Types of Affiliates

Most merchants find it useful to divide prospective and current affiliates into major categories, which usually have different performance characteristics and concerns.

1. "All-Joiners": These affiliates generally seek to join all available affiliate programs (either generally, or within a specific product niche), in order to provide the most comprehensive information on their sites.

* Price comparison sites: Dozens of "price comparison" sites are founded on affiliate links from merchants, while some use a "pay-per-click fee model."

o Most price comparison sites exclude merchants who don't compensate affiliates in some way, but often accept very low commission rates rather than exclude well-known merchants. A few price-comparison sites, such as Froogle, are completely free (which may explain why Google has removed Froogle from public visibility).

o Many price comparison sites usually participate only in a merchant's affiliate program if the merchant provides a "datafeed" or other automated method to access information about the merchant's products and pricing.

o Because of the many variables and complexities of certain types of products and services, price-comparison sites are often misleading and unhelpful for these industries, but some may still draw meaningful traffic and could potentially drive sales.

* Coupon and Deals sites: These sites generally join all available affiliate programs, in order to have information in a wide range of product categories and for the widest possible range of merchants.

o Some "coupon and deals" sites seek to create a community of bargain-hunters, often emphasizing products and product categories. These affiliates can draw new customers to visit merchant sites; any differential treatment for coupon affiliates must include some special consideration for these sites.

o Unfortunately, most coupon sites rely almost exclusively on obtaining favorable search-engine placement adjacent to consumer searches for merchant-specific keywords (such as "Amazon coupon"), and present a page with results for that merchant - often listing no genuine coupons at all. Some will even list "fake" coupons in order to persuade consumers to click on their affiliate links. Arguably, this group of coupon sites add little value, and some will have a negative impact by upsetting consumers with fake offers.

+ In reviewing one merchant's log files, I determined that almost 50% of the sales attributed to affiliates were actually to consumers who had arrived at the merchant's site from some other source, chose items, and began the checkout process - but then saw a "coupon prompt" and exited the site to search for a coupon code, returning through a coupon affiliate's link. This merchant had no active coupon codes, so these sales were credited only to affiliates who had expired or fabricated coupon information. It is likely that many sales were actually lost after customers were disappointed that these coupons weren't honored.

* Incentive Sites: A number of internet companies promise consumers either "rebates" or "charitable donations" based on a share of affiliate commissions, if the consumer uses the "right" affiliate link before making a purchase at a merchant site.

o Such affiliates generally do not bring new customers to a merchant, but instead "poach" a transaction that should properly be attributed to some other source (which increases the merchants' costs, reduces the accuracy of other reporting methods, and alienates affiliates whose commissions are poached).

o Some "incentive affiliates" are actually "fronts" for "parasites," who use the "incentive" business model as a pretext for the lack of referring URLs in most of their affiliate links, and for their unusual (high or low) conversion rates.

o On some affiliate networks, these sites are flagged or assigned separate categories so that merchants can allow or exclude them; some unethical incentive affiliates actively circumvent such methods.

o I recommend that merchants exclude "incentive" sites from affiliate programs. Such an exclusion will add compliance costs.

2. "Many-Joiners": Some sites join "many but not all" affiliate programs, for a variety of reasons.

* Shopping Mall Sites: Some sites attempt to create a "mall" or "shopping resource" site, with links to several (or several dozen) merchants in each product category. Most of these sites carry little information other than an organized map of affiliate links, but some do provide meaningful information about products, shopping and gifting strategies, or other topics.

* Banner Farms: Probably the most annoying affiliate applications come from individuals who simply create a single web page with dozens of merchant banners and buttons. These "banner farms" contain no original content, and as a result they draw almost no traffic whatsoever. Sometimes, these sites are created by individuals who are duped into "buying a web site" on eBay or through a promotional package, with assurances that vast wealth will result. While these sites are pathetic and have little value, they also have little or no impact on an affiliate program (since there is little traffic, there is no impact on EPC, for example). My recommendation is that if such affiliates apply, then unless there is something objectionable on their site, they can be accepted; there is always a remote possibility that one in 1,000 of these affiliates will later build a "real" web site that generates traffic and sales. However, these sites should generally be excluded from many special offers or follow-up communications that might waste affiliate-management time.

3. Content and Directory Sites: I use this term to web sites which provide some benefit to consumers, usually by providing relevant editorial content (articles, blogs, or discussion forums) or by maintaining a relevant directory of information and resources sought by consumers. These are the "affiliates" that first come to mind for most consumers and merchants, when the word "affiliate" is used.

4. Portals and Mega-Sites: Sites like Yahoo, MSN, and About.com provide vast amounts of information on a wide range of subjects, sometimes organized in a consistent way, and sometimes organized in a variety of different ways. While most of these companies claim that they do not participate in affiliate programs, most of them actually do so.

* The Good News is that these sites draw vast amounts of traffic (many millions or even hundreds of millions of pageviews per month). If affiliate links are shown on relevant pages, they can sometimes draw good clickthrough rates and often strong conversion rates also.

* The Bad News is that many of these sites run affiliate ads (especially banners) indiscriminately, on pages that are not relevant. One result is a very low clickthrough rate (which generally doesn't affect the merchant unless there is a cost for serving banner ads). Unfortunately, the clicks that do occur often have a dreadful conversion rate, in part because when clickthrough rates are very low, a substantial number of the clicks received are "accidental" or are generated by automated tools. Low conversion rates will push down the merchant's EPC (earnings per 100 clicks), which may make the merchant's affiliate program seem less attractive to new prospective affiliates.

o Some affiliate networks actually recommend "removal" of high-traffic, low-performance affiliates; I think this is ludicrous. Instead, the affiliate manager may need to spend some time working with the affiliate to optimize their affiliate campaigns.

5. Directory Sites: In some industries and product categories, consumers may rely extensively on "directory sites," to help them identify and compare available resources. Over the past 12 years, I've frequently bought services that I've discovered through directories. (I've also created and sold two successful directory sites.)

* Industry-Specific Directories: There may be hundreds (even thousands) of web sites that offer directories of companies in your industry. While a few of these are maintained with editorial independence, the vast majority include only pay-per-click or affiliate links. Offering an affiliate program should allow access to more of these directories.

* Business Directories: There are also thousands of different "business directory" sites, each with a slightly different focus. Some will provide free listings, and others may seek monthly or per-click fees -- but many dozens of these sites focus on merchants with affiliate programs.

6. Product Comparison sites: There are a number of "product comparison sites," which seek to identify and compare the features, benefits and drawbacks of various products. There is some overlap with "price-comparison sites" and "directory sites," and some sites can't be assigned to just one category or the other. Like most price-comparison sites, many product comparison sites rely on the availability of a "datafeed" as the source of product information. Given the many "variables" in xyz-service and xyz-services, both "product comparison" and "price comparison" is quite difficult and often meaningless - but some sites should deliver traffic and sales.

7. Information, Advice, and Forum Sites: These are "primary content sites" which specifically focus on a narrow topic, drawing visitors who are extremely likely to be interested in the products and services being offered by MerchantName.com. Sites with article or advice formats (excluding forums) are highly likely to participate as affiliates. Forum sites usually prohibit posting of affiliate links in posts (messages), but forum owners sometimes promote merchants with affiliate programs; they may use advertising space, post affiliate URLs in messages, or sometimes even edit URLs in other posts to append affiliate tags. (Forum sites often produce extremely low clickthrough rates, since most forum users "tune out" standard advertising placements while viewing dozens of pages at a site each day.)

8. Complementary Content Sites: I use this category (which clearly overlaps with the prior category) to describe sites whose topic or focus is something "other than" your industry or products. These would be sites that attract the kind of visitors you want as customers.

9. Complementary Merchants (Non-Competing Competitors)

Source : Affiliate program