Say you’re planning to buy a watch for your sister. You search through a few online retail sites, looking for an elusive deal. Within a few hours, every news portal or website you surf will have reams and reams of, you guessed right, ladies’ watches! This is one of the insidious ways affiliate marketing works. The publisher gets to know of products you, the consumer, is interested in, and shows you relevant ads.

‘The middleman’  

“Affiliate marketing is a middleman who takes a product, say mobile phones, from a given website (example Flipkart) and promotes it on his/her blog or website. When someone clicks on the Flipkart link and buys from the website, Flipkart will pay a commission,” says Suresh Babu, founder of Web Marketing Academy, Bangalore.

 This form of online advertising involves three nodal points: the publisher, the advertiser and the consumer. Every time a user visits a retail/service site (advertiser), the website drops a ‘cookie’ on his/her computer. Publishers track cookies and display relevant ads from advertisers.

   Advertisers pay either on ‘pay-per-click’ or ‘pay-per-sale’ basis. In pay-per-sale, once a blogger/publisher signs up as an affiliate, he/she is provided an HTML code to embed in his/her website. This helps to identify the publisher as the source of traffic to the advertiser’s website.  When a user buys something on the product site after clicking on this ad, the advertiser pays a commission to the publisher.  Merchants (Shoogloo), independents (shaadi.com), ad networks (Tyroo) and networks like Linkshare, Shareasale and Affiliatecurry pay for affiliate marketing in India, says Mr. Babu.

 A basic understanding of affiliate marketing, blogging, content, digital marketing and search engine optimisation are required for bloggers to successfully earn from affiliate marketing, says Mr. Babu. Anyone who gets even 500 page views a day is eligible to apply, but to earn profits they need more traffic on their website, he adds.

 Siddharth Puri, CEO of Tyroo, one of the leading ad-networking agencies in India, says Tyroo offers services to make online marketing easier for small publishers: “Instead of identifying what advertising program to put up, we give them a piece of code that will automatically identify keywords used in the website and through an optimisation program show relevant ads on the publisher’s website.” This is similar to what Google offers with its AdSense programme.

 “The Indian market is in a nascent stage. Typical publishers who make money are big publishers or geeks, unlike the U.S., which has a large number of tech-savvy publishers who are into affiliate marketing,” he says.

Penguin 2.0

Google has been trying to stem the spurt of low-quality affiliate marketing sites for a while now. With recent updates to its search algorithm, aka Penguin 2.0, all affiliate sites belonging to a common domain will not be listed on Google Search. Only one site per domain, which has the highest ranking, will be displayed. The same applies to publishers indulging in keyword-stuffing or low-quality sites. This is mixed news for bloggers: while better content will rank higher, genuine websites can get poorly ranked or be marked as spam.

 Founder-editor of techpp.com, Raju PP, says these changes have hurt Internet marketers all over the world, including India. “However, most Internet marketers don’t depend upon a single website/domain to make money. Changes to Google search algorithm usually affects websites which have been around for a while. So, marketers are wise enough to switch domains and start afresh to game the system.”

 Rahul Bansal, administrator of popular tech blog devilsworkshop.org, says although algorithm changes impact traffic to a blog, most income is generated from the “regular” reader-base, which visits sites from non-search mediums. “So even if a site’s traffic declines by 50 per cent, it will hardly affect their affiliate marketing revenue by 5 per cent.”

He adds that the rise of online shopping has significantly changed the affiliate marketing scenario.

Caution advised

For bloggers, it is important to choose affiliate programs relevant to their content. Matrimonial sites offer high conversion (around 10 per cent) on sales, but would probably not earn too many clicks for a tech website. Another no-go for bloggers is putting up so many ads that they run the risk of alienating their customers. Also, bloggers should steer clear of ‘pyramid schemes’, which do not offer any product/service. The only way to make money is to sign up new members.

The issue of click fraud has made advertisers switch from cash-per-click to cash-per-sale models.

Click fraud misuses pay-per-click advertising by making money through fake clicks, typically by paying someone to click on the sites. And now for the all-important question: how much moolah can you make online? Mr. Bansal says a new blogger can easily earn more than Rs. 50,000 a month in their first year itself.  “There’s no definitive answer to this,” concedes Mr. Raju. “I know people who earn more than Rs. 1 lakh to above Rs. 10 lakh per month through affiliate marketing. It’s all about hard work and getting the formula right.”