Wednesday, February 08, 2006

Buying The Cow: The Pros and Cons of Paid Affiliate Sign-ups

"If you can get the milk for free, why buy the cow?" This rather crass question became popular in the late 1970's, when many couples chose to live together without the benefit of marriage. Similarly, today's affiliate marketers tend to favor programs that offer no sign-up fee, especially when so many include support, personalized websites, back-office marketing, etc.

And, too, there are programs that offer nothing more than an ID link and a few banner ads on a login page. In fact, seemingly sophisticated marketers are often offended by a program that requires an up-front investment. And for good reason: the marketer is already investing time, effort and their own marketing system (i.e., money) to promote a given program-- an additional investment seems as if the company is taking advantage of them.

And some do. But not all of them.

In fact, online companies that offer affiliate programs can be divided into roughly three different categories: Those that offer free sign up; those that offer a free sign-up but require some kind of back-end fee; and those that require an up-front investment from their affiliates, as well as a back-end fee. The reasoning behind each strategy varies from program to program and should be considered along with the qualities of each. But, in general terms, these are the basic strategies behind them:

FREE SIGN-UP PROGRAMS

This kind of arrangement is usually offered by those companies that offer little, if any, hands-on support for their affiliates. They supply the link and a login-secure page on their site with several advertising tools, possibly with an automatic payment system, such as through ClickBank or Storm Pay.

These companies are generally small -- possibly only one or two people -- and are hoping to capitalize on the affiliate marketing system with little or no effort on their part. Generally, too, they offer only one product or promotion. For the marketer, unless volume sales are huge, they can expect to make only a few dollars from these types of programs. But, if all they have to do is put an affiliate link on their website to generate sales, this is sufficient for the marketer. Also, a very small percentage of companies in this category offer an MLM system.

PRO: These type of programs are a quick and easy way to cash in on a new product or trend, provided one learns of it early.

CON: Once the market is saturated, sales reduce to the point where even the small space the link takes up on their webpage becomes a loss. Also, unless the company is sound -- as well as responsive to its affiliates -- there is always a chance it could fold up and disappear before the marketer ever sees any actual cash for his or her sales.

FREE SIGN UP WITH BACK END PAYMENT PROGRAM

This is the most common type of arrangement and the companies that employ this seem to be trying to utilize the "best of both worlds" approach. Either the company will offer initial sign-up for free with incentives to upgrade, or they will charge for "extras" in lieu of sales or a downline (in the case of MLMs). Essentially, these companies are "straddling the fence", that is, trying to find a way for the affiliates to cover their own expenses without making an "up-front" investment.

PRO: Programs like this often forego charges once a marketer creates a certain amount of sales or take the charge out of commissions, both of which give the marketer an incentive to make a minimum amount of sales. The companies that use this type of program usually offer adequate back-office support such as a support staff to answer questions, payment schedules that are adaptable to each marketer and regularly updated promotional materials. They also tend to be better established than the completely-free-program companies and often have a physical contact address and telephone number for questions or problems.

CON: Without sales or a downline, marketers are often paying much more in the long run than many up-front investment programs charge. Also, in the case of companies that ARE well-established, a new marketer may be unknowingly entering a field that is fully saturated with other, well-established and more experienced marketers. This makes obtaining the sales they need especially challenging, particularly for the newer marketer. Getting their foot in the door becomes a challenge of its own.

THE UP-FRONT INVESTMENT PROGRAM

These are less common than in the past but still exist -- and, in fact, are still being created -- under certain, specific circumstances. The company that opts for this arrangement may use up-front investment as a way to "pre-qualify" its marketers, hoping to capture only the most professional and serious-minded marketers. They usually offer higher than average incentives and may also have a high-demand product in which the company has already invested heavily themselves. And, too, they may be budgeting for future advancements and product placements, as well as creating support teams specifically designed to help the marketing staff alone. These companies will often include -- to help off-set the investment -- many back-office features not usually offered to marketers in other programs. And, without exception, these companies offer higher-than-average commissions.

PRO: Programs such as this offer more promise to actually obtain the kind of income that has become infamous (not to mention synonymous) with internet marketing. Also, bonuses or other payment arrangements that allow the marketer to make higher than average commissions.

Back-end support is usually top-notch including, in some circumstance, the marketer is treated as an actual employee. Some even include benefit packages and other employee-like perks. The product or product line is something in high-demand and/or has a high rate of sales.

CON: The up-front investment obviously causes start-up marketers to turn away. Also, competition from serious marketers who have well-established sites makes succeeding in this field challenging. Further requirements after joining the program that may increase the challenge of succeeding. Due to their inherent popularity, a short time-frame in which joining this type of program is viable in terms of ROI.

In choosing individual programs, a marketer must decide which type is best for them, regarding their resources, their own marketing strategy, the overall ROI (return on Investment), and based on their advertising campaign/budget. Many marketers choose a mixture of these programs in order to minimize their investment while maximizing their return.

Oh and, by the way? In case you're wondering, many of those couples in the 1970's that started out living together, ended up getting married after all. So, what does that say about getting the milk for free?--mo

Marige O'Brien works as a writer, web designer and Internet Marketer. Visit her Website, Tracker Mo's Den where you can find information about the business opportunities and etools she recommends.

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