By Jesse Torres

I recently had the opportunity to interview affiliate marketing veteran Stephanie Robbins on KCAA Radio’s Money Talk. Stephanie, through her company Robbins Interactive, helps clients with all aspects of marketing including affiliate marketing, social media, online branding, website development and online advertising.

“Affiliate marketing is an agreement where one firm (the marketer) compensates another firm (the affiliate) for generating transactions from its users. In practice, it involves a marketer placing links to its website on affiliated websites,” describe Simon Goldschmidt, Sven Junghagen and Uri Harris in Strategic Affiliate Marketing.

“Rather than pay for the links upfront, the marketer provides a commission to affiliates for every transaction that results from these links. If organized correctly, it can potentially benefit both parties, because it helps marketers acquire new customers and increase revenues, while affiliates can generate revenues from the visitors to their sites.”

Among today’s best affiliates are bloggers and social media personalities that have developed a large following. Through affiliate marketing entrepreneurs enter into an arrangement with an influential Internet personality or any person willing to represent the entrepreneur’s product. The affiliate, who should feel passionate about the product, promotes the product through links, banners, testimonials or other content about the product.

The entrepreneur benefits through the sale of products resulting from the efforts of the affiliate, the affiliate benefits from the revenue as well as the content that is created and share with followers and followers benefit through access to the content and the introduction to the product.

Entrepreneurs should ensure appropriate disclosures are made by affiliates that choose to promote the product through testimonials or other similar content. There is nothing wrong with affiliates that choose to promote a particular product. However, in such cases the affiliate should ensure that appropriate disclosures are made in compliance with applicable laws, rules or regulations. Lack of appropriate disclosure can damage the reputation of both the affiliate and the entrepreneur.

The following are four considerations that entrepreneurs should consider when establishing an affiliate program:

1. Online Store. Robbins states that affiliate marketing programs work best where an online store has been established. The store should have been up and running for a while to ensure that it is working properly and the kinks have been worked out. Robbins cautions that the quickest way for an entrepreneur to lose valuable affiliates is through technical glitches that cause lost sales and result in lost revenues for affiliates.

The beauty of well-developed affiliate programs is the ease of integration with the online store. While entrepreneurs can develop homegrown systems it may be worth exploring the options available through third party affiliate programs such as CJ Affiliate, Rakuten, Shareasale and Avantlink.

“You need to be able to put the technology in place so that you can reimburse and reward your affiliates as appropriate,” says Robbins.

2. Product Pricing. Affiliate marketing programs provide affiliates with a percentage of each sale generated through the affiliate’s activities. Driving traffic to an online store can involve tasks as simple as a hyperlink or banner on a Web site to comprehensive and well-thought out articles that address the features and benefits of the product.

Regardless of the effort, influential affiliates – those with large online followings on blogs, Twitter, Facebook, Instagram, etc. – have many products available for them to represent. As such, the commission per conversion is important. Robbins believes that products priced in the $60 – $100 range are optimal as they can generate significant volume with a reasonable commission. Lower dollar amounts provide nominal affiliate revenue and higher priced items do not sell as readily.

3. Product Worth Buying. Successful affiliates work hard to create influence within their space. If the product does not inspire a conversation the top affiliates will not touch the product.

Each affiliate has a niche. Entrepreneurs should target and make arrangements only with affiliates that operate within their industry. For example, an entrepreneur selling high-end culinary utensils and hardware should seek affiliates that are foodies, restaurant owners, industry consultants and others that operate in a related space. These affiliates may maintain blogs, Web sites, social media pages and social media accounts where they can share information and links about the product.

4. Great Affiliates Are Not Cheap. Entrepreneurs must be prepared to make significant revenue sharing agreements if they wish to engage with the top affiliates/influencers.

Years ago entrepreneurs were told in books, articles and workshops to seek out influential bloggers and others with strong followings and offer product or some other benefit in exchange for a mention or link. This worked for a while. But it doesn’t work any longer.

“So many people think that if we give these bloggers free product they will be completely happy,” says Robbins. “These are business people now. They know the value that they are bringing to the client. And they want to be compensated for it.”

 About Jesse Torres

Jesse Torres has spent nearly 20 years in leadership and executive management posts, including executive management roles at financial institutions. In 2013 the Independent Community Bankers of America named him a top community banker influencer on social media. He is a frequent speaker at financial services and leadership conferences and has written several books. He hosts an NBC News Radio show called Money Talk with Jesse Torres.
Follow @jstorres or contact  Jesse@JesseTorres.com