The Internet has enabled like minds of every possible description to connect. Somewhere out there is an elite group of talented sales gurus whose selling skills are exquisitely tuned to sell your product above all others.

Affiliate Marketing is an almost mystically pure instance of a free-market meritocracy: invite a million salesmen to pitch your product in any way they can think of, pay them on a strict commission basis, and wait for the performers to rise to the top. It's an economic system that uses classic market dynamics to distribute an intangible commodity—sales talent—as afficiently as possible.

There are thousands of articles out there on being a successful affiliate marketer. Most contain little information beyond an exhortation to persevere: successful affiliates are wary of competition, and unlikely to share their most lucrative secrets.

There's comparatively little material, though, to guide the other essential player in the affiliate transaction: the advertiser providing the product and paying the commission. How do you get started selling your product through affiliates? How do you recruit and retain talented affiliates? And, most important: is your product appropriate for the affiliate marketplace to begin with?

To Affiliate, Or Not

Affiliate sales are not for every business.

To understand why, let's examine the marketplace from the affiliate's perspective. Affiliates work on a commission-only basis, and they have dozens or hundreds of programs to choose from in any niche. Wherever an affiliate can capture a shopper—whether through e-mail, or his website, or a number of other places—he can generally only send the shopper off to a single destination.

So if an affiliate has two advertisers to choose from, he's going to think real hard about what each advertiser might do with his traffic. The ideal advertiser does a good job of converting any traffic sent, and pays well on conversion. Some big-ticker items pay very well, but don't convert very fast. Even though the average payout per click on, say, plasma TVs may be very nice, an affiliate may not be willing to waste 400 clicks to find out.

Affiliates prefer products and services priced to move. Are there exceptions? Sure... but generally cars and boats are not good candidates for affiliate sales. The volume's just too low. Same goes for many B2B products, because of the limited audience.

On the other hand, consumer catalog merchants are made to order for affiliate sales. Does your company maintain a catalog of 10 thousand widgets priced under a couple hundred dollars? Can you export that catalog to a data feed? Then somewhere there's an affiliate who will make himself—and you—a fortune selling your product.

Getting Started

Many advertisers are daunted by the high entry fees charged by large affiliate networks like Commission Junction and LinkShare. It's tempting to test the water in a smaller marketplace. Resist the temptation.

Recall the numbers game: out of a million prospective affiliates, a few thousand may ultimately join your program. Of these, perhaps ten will sell at any respectable level. With these odds, join a smaller network with under a hundred thousand affiliates and you'll be fortunate to find even one top performer.

Beyond matchmaking between advertisers and affiliates, an affiliate network also provides essential services like click and conversion tracking, data feed publication, and commission payments. For a fee, they'll also manage your program. In our experience, Commission Junction appears to have the best combination of features and customer service among the big four networks.

As far as affiliate program management is concerned... well, that's what Profit Rank is for!

Finding & Retaining Affiliates

Most affiliate networks provide systems that enable advertisers to reach out to prospective affiliates. To some degree, this is a chicken-and-egg problem: talented affiliates are attracted to lucrative programs, but you'll need some critical mass of affiliates before your program will become lucrative. The bottom line: you have to sell your program to affiliates before they'll sell your product to anybody else.

Most advertisers discover very quickly that the kinds of incentives that motivate employees in the off-line world—recognition, iPods, and the like—don't work in a marketplace where hot employees can instantly shift focus to whichever employer pays the best. Affiliates are motivated by precisely one thing: cash. Fortunately, in that sense your interests are aligned.

A really smart advertiser will recognize that a successful affiliate understands one specific segment of the marketplace more intimately than anybody else. Such affiliates can offer critical insights into what their customers want, and what kinds of offers will maximize conversions. Paying attention to your affiliates is more than just a sound business strategy: by involving an affiliate in your corporate strategy, you tell him that his ideas can impact his own bottom line for the long haul.

Cash, remember?

A Shameless Plug

Profit Rank's business is—among other things—the management of affiliate programs. We bring our clients a network advantage: new clients have instant access to all our other clients' affiliates, across multiple affiliate networks. So long as our affiliates trust us to bring them advertisers that make them money, the system works. We compete with management programs offered by the networks themselves. Why hire Profit Rank instead? Because we operate on a pay-for-performance basis: you only pay us when we sell your product.

If the Commission Junction or LinkShare sales team won't make you that kind of offer, ask yourself why not.