How To Guide: Affiliate Marketing Essentials For Startups

I have nothing.

Wow, that sounded bleak. But you’re intrigued, right?

In a less dramatic way, I have nothing in terms of customers, clients, and resources. Nada, zilch or as the old Hebrews would say – bupkis. (And by old Hebrews I mean my Grandma Molly and Grandpa Murry)

I am an online startup that no one knows about…well, except for my parents and mother-in-law who dutifully thumbs up my Facebook posts.

But all that is about to change. Because I just found out about a magical, answer-to-my-dreams-and-solve-all-my-problems-solution that I’ve been searching for since launching my solo online business. Or so it seems. At least, I think so it seems.

What is this magic bullet of marketing and merriment? “Affiliate Marketing.”

What The What?

Affiliate marketing is one of those things you hear about, but you’re not sure if you should admit you don’t really know much about it (see also my high school years and girls).

So, what is affiliate marketing?

Well, it’s a revenue-sharing model that’s akin to a realtor selling a house. If there’s a sale, the realtor gets a commission for finding the buyer and leading said buyer to the house. But the house then has to sell itself, which is where the analogy falls through.

That’s a bit oversimplified, but you get the idea. So with affiliate marketing, a business (in this case me) rewards anyone who helped bring a “customer” to my site.

And right now that seems like it would solve my biggest problem – visitors. Or rather, the lack of visitors.

If you’ve never experienced building a website with zero visitors (kudos to you), it feels a little like being lost in a jungle. A jungle that no one knows about. Basically, I’m like an un-findable jungle. What I wouldn’t give for Hurley and some sage Star Wars advice for a way off the island. (Man, Lost was a great show.)

Since there are 152 million blogs (as of 2013) and I have 0 audience/traffic, it seems like a no-brainer, right?

Figuring there has to be a catch, I did more research.

Here’s what I found…

Win-Win

Affiliate marketing for a merchant (aka vendor or advertiser) can be awesome. For the most part, you only pay for an actual sale – not just visitors.

So if a blogger sends someone to my site, but they don’t actually buy, I don’t have to pay for the visit. It’s like the best version ever of a pay-per-click ad.

With most pay-per-click models, I would pay each time someone clicks on an ad and visits my site (whether they buy or not). According to Wikipedia (who I’m not above referencing), here’s the breakdown of affiliate models:

• About 80% of affiliate programs use revenue sharing.
• About 19% use cost-per-action (basically paying if someone signs up for, say, a newsletter).
• The remaining one-percent use pay-per-click or cost per mille (aka CPM, which just means a site has to show your link/ad to a certain number of page visitors/views).

So, what’s the downside?

Well, that depends, let’s look at some of the different options for using affiliate marketing as a merchant.

Affiliate Network

Affiliate networks are basically the middlemen that allow bloggers/affiliates to find merchants and see if they’d like to promote their product or site.

If they do, the blogger will use a specific link or banner, which has a tracking code that goes to the merchant’s site. This unique code is how the network keeps track of the referring blogger to ensure they receive proper compensation.

Networks can vary in size and typically focus on different niches, but they all provide the ability to track sales, as well as an accounting system that takes a percentage of the sale to pay the referring blogger.

To be expected, the network also takes a certain percentage of the sale. How big that percentage is depends on the network.

COMMISSION & FEES

Receiving a boost in traffic (and sales!) is great. But how much does it actually take from the bottom line?

Here are 8 affiliate options along with their associated fees…

1.) Rakuten Linkshare

Linkshare is one of the biggest and oldest affiliates with clients that include Macy’s, Walmart, and Sephora. I have a feeling my startup might not fit, but I inquired anyway.

When I asked about cost, I received a message that said “successful clients” meet the following: “Your business generates more than $2 million in online sales”

Alrighty then.

Here are the LinkShare merchant fees:

• One-time fee of $2,500
• Monthly fees from $500 to $3,000 based on sales volume.

2.) CJ Affiliate by Conversant

CJ has been around since the late ’90s and is one of the other large affiliate networks with clients like Home Depot, HSN and Turbo Tax.

Optimistically, I signed up and received a similar email that said they look to partner with sites that “earn a minimum of $75,000 a month in online transactions.” So, $900,000 is better than $2 million, but it’s still just above my current gross of approximately $0.

Here are the CJ Merchant fees:

• One time fee of $3,000
• Deposit of $3,000
• Renewal fee of $500.
• Cost per sale is about 30%. But if your monthly fees are less than $500, then you pay $500 less the actual fees due for that month.

Yipes.

3.) ClickBank

ClickBank is another large affiliate network (reportedly 200 million customers), which focuses on digital media products like ebooks, online membership subscription, etc. They’re also supposed to be super popular with entry-level merchants.

In other words – no approval process!

Here are the ClickBank merchant fees:

• One-time $49.95 activation charge.
• There are no monthly charges, but there is a $2.50 pay period processing charge for every payment that ClickBank issues to you.
• Each time you sell a product, ClickBank effectively keeps 7.5% of the sale plus $1.

4.) Share A Sale

ShareASale is a fairly large network with nearly 4,000 merchants & 700,000 affiliates. Their website feels a little less formal – but in a good way. It feels like they would appreciate my startup spunk (which sounds oddly…nope, nevermind).

Here are the ShareASale merchant fees:

• $550 one-time network access fee
• $100 minimum deposit
• 20% transaction fee based on payout rate
• $25 monthly minimum if your account doesn’t generate at least $25.

5.) Avangate

Avangate has 50,000 affiliates that focus on software & online services.

Which sounds impressive – especially if they accept me. And they have a lot of products and services, so much so, that I’m still not 100% sure what they do (just like their name, so that works…sorta).

Here are the Avangate Merchant fees:

• No startup fees
• 3.99% + $.99 transaction fee

6.) E-Junkie

E-Junkie is more on the economical side, with a paired down website. But according to some sources, they have nearly 8,500 merchants and thousands of affiliates.

Their pricing model makes up for their no frills website… It’s free to start and they don’t have a per-sale commission. Now we’re talking.

Here are the E-Junkie merchant fees:

• no setup fee
• no transaction fee
• $5/month for 200MB download storage
• Plans starting at $20/month and up, they also support an optional Remotely Hosted Downloads feature to have us pull your download files from any Web server.

7.) PayDotCom

Paydotcom has over 400,000 affiliates and claims to get over 1,000 new affiliates every day but, more importantly, (for anyone on a budget) they are super affordable.

They have a pre-set 50/50 split for merchants and affiliates. And they offer discounts if you purchase bulk services upfront.

Here are the PayDotCom merchant fees:

• Vendor/Affiliate Accounts are free.
• Sale price $.01 – $10 has a $1 fee ($.80 discount)
• Sale price of $10.01 – $20 has a $2 fee ($1.60 discount)
• Sale price over $20 has a $3 fee ($2.40 with discount)

In-House Affiliate

An alternative to joining a network is to go it alone with your own tracking software. The pro being no setup or network costs so you can offer affiliates a better rate. The con is that you’re not in front of a large pool of affiliates.

And (sensibly) it’s hard for affiliates to trust that they’ll get paid properly from a rouge merchant.

8.) Post Affiliate Pro

Post Affiliate Pro is an affiliate software program that can track any referrals and record payouts but it can’t actually process any financial transactions.

Here are the Post Affiliate Pro merchant fees:

• $29/month
• $199 one-time fee installed on your own server

Warnings & Gotchas

Just like with anything, there are always some bad apples that can potentially ruin a good thing. For instance, it’s been reported that affiliates have advertised a non-existent coupon for a store/merchant and then claimed a commission on a sale that the store would have made anyway.

There’s also a thing called “cookie stuffing” where a visitor of a site gets a third-party cookie placed on their computer from an entirely different website (which we’ll call the target website), usually without them knowing about it. Then if the person goes to the target website and buys something, the ‘cookie stuffer’ is paid a commission.

And lastly, my research has shown that some affiliates engage in shady and unscrupulous actions, akin to a hired gun, selling their services (and audience) to the highest bidder.This could take the form of:

This could take the form of:

• Not disclosing their affiliate relationship (as is required by federal law).
• Recommending the product that pays the highest commission, rather than the superior product or one that’s ideally suited for the reader.
• Looking for ways to cheat the system (see cookie stuffing above).
• Dropping a merchant and their product whenever presented with a higher competing commission.
• Citing 10 different competing products each month (“ZOMG this ONE is the best thing ever) as they test out new affiliate programs.

Some merchants and site owners have gotten to the point where they only approve affiliates on a per-case basis, potentially lowering sales, but knowing that the sales (and relationship) are on the up and up. (The owners of this site, Pagely, fall into this camp of being very selective of whom they allow into their affiliate partner program.)

Results

So, after all this research did the affiliates boost my sales from zero to something other than zero?

Sadly, I can’t find out.

My site is on the Wix.com platform and it’s currently unable to work with any affiliates.

When I inquired about it, I received this from Wix, “Unfortunately, we do not offer an affiliate program for Wix sites at the moment. We did offer the LeadDyno Affiliate Marketing app via the Wix App Market, however, this app has been removed from the app market.”

Um, okay?

Maybe it’s their online store or something that can’t process/integrate with the tracking. Undeterred, I looked for other options… And found that I could upgrade to the Shopify store app. So, I asked Wix if this would solve the affiliate issue.

Nope.

Here’s the reply in its entirety: “Currently, external affiliate networks are not compatible with Wix sites. Using a different store platform will not affect this. Your feedback is greatly appreciated as we are always working to update and improve our products.”

Moving on… affiliate marketing might be everything I want it to be – I just can’t use it to find out.

TO BE CONTINUED

Next up in my journey of starting a business… Amazon. And reviewing possible future website platforms like WordPress, [Editor’s note: Pagely is WordPress on Amazon] which doesn’t appear to have any of the limitations I’ve run into.

If you have comments about affiliate marketing or have suggestions about how best to attract customers, leave them in the comments below.