Home-based e-business - an option for the self-employed?

3.1.1. Affiliate Programs

A publisher is a web site owner who publishes content on the Internet. He may offer advertising space to prospective advertisers. In general, web sites that are not well known and do not have a high volume of traffic start taking advertisements through joining affiliate programs, whereas larger and well-known web sites take in advertisers directly and generally demand a higher rate. Advertisers who want to buy advertising space on web sites may pay for impressions, click-through, leads or sales [30]. An impression is the display of an advertisement, text or graphics. A click-through is when someone clicks on the advertisement and goes to the sponsor's web site. A lead occurs when the person who clicks through gives contact information, such as name and email address. Companies may also offer to pay commission on sales, either a set amount per transaction or a percentage of sales for each sale generated by a click-through or over the course of a customer's lifetime with the company. Each affiliate program states how much it is willing to pay for which service. For example, one may pay $.01 per click-through while another may pay $1 per lead, or both [1].

To establish an affiliate program, a text or banner link is placed onto the publisher's web page that leads to the advertiser's site. Traffic referred to the partner site is tracked either by the partner site itself or through a third party such as Commission Junction [7]. Depending on the agreement with the advertiser, the publisher will be rewarded for hits, leads or sales with a certain amount or percentage-wise per sale. It could be a very time-consuming process to identify, contact, and set-up an affiliate program with various advertisers. It would be easier to do this through a third party such as Commission Junction, Link Share, bCentral. Merchants and affiliates are brought together in a 3 rd party structure that organizes the agreements, monitors the operation, and disburses the funds.

When an individual has decided to attempt to earn a living by being a publisher, he should first to create a web site that can attract high volume of first time and returning visitors. Generally, forums, interest groups, chat rooms or hobbies sites are comparatively easy to set up and be able to attract high traffic of target groups and have a higher potential to generate actual sales. Accepting of advertisements on a web site inevitably affects its image to its visitors, people may find it very disturbing especially with pop up ads, flash banners or some ads that stop you returning to the original window. Therefore, a publisher should carefully select the ads for his web page. Basically, it is better to choose some ads that are related to the theme of your web site and are also more effective in generating click and sales. There are a lot of affiliate programs on offer with some offering a very attractive rate of remuneration. However, many do not provide a means to the publisher of tracking his performance and entitled remuneration. Therefore, one should always select well-known advertisers such as Amazon.com. Another way to promote affiliate programs would be through an opt-in mailing list that the affiliate has built up. The affiliate would typically e-mail members on his mailing list making recommendations on merchants he is affiliated to. Provided that the mailing list is large and targeted, the affiliate can often generate a lot of conversions if this copy convincing enough. Another method would be to buy advertisements from search engines such as Google and Overture and direct the traffic onto the merchant's site. This may sound an ideal way to earn money as it does not even involve making a website or constructing a mailing list. Certainly, some affiliates have reported huge earning using this method. However, the financial risks are quite high since advertising is quite expensive.

The other option would be a third party agent service like Commission Junction [7], which it brings many affiliate programs together in one place. Both publishers and advertisers have the advantage of tracking many affiliates or affiliate programs together. The publisher simply selects the programs he wishes to join and the agent will make the necessary arrangements. Commission Junction is widely regarded as the best agent on the market at present and therefore it is examined in more detail. Publishers from all countries, including Hong Kong may sign up with Commission Junction. Payments are made once a month that consists of all the earnings from the different affiliate programs that the publisher has joined. The advertisers pay all the agent fees.