An affiliate network is basically an intermediate between publishers and merchant affiliate programs. Affiliate networks assist publishers or affiliates as they are commonly known, to easily find out the affiliate programs that will generate more traffic and hence more revenue for their web sites. This also allows the online merchants to advertise their affiliate programs to all publishers who are participating in the affiliate networks. It is an equally beneficial scheme for publishers and online merchants to gather at one place and reap in the benefits.
Affiliate networks are based on the idea of revenue sharing that is, they let merchants give a part of revenue produced to him from visitors to the publisher's website. There may also be a fee for each visitor on the site that undertakes and completes a particular action like making a purchase, or for registering and subscribing for a newsletter or a magazine. But usually revenue sharing is the standard method compared to or opposed to a fee-per-action model. Affiliate networks with many advertisers also draw in a large pool of the publishers. Big affiliate networks generally do not need to recruit publishers as the publishers already flock to them on their own. Typically websites that draw in the same kind of customers as the advertisers but without any competition in them are typical affiliate network associates.
Affiliate networks have grown rapidly since their inception. Viewed as marketing toys in early days of internet, they have become an important part of business plans of many companies around the world. In reality they have been so successful that they have grown into larger businesses than the existing offline business. The total sales amount generated according to one source by affiliate networks is £2.16 billion in UK alone for the year 2006. In the same year for the USA the overall bounty amounted nearly US $ 6.5 billion.
Affiliate networks are mostly used in variety of sources like retail, gaming as well as gambling, personal finance, travel, education, telecom and publishing. Traditionally the affiliates are allowed to join the network free of cost while there is generally a minimal fee for the merchants in order to participate. The network also charges the first setup or a membership fee which can be recurring. Even though affiliates join for free but they pay a certain percentage of their earnings as commission to affiliate network.
Affiliate networks are a large conglomeration of publishers and suppliers working towards a common objective; profit realization. Merchants bring in benefits like tracking technology, payment processing, reporting tools and a large group of publishers from the affiliate network. On the other hand, affiliates derive services and benefits like affiliate programs, reporting tools and payment aggregation by using the network.
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