This is the second of a three-part series of posts about affiliate marketing. For the first post, please click to: http://www.humanuspublishing.com/2008/10/24/affiliate-marketing-for-self-publishers-part-1.

In this second post, we’ll talk about my real-life tool for managing affiliates, a glossary, and walk you through startup costs of a working affiliate program.

You will need to understand some basic stuff before you begin. For starters, here’s the promised glossary…

Landing Page: This is a general term for the first page that consumers see when they first click on one of your ads, from anywhere on the internet. This may or may not be the page where they actually buy the product, and there’s a whole science around how to create the “ideal” landing page (if there is such a thing), and what makes people actually whip out their credit card. This page is crucial, so carefully constructing it with help from various experts is important. (See future posts – I will not go into detail here, but you can just do a quick search on Google and come up with a variety of sources.)

Campaign: this means essentially the same thing is does in the old-school advertising world, which is to create a series of ads, setup the landing page, and plan a time-limited series of ads with a clear and measurable objective.

Traffic Provider: this is the person that has the list of people that they send your ads out to (such as someone who publishes a digital newsletter, or a blog author) or the person who has the website where the ads are posted. The numbers of people who visit their sites or read their stuff are called “traffic”.

Payout: the amount that the affiliate earns for a single sale of your product. Can be quoted in actual dollars or a percentage of the retail sale price.

Conversions: this expression applies to the number of people that are converted from browsers to buyers of your product. Much can be done to improve conversions on landing pages and elsewhere. To commit to any sort of action can also be referred to as a conversion, such as how many people click on the actual banner vs. just look at it and do not click.

CPC, CPM, and CPS: when buying ads, be sure to ask how you are being charged* by the traffic provider, such as Cost-Per-Click (when people click on the ad you make a payout), or Cost-Per-Thousand, where “M” is short for thousand (in French, M stands for “mille” which means thousand) and in this case, the meaning is per one-thousand people that click or take the action on the ad, and Cost-Per-Sale (or CPA for Cost-Per-Acquisition), which means that you only pay the affiliate when the sale actually happens. (These days, CPS is the standard, because clicks are easily inflated and falsified.)

*In the case of managing your own affiliate system, which is the focus of this article, the relationship is more the case that you are paying out rather than being charged, but for the sake of clarity, it may be referred to this way when you’re negotiating with affiliates.

Costs:
When I first began using affiliate marketing as a tool with my clients, we decided to start small and build from there, which is a philosophy that I still recommend. Here’s what you’ll need to expect in terms of costs for startup;

1) Subscribe to a good service provider: I discovered 1ShoppingCart.com about a year ago, and haven’t looked back since. This is now my number one business tool. I’ve used other shopping carts, but this is the best. Seriously. They are an all-in-one package of not only shopping cart services, but also a really, really nice affiliate system, sales reporting, and merchant processing. Without them, my business would be dead in the water. Their system is quite deep, but you don’t need to leap in whole hog right away. I did not need to hire a designer to make the shopping cart work, and their customer support people are nothing short of amazing. I subscribe to their top-end $99 per month account, which handles not only online sales for all my businesses, but all of my affiliate relationships, with full accounting. They even automatically deliver downloadable ebooks to customers! The only help I have is my super-duper Girl Friday who does my books. It makes her job easy and saves me a fortune. Just do it. (In a future post, I’ll do a walk-through of the management panel of 1ShoppingCart.com so that you can see how to setup your starting information.)

2) Your website or blog: Don’t get me started here again about why your website should be a blog, and not a static website, but be sure that you have a page that is your designated landing page for all affiliate sales. The only thing this page needs to have in terms of technical stuff is the actual shopping cart buttons. Everything else is just designed as per your imagination, and what you think will convert well. The only reason I’m including this on the list of costs is just in case you don’t have a blog already.

3) Design some ads: Remember to think about more than banners – text ads may sell products well in email marketing. Crafting careful words can be very difficult for a product that you’re intimately familiar with, so this is one case where I totally advise getting some help. eLance.com, oDesk.com and others are a great resource for this sort of contractor. Even for banners, knowing which words to use, and which not to, can be very difficult. Hire some objectivity.

4) Buy some domain names: Using a variety of domain names for an affiliate marketing campaign serves two major purposes, and several minor ones. Buying about 20 domains and pointing them all to your main landing page allows you to market to multiple audiences and measure their effectiveness more easily. In addition, a domain name like “smootherlegs.com” will attract different users than “newrazorproduct.com”. It’s all about increasing your traffic. (See a future post about how to choose good domain names and avoid bad ones.)

In part three of this series, we’ll talk about avoiding pitfalls, how to get your first affiliate, maintenance, taking it to the next level, and the other really important business-building strategy that you can use affiliate marketing to achieve.