Recently, one of the most popular affiliate programs, Commission Junction (CJ) announced they would be making some significant changes to their program. This news specifically impacts online merchants who have been using CJ to attract affiliates (other sites who get monetarily compensated by the merchant in exchange for driving traffic or sales to their site). The first change involves price increases for transaction fees, which are going from 20% to 30%, and minimum fees per lead or sale (now $0.30). They are also phasing out the pay-per-click choice. While reasonable start-up costs still make Commission Junction a relatively affordable program, the price hike will obviously impact budget-minded Web site operators who depend upon affiliate revenue, pay-per-click revenue in particular.

Not to fear! If you’re a merchant feeling stepped on by Commission Junction, there are still other options to turn to. But let’s take a step back for a moment and review what affiliate programs do and how you work with affiliate networks to make money on the Web.

Affiliate Marketing Fundamentals

Boiled down to its purest form, affiliate marketing is simply revenue sharing between online merchants (sellers of goods and services) and affiliates (content sites). Affiliates are given links by the merchants to place on their site with the intent of receiving quality traffic, expecting a percentage of which to result in a desired action (e.g. sales, registration, downloads, etc.). By using affiliates, merchants extend and distribute their products and services through a “virtual” sales force working 24/7.

Who Operates Affiliate Programs The majority of affiliate marketing programs are executed through networks. There are high-end programs with relatively heavy up-front start-up costs like beFree and Performics (formerly Dynamic Trade), which provide resources to recruit successful affiliates, track sales, deliver advertising, and pay commissions, and lower-end programs like Commission Junction or MyResellers.com, which tend to offer less on the services side. Some networks make their revenue by taking a cut of every transaction the merchant makes that is associated with their network.

What It Means To Be A Merchant Merchants use affiliates to drive traffic to their sites by providing advertising that the affiliate then picks up off the network and puts on their site. Theoretically, the more relevant the affiliate that picks up the merchant’s advertising, the greater the chance of increased traffic (and hopefully sales!).

Merchants do not need to use an affiliate network to run an effective affiliate program. Several large sites run their own (Amazon, for example), and merchants can buy affiliate marketing software for in-house use as well.

What It Means To Be An Affiliate For starters, you need a web site in order to join an affiliate network. When you join a network you can enter into a revenue sharing agreement with a variety of online merchants and place their advertising on your site. The advertising comes in the form of banners, text links, and a number of other more sophisticated types of links.

Affiliates who “work” their program well stand to make the most money. For example, placing affiliate ads in high-trafficked or specifically-targeted areas of a site increases the possibility of a click-through to the merchant’s site. Affiliates can make money either by the click or by the sale (a commission). One of the reason CJ is likely doing away with the pay-per-click option is that there is a greater possibility of fraud being perpetrated to make it seem like lots of click-thrus to a merchant’s site is happening when in fact it’s a software just generating clicks for the purpose of generating revenue for a crooked affiliate. Bottom line is that you want to read the terms of agreement for each affiliate program to know what you’re getting into. The best part about being an affiliate is that it is FREE.

To examine more of the creative options available to you, check out our archived tip titled, “Alternative Promotions For Affiliate Bucks” .

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