Affiliate Marketing

If you recommend Old Town White Coffee to your neighbour, and she visits Old Town White Coffee because of your recommendation, the restaurant’s revenue will have increased because of your referral. However you do not see any of the cash benefit that Old Town White Coffee does!

Now, as an appreciation, Old Town White Coffee has decided to reward you 10% of every amount of your affiliate (previously your neighbour) spend in the restaurant for lifetime. You have a new intention now, you are now recommending your other friends, girl friend's friends, auntie, uncle, Bobby, Frankie bla bla bla to the restaurant because once they become the affiliate, you would have cash automatically goes into your bank when they consume in the restaurant, even when you are sleeping.

This marketing effort is known as Affiliate Marketing, the concept sound simple and fair enough but the key points is problems such as tracking, especially if you are doing this offline. Several types of Affiliate Marketing are such as:

1) CPA (Cost Per Action), eg Firefox 3 runs CPA to promote the spread of Firefox. Seriously, I love Opera, and I think Firefox sucks, probably the most overated software on earth, but it's Affiliate program has made it one of the most successful browser business over the years.

2) CPL (Cost Per Lead), is usually used for offline business, eg insurance company. The toughest problem an affiliate face in offline business is tracking whether he has brought sales to the merchant. In this case, some companies would pay a fixed commission to affiliate for every potential sales they brought.

3) CPS (Cost Per Sales), or known as revenue sharing. Online retailers and instant online travel agents are perfect examples of merchants who offer a revenue share commission. The affiliate earns a percentage of the sale.

Whether you are doing business online or offline, you would be amazed by the result Affiliate Marketing can offers you. It's not a magic or genius calculation, the reason is that everyone is doing something with an intention. With Affiliate Marketing, you are giving your affiliates an intention to spread your company names around. (In this case, even if there is a cockroach in your affiliate's drink, he might just flip it away and keep quiet!)

Affiliate Marketing has been used long time ago, like 90s. However this marketing tool is well known after the creation of Jeff Bezos's Amazon.com Associate Program. The growth experienced by Amazon.com as a result of their Affiliate Marketing is well documented, and accounts for about 40% of their revenue.