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AFFILIATION

The affiliate model is mainly a marketing strategy that is used to generate more exposure, sales, and income. To use this strategy, businesses and even individuals reward others for sending customers their way via a click through link, and provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partners (sites). There are several variations of the affiliate model, these are: Banner Exchange — trades banner placement among a network of affiliated sites, Pay-per-click (PPC), Pay-per-lead (PPL), Pay-per-sale (PPS), Pay-per-view (PPV), Revenue Sharing — offers a percent-of-sale commission based on a user click-through in which the user subsequently purchases a product.

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The SME Example

Wirecutter is an online electronics and gadget review site that tests and writes about products so that consumers can make informed purchases. Their whole model is based on Amazon affiliation. They provides Amazon links to all the products their recommend which in turn creates the bulk of their revenue.

amazon
Amazon

http://www.amazon.com

Amazon is a massive online marketplace and is currently the largest online-based retailer in the United States. The company has an affiliate program for online bloggers or entrepreneurs. Affiliates sign up with Amazon with the intention to drive traffic. These methods could include an article or a link. When a user clicks on the affiliate link and purchases a product on Amazon, the affiliate gets 4-8% of the revenue.

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Is This Only For Online Businesses?

Affiliation is not limited to online businesses. Bricks and mortar businesses can use the affiliation method by rewarding individuals or other businesses in exchange for referring customers. For example, a hair salon can use this to promote their business by affiliating with a local blogger. In this case, the salon might offer a discounted price on the blog (using a voucher system) and the blogger would be rewarded a percentage for each customer they referred. This a great way to gain exposure, enhance a local reputation, or promote a business or new service.