Affiliate Programs and what Startups should know

by Startacus Admin

Any content driven or web based startup will probably come across that ever present hurdle of early stage monetisation. Your content isn’t making you immediately famous and groundbreaking; you’re also hosting a site and need the funds to keep things afloat. That’s ok, there are a few options open to startups like this that will help ensure some form of income, in some shape or form.

Affiliate programs are one such way, where you effectively advertise or promote a certain affiliate and receive a certain amount of reward depending on actions taken. For example, you are an affiliate of a shop, and if someone buys something from the shop through a link on your website, you receive a percentage of the sale. Sounds simple enough right? In essence, it really is that simple; but like all things in the world of business, you have to look at all the angles, and figure out how best to make it work for you, or if it is even the right choice for your website.

Not to worry, Startacus is here to help with some handy information to help you make sense of it all.

First let’s take a look at the benefits of affiliate programs:

• An easy, cost effective way to generate some amount of income – regardless of the sum, it’s usually a free process anyway, and can allow a startup that wouldn’t normally sell products, to add and gain from some form of sale through their page.
• It takes a small amount of effort or management, as the company offering affiliation will usually manage the finances and paperwork
• Can foster working relationships with affiliates, and can result in other affiliations and in turn more income from affiliation
• Can in turn generate a greater consumer use of your page, from mutual promotion of affiliates.

In a nutshell, these are your front page benefits to affiliate programs. Any program worth its salt will offer most if not all of these kinds of benefits. Simple as that, so be very wary of any and all offers when it comes to affiliate programs - if there’s very little in return other than a potential cash flow, definitely weigh up what’s being asked of your site.

Now we can take a look at the disadvantages of an affiliate program:

• There’s no guarantee of any form of income, if your users don’t bite, then there’s no prize on the hook.
• There are certain levels of uncertainty, for example, a customer could learn of a purchase through your site, but if they don’t click a specific link or make the choice to go direct, regardless of your influence, the company gets their sales without your percentage.
• The affiliation management falls to the host company, meaning they would have a lot of the relevant information like sales and values, that you may need for example for taxation reasons.
• Can be very open ended and result in a lot of disputes about what needs to be done, and so requires a substantial amount of negotiations and knowledge of company policies in order to make effective

If your team or you are willing to cooperate and do everything you need to ensure successful affiliate programs, then there’s a pretty decent revenue stream available to your startup. It’ll probably never be a bank breaking balance, but done correctly and regularly with quality and professional companies, it is very fruitful. As you can see there’s a pretty even board when it comes to the pros and cons of these kinds of arrangements, ultimately the work will come down to whoever in your startup is responsible for B2B practices (thats ‘Business to Business’ – if you want to know more of these terms check out our list of startup Buzzwords).

We hope these bits of information are enough to get you started, or at least enough to get you clued in enough to make the right calls when it comes to affiliate programs.

If you like this handy info post, you might also want to read...

• Choosing the Right Business Suppliers - some handy advice for startups and SME's

• Drop Shipping Explained

• 25 Startup Terms you’ll probably hear and need to understand

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Published on: 12th March 2015