The Power of Free
One complaint that I have often heard about affiliate programs from webmasters is that they often end up promoting the affiliate vendor for free, without being fairly compensated in return. This usually occurs when a webmaster promotes a program and begins sending visitors to the vendor, but few of the visitors actually make purchases. Many online shoppers visit a site several times before deciding whether or not to make a purchase. The problem with this for affiliates is that if the visitor bookmarks the vendors site, they often will not receive any commission if the visitor does later make a purchase. The vendor ends up receiving traffic, brand promotion, and potentially revenue for free.
Improvements to some affiliate programs have tried to eliminate this potential problem. Many programs use cookies to track visitors and referring URLs or affiliate IDs, and give credit for sales made even months later. This works well in theory, but there are limitations to the use of cookies. Some web surfers have set their browsers to not accept them, and others routinely delete the cookies they have accumulated, either of which result in lost commissions for the affiliate.
A few other programs have agreed to pay a certain amount per click-through (usually $0.05-$0.10) in addition to commissions on sales the affiliates refer. This at least helps, but it takes quite a few click-throughs to make up for a lost sales commission because the visitor bookmarked the vendor site.
A better solution may be the recent trend to offer affiliate hosts the opportunity to earn commissions without the visitors needing to make any type of purchase. This can be best described as a pay-per-lead model, in which affiliates earn commissions for referring potential customers to the vendor. Usually the commission is earned when the visitor requests a free trial or sample of the product. Others pay for visitors to complete an opinion survey or for referring email addresses for a free newsletter.
The main advantage of these types of programs should be obvious. Since visitors aren't required to actually purchase anything, you will see a much higher conversion rate. According to Irv Brechner, Director of Marketing Technology for TransAct!, 10-30% of click-throughs from an affiliate will result in a commission-generating request from the visitor. This is because people are much more inclined to request a free trial or sample of a product on their first visit to a new web site then they are to shell out hard earned cash. After all, what do they have to lose? Especially if their privacy is assured.
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