As in most things that involve risk, you want your online marketing program to diversify that risk over a number of vehicles. While search engine positioning can be a tremendous source of traffic, you'll want to explore your options here. I've talked about some of them before. Look at pay for placement options such as Goto or Google's AdWords. Consider using e-mail as a marketing tool. Seek out relevant newsgroups or forums and see how you might use them to promote your website without breaching their rules of netiquette. When it comes to banner advertising, regular readers of this column will know where I stand. There is one marketing vehicle that I haven't talked about in the past, however, and that's affiliate programs. Today, its time has come.

Who's Right for Affiliates?

Affiliate programs are a better match for some of us than others. Generally, it comes down to the strength of your online business model. If the product or service you sell online has enough perceived value to be of significant interest to customers, than it's probably a candidate for an affiliate program. The more unique the product or offering, or the more value it offers the buyer, the more likely it is that your affiliate program will be successful.

What Is An Affiliate Program?

The concept behind affiliate programs is quite simple. You place a banner or a link promoting your service on another website. Generally this website could be relevant to your industry or provide a complimentary product or service, but this doesn't have to be the case. There are sites that exist that are nothing more than fronts for several different affiliate programs. When a potential customer visits one of these sites and sees the banner or link to your site, they can click through and hopefully make an online purchase. Depending on your affiliate compensation model, you then pay a finders fee or commission to the affiliate that generated the lead.

What are the Advantages of Affiliate Programs?

Hmmm, you muse to yourself, putting a banner on someone else's site and paying them for the right to do so. Isn't that..banner advertising? Yes..and no. First of all, let me state that I have no inherent problem with banner advertising. What I do have a problem with is the return on investment that it offers advertisers. The biggest difference with an affiliate program is that you only pay for it when it delivers results.

The other thing I like about affiliate programs is that they can be a very efficient way to build relevant links back to your site. I'll talk more about ways to maximize this benefit later in this column. Right now, it's important to stress one important difference between banner advertising and affiliate programs. With banner advertising, you usually place a banner on a high traffic site that usually bears little relevance to the content of your site. An affiliate program allows you to place banners on many sites, including ones you can specifically hand pick for the relevance of their content to your product or service.

How Do I Track Traffic?

The first thing you'll need to source out if you're looking to start an affiliate program is a way to track the traffic you're receiving from your affiliates. After you decide on a payment model, you will require a tracking program to make sure your affiliates receive payment for the leads they generate. There are two ways you can go here. First, you can join an affiliate network and let them do all the work. Or, you can buy affiliate tracking software and set up your own affiliate program. I'll take a quick look at each option

Joining a Network

By joining a network, you can take advantage of tapping into a base of existing sites that could become your affiliates. For example, Microsoft's Clicktrade allows you to access their network of 120,000 potential affiliates. You can choose to pay for visitors by the click or by the sale. When you start your program, you'll have to decide what your payout model and amounts will be. Obviously, your average online sales amount and conversion rates are going to play a large part in which way you decide to go. On top of this, you would be paying Clicktrade a 30% commission, so if you went with the by-the-lead example at $5 per lead, your total would be $6.50 each. While Clicktrade doesn't have a set up fee, they do require a minimum $500 deposit to start your account.

Clicktrade offers a fair amount of flexibility in allowing you to set up your program the way you want. You can choose the type of affiliate partners you want and customize the payment model to suit you. Set up is easy, with a wizard (it's Microsoft, what else would you expect?) guiding you through the process.

Other affiliate networks you can check out include Clickbank (it's bundled with their merchant account solutions), Plugingo ($995 set up, 18% commission to Plugingo, you determine the affiliate pay out rate), and BeFree.

Going Your Own Way

If you want to set up your own program, giving you maximum flexibility and avoiding ongoing commission charges, you'll need a good affiliate tracking program. Here are some options.

AssocTRAC, while not a stand alone program, does offer you access to a sophisticated tracking system at a relatively low price. The set up fee is $677 and there's a $35 per month maintenance fee. There are no commissions or other fees. AssocTRAC offers automated affiliate sign up, realtime tracking of stats, cookie and CGI tracking and easy set up.

ProTRACK is also a hosted solution, similar in many regards to AssocTRAC. Like the competitor, there is a one time set up fee (in this case $697) and a monthly maintenance fee ($25). ProTRACK's feature set is also similar.

Affiliate Link is a CGI based program that does sit on your own server. The one time installation cost is $350. The feature set is a little sparse and the interface does not have much polish.

The Intangibles of an Affiliate Program

Of course, the primary benefit of an affiliate program is the additional sales that could result from traffic driven from your affiliate sites. But there are other benefits that go along with that.

First of all, an affiliate program is a great way to build your link popularity, especially if your affiliate links are placed on sites with relevant content.

Secondly, if you do any banner advertising, an affiliate program gives you a great no risk test market to gauge the effectiveness of your banner ads. You can set up tests with 2 or 3 different banner designs and see which generates the greatest click through rates. Because you're only paying for actual visitors in an affiliate program, you won't be wasting thousands of dollars paying for impressions of a banner that just won't generate traffic.

Maximizing your Affiliate Program

If possible, try to arrange more than just a banner on your affiliate sites. Ideally, try to back up the banner with a little descriptive text including an endorsement from the site owner. Not only will this dramatically increase your click through rate, it will also give the quality of these incoming links a significant boost in the search engines. You'll find this flexibility with how your product or service is featured on affiliate sites will pretty much dictate going with your own affiliate program. This flexibility is impossible to achieve with the big networks.

United We Stand

As you build your online marketing program, I would give very careful consideration to making an affiliate program a part of it. I like the fact that it allows you to only pay when the program is actually performing for you, generating sales. If you're interested, check out www.affiliateguide.com for more resources. And remember, Network, Network, Network!