A good referral program is like a business steering customers to a related but non-competing local business, either for the good will or more tangible compensation. Every business has its potential partners, Marciano says. Jupiter Communications estimates that 15 percent of affiliates account for 85 percent of the revenues generated. Marciano says the numbers are even more lopsided, with 2 percent of affiliates accounting for 98 percent of all revenues generated. All this is good news for larger retailers, because it means that instead of sifting through untold thousands of tiny websites, maximum impact can probably be achieved by focusing on the most visible locales with the most loyal audiences.
Affiliate programs pay the sites that participate in a number of different ways.
Players get anywhere from 5 percent to 20 percent or more of an item's sale price. They sometimes get a bonus for signing up, and a significant additional payment for each new customer they bring to a site. In the end, though, all but a few affiliate sites rarely make more than a couple of hundred dollars a year. Whether those numbers are enough to keep the affiliate marketing tide rising is uncertain. But chances are the strategy's rise has only just begun, and that retailers that use it well will gain a significant advantage over their competitors.