refer their customers on to a transactional website and earn some revenue from the end sale, assuming there is an end sale.

The alternative, pay-per-click model enables websites such as Google or Facebook to earn revenue from customers simply clicking a hyperlink to go to a third-party website. Affiliate marketing earns revenue when a third-party website is able to sell a product – i.e. it’s performance based.

Affiliate marketing is a large commission scheme. And like many other Internet-based revenue schemes, there are aggregators (such as Commission Junction) who offer a marketplace style service where companies selling stuff can advertise their wares, and companies with large audiences can peruse the sellers, embedding affiliate hyperlinks and start earning commission immediately.

There are two downsides to affiliate marketing. One is that your website is effectively sending traffic elsewhere, and those users are unlikely to return quickly. The second is that by linking to transactional websites, your website is promoting them, and if users experience poor services, it can affect your website too.

The past and the future of affiliate marketing

Affiliate marketing went through a dark period. Do you remember several years ago, searching for products and landing on a website which simply had links to Amazon? You’d try another search, find a different website, and that also, only had links to Amazon. This was because affiliate marketing is easy to set up (especially with Amazon – which is a great feature), and these affiliate websites were performing advanced SEO (Search Engine Optimisation) techniques at the time and appearing above Amazon itself.

Since then, Google has managed to remove these solely affiliate websites from search results. Affiliate marketing has returned to its root of being embedded in longer, relevant and useful content items such as reviews.

Affiliate marketing will become more and more important on the Internet as a key marketing initiative because the cost of Pay Per Click advertising will continue to rise past a threshold until it becomes financial unviable to pay that much for a click rather than a sale.

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