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Sharing the Wealth

Want to get a piece of the eBay pie? Joining its affiliate program can be a good way to do just that.

Affiliate programs--in which a website carries a banner ad for a company in exchange for a percentage of any sales referred to the advertiser--have become quite popular among online retailers. And one of the most lucrative affiliate programs today is operated by online auction powerhouse eBay.

"One of the reasons eBay's affiliate program is so successful is because of the sheer number of people that come to eBay's website every day," says Vaughan Smith, who's responsible for eBay's affiliate program as the senior director of internet marketing. "We are paying multiple affiliates every second of the year for transactions that they drive to us, and that's the result of having 25 million items up at any one time that affiliates can promote."

Another key reason: eBay pays handsomely. Commissions are earned when affiliates send new users, bidding activity or Buy It Now activity to eBay. Depending on monthly activity, affiliates can earn between $10 and $20 for each active registered user sent to eBay. (An active registered user is defined as a user who registers with eBay and, within 30 days, places a bid on any item or uses the Buy It Now feature to purchase an item.)

Additionally, affiliates earn between 10 and 25 cents for each bid and qualified Buy It Now transaction, a combination that allows some entrepreneurs to strike it rich. According to eBay, it has about 10,000 affiliates in its program, with the top 50 affiliates making more than $1 million in commissions per year. "These are real businesses that are making great money," says Smith. "So if you are an entrepreneur [who] is innovative, has technical skills and a little bit of a marketing bent, then this is a fantastic way to make money on the internet."

On its part, eBay has tried to make it easy for affiliates to work with the company. Affiliates are given a choice of eBay banners, buttons and logos that they can feature on their websites; when someone clicks on that banner, button or link, they're taken to the eBay site with a cookie on their computer showing that the affiliate referred them. EBay also offers Editor Kits, which allow affiliates to add relevant, real-time eBay listings to their sites. With these customizable features, a site that reviews movies, for example, could have reviews on one side of a web page and the actual listings of the movies for sale on eBay on the other side of the page.

Last year, eBay launched its affiliate API (Application Programming Interface) program, which lets affiliates access more real-time eBay data than they were previously able to--such as category listings, product details, pricing data, bidding times and inventory counts. It enables affiliates, for example, to publish product images from live auctions in their own applications and sites. Using the API program, affiliates can better tie this information into their own selling efforts, which can lead to increased commissions.

Success Story

One entrepreneur who has found success as an eBay affiliate is David Kaye, 48, president and founder (with wife Andrea, 33) of Kayetech Systems Inc., an online affiliate marketing company in Mount Dora, Florida. The company has 550 niche websites--including AllBookstores.com, AutoBuyersAdvice.com, Fashionbrokers.com and Handbags-and-Purses.org--devoted to specific product categories and featuring links to products on different merchants' websites that Kayetech promotes, such as eBay.

Since Kayetech is a member of various affiliate programs, whenever people click on the links, the company makes a profit. To promote the sites, Kayetech relies on search advertising. The sites come in different varieties. AllBookstores.com, for example, is a site that allows people to find the lowest book prices on new and used books by comparing prices at online bookstores. The site compares prices by searching websites such as Amazon.com, Barnesandnoble.com and eBay.com, and when someone clicks on a link to purchase or bid on a book from eBay (or any of the links, that is), Kayetech makes a profit.

Kaye says he uses many of the tools eBay provides, such as the affiliate API program and the Editor Kit. And he also uses paid search advertising to generate eBay commissions. So how's he doing? Kaye says he makes more than $150,000 in commissions per month with eBay. "We are making the most money with the eBay program," says Kaye, whose company comprises Kaye, his wife and two programmers that he contracts out.

Kaye credits marketing savvy and creativity as two of his secrets to success. "We also spend $5,000 or $10,000 a day on paid advertising [for other promotions as well as eBay], and the average person can't do that," he explains.

When it comes to the eBay affiliate program, you get out of it what you put into it. To find out if it's right for you, log on to http://affiliates.ebay.com.


Melissa Campanelli is a marketing and technology writer in New York City.

Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

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This article was originally published in the February 2005 print edition of Entrepreneur with the headline: Sharing the Wealth.

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