| Dear Internet visitor,
My intention is
to help you own a profitable Internet
Home Business.
Here is
Internet Home Business course that will help and guide
you to start off your Home Business on the Internet.
Lesson #6
HISTORY OF AFFILIATE PROGRAMS
WHAT YOU WILL LEARN
In this lesson, you will learn how
affiliate programs have evolved as the means of
advertising for e-commerce. You will learn how the
Internet created an entirely new channel for selling
goods and services and how the multitier commission
structure supplies the missing link to make this new
channel fully effective.
THE EMERGENCE OF THE
WEB
Ten years ago, there was no such thing
as e-commerce as we know it today. Although the Internet
has been around in some form or fashion for many years,
for most of its history it was used only by the military
and research scientists. As the technology became
friendlier, others began to use it. The key event to the
popularization of the Internet was the creation of the
World Wide Web—especially the capability to show
pictures and play sound from the Web, which became
available around 1994. Adding that multimedia capability
to the Web made it inevitable that the Internet would
eventually pervade business and commerce. It did not
take long.
The graphical Web was shortly followed
by the capability to transmit credit card information
securely online, which was shortly followed by the
ability to process the card payments in real time
online. A new venue to sell products and services had
arisen seemingly overnight.
A NEW DISTRIBUTION
CHANNEL
The Internet provides a new and quite
different distribution channel for vendors to sell their
products and services to consumers. Consumers can learn
about, view pictures of, and order products from
anywhere at anytime from the comfort of their home or
office.
To sell anything, though, a vendor
needs to get traffic to his or her Website through
advertising. This was first approached from the old
model of TV, radio, and print ads. That is, vendors went
to popular Websites and offered to pay for placement of
their ad for a period of time. Since the Internet is
different from the old broadcast media, however, new
more efficient methods of advertising were sought. It is
relatively easy to determine the size of a TV or radio
station's audience. The same is true with the
circulation of print media such as newspapers and
magazines. It's not as easy with a Website, however.
Sure, there are counters, but they can not always be
trusted.
Plus, a Web page being retrieved from
a server (and thus adding to the counter) does not
necessarily mean it will be seen by a human being. Bots
and automated processes can retrieve pages that are
never seen by any human being. It became important to
know whether the page views were coming from the same
source or whether they were "unique views"—i.e. new
people rather than the same few over and over or some
automated process. Another problem was that unless the
ad is placed prominently and in context on the host
site, it will not draw traffic, even from a large
audience of unique viewers to the host site. So, paying
a flat fee for displaying an ad on a Website for a set
period of time turned out to be undesirable.
Rather than paying for a set period of
time, advertisers began to prefer to pay according to
the number of clicks on their banners. Standard sizes
evolved for banners used to advertise Websites on other
Websites. The banners can have words, pictures, and
animation and serve as a link to the advertised Website.
When you click on the banner, you are taken immediately
to the advertised site. Thus, with "pay per click" if
you did not get any traffic, you did not have to pay.
This motivated the host site Webmaster to place the
banner effectively on the site so it would draw traffic.
Even "pay per click" had its problems, though. Clicks
could also be automated and unscrupulous hosts could
cheat. Clicks also needed to be from "unique viewers" to
be effective.
Thus, vendors ultimately came to
prefer paying only when a sell was actually made or
someone at least interacted with the site by joining an
opt-in program. The vehicle for paying only for sells or
opt-ins on your site from persons sent from the host
site became known as "affiliate programs."
AFFILIATE SERVICES
As the popularity of affiliate
programs has grown, services, such as LinkExchange,
Commission Junction, BeFree, and many others, have
arisen to provide centralized locations where Webmasters
can pick and join affiliate programs. These services
also monitor the vendors and keep them honest. They
provide standardized software and interfaces to run the
affiliate programs so that each new vendor does not have
to re-invent the wheel when they start up an affiliate
program.
As a Webmaster, you can go to one of
these sites and pick out the programs you want to join.
You fill out a form providing information about yourself
and your Website and then you download the "banner code"
to place on your site. When someone clicks on the banner
from your site and buys something from the vendor, the
sale is tracked and they pay you a small commission.
Most provide online reporting so that you can see your
how your sales are going at any time.
While these affiliate services help to
promote affiliate programs for the vendors, and provide
some efficiency for the Webmasters, vendors are still
looking for better ways to promote their affiliates'
programs and Webmasters are looking for more profitable
arrangements.
BUYING FROM YOUR OWN
STORE
Only a small percentage of the
millions of Websites on the Internet actually draw any
significant traffic. ISPs and other services provide
free personal home pages and many people have designed
sites more for their own amusement than any serious
purpose. Nevertheless, it is advantageous to vendors to
have their affiliate banners on as many pages as
possible. Even the sites that do not draw significant
traffic have the benefit of the loyalty of their own
Webmaster. If you have put the Amazon.com affiliate
banner on your site, you will go there to buy your books
rather than Barnes and Nobles because you get a little
commission back when you buy from your own "store."
Because of this, most vendors make it as easy as
possible to join their affiliate programs and want
affiliates even with low traffic sites.
After the new wears off, however, most
Webmasters realize it is too much work for too little
value to keep affiliate programs on their low traffic
Web pages. Because vendor sites are constantly being
redesigned, your banner stops working and you have to
download new "banner code" and replace it on your site.
As promotions change, the vendors make you change your
code or the pictures stop showing up. A few of the major
vendors with affiliate programs have gone bankrupt and
the links just quit working. It turns out to take a lot
of time and effort to keep affiliate banners working on
your site. Yet, it would benefit both the vendors and
the Webmasters of the low traffic sites if this could be
more conveniently and more profitably done.
A BRAIN TEASER SOLVED
There are thousands upon thousands of
affiliate programs available on the Internet. A
Webmaster cannot put more than just a very few affiliate
programs on any one Website without losing
effectiveness. (Nothing is worse than a Web page crammed
full of banners.) Thus, Webmasters have become selective
in choosing affiliate programs. As competition heats up
among the vendors, the vendors find themselves focusing
on finding creative ways to promote their affiliate
programs. Affiliate programs are excellent for marketing
products and services on the Internet, but how do you
effectively market an affiliate program to the
Webmasters?
A few bright entrepreneurs, including
SFI marketing Group's founder, Gery Carson, have come up
with the answer. The answer is to have a multitier
affiliate program. This solves two problems. One, it
makes it worthwhile for the ordinary person to become
involved in e-commerce. You can make good money even
without a high-traffic Website because you share in the
sales of an entire organization. Plus, you don't have to
hassle with keeping banner code for multiple programs up
to date. SFI's Catalog allows all SFI affiliates to "buy
from their own store" without the hassle of trying to
maintain hundreds of affiliate programs yourself. Two,
the attractiveness of the multitier commissions
effectively promotes the affiliate program without
distracting from product promotions.
Plus, this solution involves multitier
training as well. Webmasters become involved in
affiliate programs not only for their own savings but
also to generate income from selling to others as well.
This is not easy and requires training. It would be
extremely costly for each vendor to establish an
effective training program, providing the one-on-one
communication necessary for true results. A multitier
system with Team Leaders providing one-on-one training
as needed eliminates the vendors' substantial affiliate
training costs.
Thus, the next logical step in the
evolution of affiliate programs in e-commerce is exactly
what the SFI marketing Group has already done: a
multitier commission and training structure.
NETWORK MARKETING AND
THE INTERNET
When you step back and look at the
history of e-commerce, you see that affiliate programs
have independently evolved into something very similar
to network marketing, which has been around for a long
time. Ironically, though, network marketing itself has
not taken well to the Internet. Most network marketing
companies mistakenly believe that face-to-face
interactions are necessary and that recruiting can not
be effectively done online. (The research is in,
however, and it shows the contrary to be true.) Another
factor is that many network marketing companies do not
encourage analytical examination of their opportunity,
which is inevitable on the Information Superhighway.
Thus, most network marketing companies only use the
Internet to provide forms downloads and similar services
to their existing representatives. They do not
effectively use the Internet as a recruiting tool or to
sell products to the general public.
Some enterprising independent
representatives, however, have evolved the "downline
clubs." Downline clubs sign people up on the Internet,
promising to place them in multiple network marketing
opportunities based on the order in which they signed
up. Downline clubs theoretically offer the possibility
of a large organization below you in multiple
opportunities without any recruiting effort on your
part. In actuality, though, most downline clubs have
been disappointing. The greed of the club founders, the
hope of instant riches, and the lack of focus due to
joining multiple network marketing companies have
usually yielded poor results. Training and commitment
are lacking, so large downlines (if they get built in
the first place) often crumble even faster than they
were collected.
Thus, network marketing as we
traditionally have known it has not grasped the
potential of the Internet and does not appear likely to
do so. Plus, and perhaps because of the Internet, the
old model of network marketing is less effective in any
venue of late.
THE NEW PARADIGM
SFI's founder, an experienced and
successful network marketer, was one of the first to
recognize that the old network marketing model quit
working for many previously successful marketers around
the same time that e-commerce was evolving toward a
similar but different paradigm. He realized that an
entirely new model was needed. He drew upon those
principles of network marketing that remained viable and
applied them to solve the current e-commerce challenge
of promoting affiliate programs on the Internet. The
results are phenomenal. SFI now has well over 7 million
affiliates and the numbers of new affiliates each month
is growing progressively.
SFI works because it is an e-commerce
affiliate program. Unlike the old network marketing
model, SFI does not require you to make unnecessary
purchases or meet stringent qualifications to earn
commissions. In contrast to almost all of the old
network marketing companies, SFI fully embraces the
powerful recruiting potential of the Internet. The SFI
opportunity stands up well to the analytical scrutiny
characteristic of the Information Superhighway. It is a
forerunner in the next stage of evolution of e-commerce.
Adding the multitier structure to an Internet affiliate
program makes the new e-commerce channel of distribution
fully workable. Because of this, SFI has been able to
negotiate fantastic savings and commissions for its
affiliates from world-class vendors and will continue to
attract more and even better deals as SFI continues to
grow.
CONCLUSION
The natural evolution of e-commerce
has pointed to a multitier commission structure to give
life to the new channel of distribution of goods and
services created by the Internet. SFI is in the
forefront of this new adventure in commerce. SFI
embodies the most advanced stage of evolution of
e-commerce. As Moore's Law (discussed in an earlier
lesson) ensures the continued growth of e-commerce,
history and logic dictate that affiliate programs will
continue as the distribution channel for e-commerce. It
follows that SFI, representing the most advanced
evolution of affiliate programs, will continue to have
lasting phenomenal growth and prove profitable for all
involved.
WHAT'S
COMING NEXT
In our next lesson, we will focus on
how you should approach finding other Webmasters to join
your team of affiliates in a multitier affiliate
program.
by George Little
Copyright (year) Panhandle On-Line, Inc.
License granted to Carson Services, Inc. for
distribution to SFI affiliates. No part of this work may
be republished, redistributed, or sold without written
permission of the author.
For more information on the Internet Income
Course and other works and courses by George Little, see
www.profitpropulsion.com.
For Web Hosting services specially designed for
SFI affiliates, see www.profitpropulsion.com.
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