Joint Venture and Affiliate Programs

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* Work at Home: Joint Venture and Affiliate Programs
Posted Nov 02, 2003 - 07:42 AM
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Pillars of Internet Marketing

Home / Chapter 1 / Chapter 2 / Chapter 3 / Chapter 4 / Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10Chapter 11Chapter 12 / Chapter 13 / Chapter 14 / Chapter 15 / Chapter 16

Chapter 1:  Joint Venture and Affiliate Programs
How to leverage the time, money, and resources of others to create leads and revenue.

Joint Ventures: A joint venture is an agreement in which two or more businesses work on a project for a set period of time. Joint ventures can be long-term, like promoting a product package together, or some can be short-term, like trading products and services. Joint ventures are all about related business teaming up and combining skills, products, services, and resources to create new stream of income and profit. Examples of Joint Ventures are: Cross Promoting -- when two or more businesses agree to promote each other’s product/service. Bartering -- trading products and services for products and services. Networking -- the sharing of valuable information with other businesses. Loyalty Programs -- rewarding your prospects or customers for taking specific actions (See Chapter 20, Building Trust and Rewarding Loyalty). Affiliate/Drop Ship Programs -- paying a commission or a percentage of the profits to people for each product they sell. Co-Product Development - creating or writing a product together. Viral Marketing -- allowing people to give away your products or information that contain your ad. 

Joint ventures can be very profitable, but are often hard to set-up.  Identifying possible joint venture candidates can be difficult.  Joint venturing is an acquired skill that, without the proper training and guidance, can go untapped, causing you to leave tons of money on the table. For that reason, I recommend Joint Venture Secrets Revealed. Joint Venture Secrets Revealed™ (JVSR) is a course on how to grab your slice of the good life using other people’s resources. JVSR gives you access to unedited, uncensored endorsement campaigns that have brought in tens of thousands of dollars for the Joint Venture partners (some of them literally overnight). You’ll also get the exact contact information of true players who want you to pitch them with your Joint Venture ideas.  This course is 185 pages of meaty, up-to-date content that will teach you exactly how to setup, structure and most importantly, profit from Joint Ventures. You'll learn how to find JV partners, how to approach them, how to broker deals and more.  Another similar and valuable resource is Joint Venture Tactics.

One key to joint ventures, I can tell you, is that writing a clear, benefit oriented inquiry letter is of utmost important.  If you aren't an experienced copywriter, this may be difficult to do.  If you are lacking good copywriting skills, then for ideas on how to compose a joint venture letter / proposal, I suggest How to Write Hypnotic Joint Venture Proposals. How to Write Hypnotic Joint Venture Proposals is a powerful proven process to make the acquisition of Joint Ventures quicker and easier (and more effective). Written by Larry Dotson and Mr. Fire, Joe Vitale (Joe is considered one of the greatest copywriters ever) you will learn how to find highly targeted joint venture partners and close the deal with compelling copy and letters. An excellent resource.

Affiliate Programs: Affiliate programs allow a merchant website to compensate a referral website (affiliate) for generating traffic, leads and, or, customers.  The compensation is usually a percentage of the sales resultant from any referred customer (5-20% are common, but may be higher and depend on whether the program is one or two-tier). Affiliate programs provide a means for the referring site to profit from referrals that result in a lead (not as common) or sale / order (most common). The affiliate commission can be thought of as a finder’s fee. Compared to other forms of internet marketing, affiliate marketing is the most cost effective for the merchant, because the merchant only pays for performance and results. In effect, the merchant allows others to advertise their site, product, or services with a trackable link or banner, but only pay for such advertising when it produces results – such as a highly qualified lead, or most common, a sale. 

Online affiliate selling was pioneered by Amazon.com in 1996 as a way of generating sales through referrals from linked websites.  Amazon.com it is now one of the biggest sources of eCommerce revenue on the internet, and I think their success is largely due to them initiating affiliate selling and having one of the biggest affiliate programs on the Internet. Affiliate selling (AKA Associate or Referral Selling) is a medium that enables a site to increase the traffic of visiting by allowing other sites to add the affiliate site's link or banner to their site, and in return, make a percentage of the profit derived from any transaction that results. Affiliate selling is possible on the internet, because all information about the referral site and the customer is logged and stored, using referral IDs (embedded in a text link or banner) and cookies, and is tracked by the use of affiliate tracking software.

Types and Structure of Affiliate Programs: 
There are two main types of affiliate programs, which are single or one-tier and two-tier. Single tier programs only pay referrals sites on sales of customers they refer. If that customer refers another customer, the referral is not a compensation. Two-tier programs pay referrals for customers they directly refer, and for the customers or affiliates that customer may refer (indirectly refer). The pay-out commission at each level for two tier programs varies, but is generally smaller on the second level. Two tier programs have been compared to multi-level marketing, adapted to the internet. I won’t cover the ways this classification is and isn’t true, however, suffice to say, that two-tier programs encourage not only customer referrals, but affiliate referrals, and rewards both. In my mind, affiliates are like brokers: they represent, sell, and market another company’s product or service, without inventorying the product or having to handle customer service or accounting issues. "Why," you may ask, "then would someone want to market another’s product, rather than their own?" The answer is simple, affiliate programs are not just about making money, they are about saving money too. Affiliate programs allow a merchant to add complementary products to his or her offering, virtually without any product investment costs. If that merchant already has a large customer database, or a lot of traffic to their website, it is a way to increase their revenue, without having to spend anything. 

Let us use a real world example of how profitable affiliate marketing can be (both to the merchant and affiliate). Say you are a merchant site that sells computer hardware, with 100,000 hits to your site per month. Your sales conversion ration is 3%, so you get 3,000 orders per month. Let us say I am a website that sells web hosting and web design solutions, that allows people to get a $5,000 E-commerce site for $99 and $49.99 per month. I approach you with a proposition -- that my products and services complement yours, and one advantage of my product, is it has a built-in residual income base (a monthly hosting fee, not just a one-time sale). I will pay you 20%, for the life of the customer, for any sale generated by a lead you send me. You immediately do the math and calculate, on a monthly basis (assuming the same sales conversion ratio your site is achieving); you could add an additional $6,000 a month in your pocket for web site orders and $3,000 a month in web hosting commissions, and the residual grows month after month. You see this as a good proposal, so you go to my site, click on the affiliates tab, sign-up, and download a banner imbedded with a unique ID that is tracked by my affiliate software. You then immediately place the banner ad on your site and send an email announcement to your customer database, with a text link containing your affiliate id. In the first month, this generates $6,000 in commission for you and quite a bit of sales for me. All, as the result of a simple agreement between two website merchants, and the placing of a banner ad on a high traffic site and one email announcement. Does this sound far fetched? It isn't. This happens all the time and it is how the big sites are making money as affiliates and getting bigger. In addition, it is how the little merchant stands a chance to make an impact, without loosing his or her shirt on costly advertising. For an excellent overview of affiliate programs, I highly recommend the book, The Complete Guide to Associate and Affiliate Programs on the Net: Turning Clicks Into Cash, by Dan Gray and Daniel Gray. 

Essentials of an Affiliate Program: 
There are four essential elements to having an affiliate program. These are, having an eCommerce website offering a product or service, Affiliate tracking software, Banner and text ads, and of course, Affiliates

  1. E-Commerce Website: 
    There are thousands of web design companies and individuals out there; however there are Eight Things You Should Consider Before Getting a Website. Even if you have a website, these items will help you learn to make it more profitable. To get a free report, 8 Things to Consider Before Getting a Website, send a blank email to 8ThingsToConsider1@sendfree.com or visit E-Commerce Builder.
  2. Affiliate Tracking Software: 
    Most websites do not have affiliate tracking capabilities built in, so in order to institute an affiliate program, you need affiliate tracking software. These can either be site based (reside on your server) or internet based (resides on a third party server). However, with the increased need of affiliate tracking, some sites come pre-build with affiliate tracking capabilities built in, such as E-Commerce Builder™. Not only does affiliate tracking software track referrals and sales, but it also calculates commissions due.

    Another effective affiliate tracking program is AssocTRAC™.  Associate Tracker™ is an online two-tier tracking software. Nice features of associate tracker are: It automatically tallies the month's sales for each associate (and the commissions they have earned), and e-mails them to you -- so you do not need to manually track who produced which sales, and how much they are owed. It produces a special file that you can import into your accounting software, so you can print all of your associate checks (and labels for their envelopes) automatically… saving you days of work each month, and eliminating human error. A unique aspect of AssocTRAC™, not found in many other affiliate software packages, is that you can even track orders that come through your fax, 800 number, and mailbox -- so you will always know who referred a sale. Another effective affiliate software solution is My Affiliate Program. My Affiliate Program is a popular online affiliate tracking software that has a lot of flexibility. You can have different commissions, for different products and different affiliates and custom set the duration over which commissions are to be tracked and paid. Out of the hundreds of software packages out there, My Affiliate Program is one of the easiest to use and implement. And finally, last but not least Affiliate Shop is very popular and deserves mention.
  3. Banner and text ads:  In order to supply a turnkey affiliate solution to potential affiliates, you must have quality banner ads, which they can download and implement immediately. If you are a large company, with a solid advertising and marketing budget, I recommend having them professionally designed by a graphic artist. However, to get started, you may wish to utilize some lower cost banner solutions, which usually consists of templated graphics where you merely add your text (For Banner Ad resources, see Chapter 2, Banner and Display Advertising).
  4. Finding Affiliates: While it sounds simple, finding affiliates are the most difficult and arduous part of creating a successful and profitable affiliate program. How does one find websites or business that would be interested in joining your affiliate program? There are three main methods:  

The first way to finding qualified affiliates, is getting your site and details of your affiliate programs listed in affiliate directories. Affiliate directories are sites where merchants list their affiliate program, and web masters from other sites go to browse what programs are available to "plug-into" their sites (smart web masters know this is a win-win situation and are actively seeking affiliate products). The problem is that there are hundreds, if not thousands of affiliate directories and manually finding and submitting your site to each of them can be time consuming. Furthermore, there are only a few directories worth your time that have credibility and traffic. A directory worth mentioning is Commission Junction, with is the crème de’ la crème of affiliate directories. Commission Junction is probably the largest and attracts high quality affiliates. Its main drawback is its high set up fee ($2,000) and the requirement for you to use their own affiliate tracking software. But if you have the budget, it is worth considering, for you will be in the company of Office Max, Staples and other large businesses, and to be listed with them, you will gain credibility and quality affiliates from large volume sites.

The second way to find qualified affiliates, is using an affiliate announce service. There are a growing number of affiliate directories you really must be listed with. After you have found the first few, submitting similar information to five or six you might start wondering if perhaps, your time is better spent doing other things. An affiliate announce service will submit your program to a database of the leading affiliate directories quickly and painlessly, saving you hours sourcing the directories, checking their individual submission policies and processing their on-line forms. This frees up your time to focus on building your business. Once listed, your program will usually be placed in a prominent position on the directory under the new entries listings. If an editor's recommends your site (they review all new submissions), it will quite literally make your affiliate numbers soar. In addition, the ongoing entry under the relevant directory classification will attract a steady stream of motivated and targeted affiliates actively seeking a revenue sharing program. I personally have used and am very pleased with the professional services of Affiliate Announce to accomplish this task. 

The third method of finding affiliates is to do a web search for key words that might identify companies, for whom your product or services would make a good complement, and manually browsing their site and contacting them by email or phone. Some words of advice here in contacting potential affiliates: The larger the company, the more important it is to contact them by phone (not just email). Doing a standard web search, can be time consuming and disorganized, and it is hard to track whom you contacted and what their response was (if any). I recommend using special software to do sophisticated web searches and keyword analysis, such as Arelis. This software allows you to create and save campaigns with targeted key words. It also has a built in browser, emailer and customer management database. It automatically extracts contact information from the sites you identify, allows you to email them a mail merged templated letter from any number of custom created templates, and then tracks your follow-up and their response. This software has helped me save a ton of time, and, helps me to keep track of whom I contacted and their status-- so I don't duplicate my efforts, decreasing my efficiency and possibly offending potential affiliates.

When searching sites that are potential affiliates, it helps you, if you know some more information about that site, such as how many visitors per month they are receiving, whom is the contact, etc. because you don’t want to waste your time on smaller sites (let those come to you through affiliate directories). A great, free resource is the Alexa toolbar from Amazon.com. The Alexa toolbar installs in your web browser and allows you to pull up traffic statistics, contact information, and other statistics from just about any site you are visiting. You can download the free Alexa toolbar by clicking here. It is easy to install and uninstall, if so desired.

Virally growing your Opt-In list: “Viral Growth” is an internet marketing term given to the virtual phenomenon of exponential growth due to referrals.  It’s when you start acquiring new customers or leads without ever contacting them. It is when customers come to you, not you go to them. Giving something away for free, in exchange for "sign ups" for your free product, allows you the possibility to grow a large Opt-In customer database through viral growth. Examples of “viral growth” on the Internet over the last few years have been Hotmail, ICQ, Blue Mounting eCards, Yahoo, Google, eBay, etc. . An amazing new tool has just been developed to allow you to give away a product that has mass appeal, is likely to be shared, and is practical -- making it a perfect candidate to fuel viral growth.  It is called Tool Bar Generator.  With this tool, literally in a matter of a minutes, you will be able to create your own fully branded toolbars to give away to build your brand name.  

Summary:
Joint Venture and Affiliate Programs are probably tied with achieving high search engine ranking, as the most important overall internet marketing strategy for any company. Other than development costs, these programs cost very little money and can be very profitable. Although high search engine ranking is probably the most important, it is also one the most difficult and time-consuming strategies to master. It also has two other major drawbacks, which is, the results of such a strategy can take months to manifest and with pay-per-click becoming an essential aspect of search engine strategies, it is becoming more and more costly and highly competitive (for more information on search engines, see Chapter 5, Search Engine and Domains). Therefore, mastering Joint Venture and Affiliate Programs should be a priority in internet marketing, especially for new ventures or when the online arena is a new venture for an established brick and mortar company.

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