The future of sales? Affiliates

I just returned from the splendid Affiliate Summit in Las Vegas, Nevada (conveniently held immediately after the huge Consumer Electronics Show) where I gave a well-attended business blogging workshop, and was fascinated by the wide range of affiliate programs available to interested publishers. Over 1,200 attendees were excited about affiliate programs too.
There were a wide range of attendees, but it was surprisingly common to meet someone who earned $10,000 or more monthly from their efforts to help other companies sell products or services, ranging from books and music to credit cards and even gambling (and, yes, porn, but those folk were careful to stay away from the light of day).
It was good timing, therefore, when I noticed today that PR Leads forwarded along a query from a freelance writer seeking experts to discuss technologies that are “changing the sales profession.”


The more I thought about this query, the more I realized that there’s really nothing that’s changing the world of sales more than affiliate programs.
Here’s the full request:
“I’m doing a story on technologies that are changing the sales profession, such as RFID tags, or vertical ‘deep search’ engines. I’m looking for examples of companies that use these technologies, and other technologies that will change sales and marketing…”
I fear that the reporter just doesn’t get it.
A quick aside, though, to explain affiliate marketing: You join a company’s affiliate program and once you’re approved, you get a special code that you include on all links you have to their site. When someone visits your site, clicks on one of your affiliate links, and then goes to the vendor and actually buys a product or service, you are paid a small commission.
For example, I’m an Amazon.com Associate (Amazon calls their affiliates “associates” for reasons that remain beyond my understanding) so I can easily use its Associates area to search for a particular product and then be shown the exact code I need to embed an affiliate link on my own Web page or weblog. Try it: buy The daVinci Code and I’ll make a few cents in commission.
This sales model might not seem earth-shattering, but my colleague Anne Holland at Marketing Sherpa estimates that affiliates accounted for a total of $6.5 billion in sales in 2005. That’s a lot of commissions!
Remember, the beautiful thing about an affiliate program is that there’s no salary to pay, no health benefits, no office to stock, no computer to buy. In fact, a company can double or even triple its affiliates without incurring any cost whatsoever. It’s the sales version of “pay per click”: affiliates are only paid when the transaction is completed, so there’s no risk.
Unsurprisingly, a small number of affiliates generate the majority of sales just as one or two retail outlets will lead their corporations in sales. Indeed, a common figure you hear when you talk with companies that have affiliate programs is that 5% of affiliates generate about 95% of sales.
If I were running an online store or selling products online, I wouldn’t be looking for new technologies that will change sales because nothing, not RFID, not ‘deep search engines’, will have more potential impact than empowering thousands of other Internet people to sell my service and product through an affiliate program.
Sounds like this topic would make for a good interview with that journalist, doesn’t it?

4 comments on “The future of sales? Affiliates

  1. Hi Dave,
    Good post. I happen to agree with you regarding affiliate sales being hugely significant in the online world.
    However, I believe you and that reporter were talking apples and oranges.
    RFID, for instance, will one day transform retail. But in the near term its impact will be felt in the physical store, not online (and even its in-store impact is very very limited so far, and mostly it impacts stocking the store). Long term it will impact online behavior but we are a ways from that happening.
    Affiliate sales, on the other hand, have zero impact on in store sales. The impact is felt online. Oh, you could argue that online sales are eroding in store sales and so indirectly affiliate sales are being felt in the store. But I am talking direct, immediate impact, and affiliate sales simply don’t have any to speak of in the store.
    They are just completely different animals.
    Anita

  2. Jackie, some sites just don’t attract the kind of visitor that is in a buying mood. Your site also looks like it’s lacking in actual content, so I’m guessing that people come to your site but don’t stick around very long?

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