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 10 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.
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