LITTLE GUIDE TO E-COMMERCE ( part 2)

The pay per sale method (PPS)

Pay per sale, also called pay per performance

This is a method that the US people (who are a bit ahead on european regarding internet) have improved and refined through the years.

Whilst ALL the other methods have some disadvantages, in particular the risk of fraud, or the rather expensive costs, the PPS hasn't got this type of drawbacks because the affiliate person in only paid when a sale is achieved. This is the more effective and less expensive method of advertising. Those who know how to use it properly (I am talking about merchants, not webmasters) can make significant returns, greater than ANY other form of online advertisment and even non-online advertisement.

Compared to other types of investments, this method will require a greater effort in terms of organising and running the affiliate programme: buying clicks from a search engine is something extremely rapid, whilst an affiliation programme with hundreds of webmasters is certainly much more complex to run. To simplify your life a little you should use a middle company who will run the affiliation programme for you, including payments. These companies will find and contact webmasters and will take care of the merchant-webmaster relationship.

Each month the merchant gives the middle company the funds to pay the different webmasters according to their individual sales. The middle company will deal with the payments and any other issues between merchants and webmasters. So far this has been a very succefull cooperation.

Two companies/firms can be suggested as middle companies: the first one is CJ, which is probably the leading company in the world regarding pay per sale. Working with them means having access to thousands of webmasters, many of which will be glad to sponsor your products if the pay is adequate. There is a huge competition but for international firms (who sell all around the world) this is definetely the choicer to make. I need to underline the fact that the you must have a well established firm that produces real sales (...cash...) because joining fees start from a minimum of 2300$, plus more money if you don't make a minimum specified amount of sales per month (all costs are clearly indicated) plus an annual fee etc. Joining the number ONE in the world does not come cheap.

The other company/firm that can be recommended is Linkshare. Maybe not at the same level of CJ, but very good in any case.
CJ
Linkshare


Creating your own affiliate program
A similar, but more complex to implement solution, is that of creating you own affiliation program. Financially, this is a more convenient solution, especially in the long term. In this case, it will be the merchant itself to find the webmasters and pay them directly according to the sales achieved. This type of direct relationship is generally very efficient because the webmaster (who is in charge of maximising sales) can offer great suggestions to the firm itself to further improve the sales.

Needless to say that this type of solution is particularly indicated for those companies who aim to have a huge online business, with lots of sales and affiliates. Something like a big merchant of online shopping (the best example of how something like this works is certainly Amazon.com).

There are two very important issues to consider in an affiliation programme:
1) Avoid offering ridiculously low returns to the webmaster. If the webmaster does not earn enough, s/he will soon leave us to go with some other company;
2) Establish a relationship of mutual trust. People don't get to know each other personally on the net. Therefore trust -and good reputation - is probably even more important to the online firm than to the conventional (non-online) firm.
3) Open a forum to talk with your webmasters and be sure to put a lot of effort about it, especially with asnwers (this is probably the best advice!). Webmasters like a lot finding a company that gives clear -and fast- answers to many aspects of affiliation program. This is fundamental for both the merchant and the webmaster (who is more likely to trust a company who actively participates in its forum).


Conclusion
Well, I think I have said what I needed to say on this matter. The suggestions presented above are not the result of things read or heard here and there...so you draw your own conclusions. I think there is enough food for thought...Good luck!
 

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