Marcus Exall explains the benefits of affiliate marketing online

That would you think if scores of people offered to promote your business on their websites? What would you think if they promised to do it for free - only claiming commission if they could prove that someone actually bought one of your services as a direct result of their activity?

Sounds too good to be true? But not only does this happen but, if done correctly, it can be an extremely cost-effective way of driving business.

Affiliate marketing, as it's known, is a very specialist form of internet marketing. It is based on your company developing a network of partners, or 'affiliates', all of whom will promote you online.

These promotions come in all forms. The only condition is that they link directly to your own website, so the visitor can click straight through. Affiliate marketing works a bit like an old-fashioned referral system, whereby if someone recommends you to one of their contacts, you pay them a fee for that introduction.

Similarly, you don't pay your affiliate network partners to promote you. But if they drive someone to visit your website and that person actually carries out the desired action (whether it's buying something, filling out an application form or just signing up to a newsletter), you pay the partner a fee in recognition of that introduction.

Tracking visitors
The nature of the internet makes it possible to track exactly which websites people are visiting and where they came from. This means that if someone is driven to your website through an affiliate, but after looking around they leave without buying, you can recognise that it's the same person and tell where they originally came from if they return to your site later and buy at a later date.

To this end, affiliates get paid for any visitors that convert into customers during an agreed time period. That time period is always flexible, although it usually lasts for up to 30 days after they originally visit your site as a result of the affiliate promotion.

Bad practice by some has given affiliate marketing a bit of a bad name in some quarters. This in turn has led many people to avoid it altogether. As its overall principle is straight-forward, companies often try to implement it themselves, but affiliate schemes can be tenuous.

They are based on very personal relations and only as good as the people who run them. Like coaching a football team, it is possible to do it using your intuition and common sense, but for real success you need to get an experienced professional.

It's possible for a company to work directly with an affiliate network. An agency that specialises in affiliate marketing will add value to the process by getting the best out of your partners, as it often has existing relationships with the top affiliates and networks. This understanding will ensure your affiliate marketing campaign reaps rewards.

For an insurance company, affiliate marketing can effectively give you 10,000 other people selling your services indirectly. The extensive nature of the web means this is the number of sites on which your insurance products could be featured.

For insurance companies, where you need a high return-on-investment from your website to justify the initial cost, this makes perfect sense. Especially when it's not going to cost you anything unless your partners make a sale.

Affiliates that specialise in insurance will have invested a huge amount of time creating websites that come to the top of an internet search engine's list of results when people type in insurance-related phrases.

If you feature highly on their sites, the potential for sales success is huge.

Many people see an affiliate marketing campaign as being limited to using online advertising, such as banner ads, to create links to a company's website. But there are many different ways of conducting an affiliate marketing campaign to ensure that it's tailored to meet your company's specific needs.

For brokers, an editorial approach may well be more effective. A visitor to a website could be hooked in by an article talking about a broker's success in sourcing the best packages. The affiliate could therefore produce case studies of the broker's work, enabling it to go into more detail.

When that case study is read on the affiliate's website, the user would then be encouraged to click through to your website for more information.

While less structured than an ad campaign, an experienced affiliate manager could develop and manage this to ensure that your network of partners works within tightly controlled editorial boundaries, making it easier for their activity to be monitored.

Undertaken properly, there is little doubt of the benefits of affiliate marketing - which is why, in some way, it's the marketing industry's best kept secret. The ability to only pay for activity once it's been a proven success is every marketer's dream. IT

' Marcus Exall is client services director for interactive marketing specialists, blue barracuda

Tips for successful affiliate marketing
1. Understand web traffic: ensure whoever is handling the scheme has a good understanding of how the web works so that they can assess adequately how well each area is doing.

2. Monitor closely: keep a close eye on progress, so that any problems that arise on affiliate sites can be identified and dealt with.

3. Remain flexible: the scheme's manager needs the authority to respond quickly to issues as they arise. If it's clear that one element of the programme isn't working, he needs to be able to redirect efforts into another area in a timely manner.

4. Maintain good relations with all affiliates: the success of affiliate schemes is based on good relationships. Essentially, you're reliant on your partners to find the best ways to promote you. While it is in their interest to do well by you, they are likely to have a number of clients.

5. Identify key affiliates: you could have over 2,000 affiliates in your network. Twenty of those may be responsible for the majority of your success. So, understand who your best performers are and make sure you keep them happy.

6. Continued motivation and communication is key: It's not enough to throw up a few banners and an email every once in a while. Those who win in affiliate marketing are those that keep in constant touch with and listen to their partners, and then address their concerns and opportunities.