a survey by the Affiliate Marketing Association, a Tokyo-based nonprofit

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Internet Marketing Thursday, June 7, 2007

Web Affiliate Programs Not Quite A Cash Cow

An Internet marketing business known as affiliate programs have become popular among individuals as an apparently easy means of making money...

An Internet marketing business known as affiliate programs have become popular among individuals as an apparently easy means of making money. Problems of fraud connected with the practice, however, are spreading.

An affiliate program is a performance-based advertisement business in which individuals carry advertisements for goods and services on their Web sites or blogs. If visitors to the sites purchase goods after accessing it through the ad, the owner of the Web site or blog receives a commission.

The scheme has become popular because it is easy to set up at home. There have been reports of problems, however, including cases in which people have lost large amounts of money after being given promises of easy cash.

A 40-year-old woman working for a mail-order firm in Minato Ward, Tokyo, has used an affiliate program for about a year.

She sometimes recommends her favorite cosmetics on her blog, along with advertisements for the products. If a visitor clicks on the link, the visitor is guided to other sites selling the products online.

If the visitor makes a purchase, a percentage of the sale is paid to the woman in commission.

"I have earned several tens of thousands of yen on average a month. It is attractive as a side business," she said.

A common method of getting started in an affiliate program is by registering with an affiliate service provider, who acts as an intermediary between individuals with Web sites or blogs and companies wanting to place advertisements on the Internet.

Through the provider, individuals with Web sites or blogs may choose companies for whom they would like to offer advertising space and procure graphics and other relevant data for their sites.

Commission payments of up to more than 10 percent of sales are on offer.

Anybody with a computer connected to the Internet can start the business, even at home. The growing popularity of affiliate programs among housewives, some of whom earn hundreds of thousands of yen a month, has raised its profile as a means of making extra money.

According to Yano Research Institute, a Tokyo-based economic research company, the market for affiliate programs was about 3.6 billion yen in fiscal 2002. This surged to about 31.4 billion yen in fiscal 2005 and is predicted to exceed 100 billion yen in fiscal 2008.

However, only a small number of the affiliates seem to have earned a satisfactory income from the program, according to a survey by the Affiliate Marketing Association, a Tokyo-based nonprofit organization.

The survey in 2005 of about 540 affiliate program users showed that about 43 percent reported they had earned less than 1,000 yen a month from the program. This was followed by about 27 percent who said they had made no money from the program. Only about 10 percent said they had pocketed 5,000 yen or more.

There also have been program users who made exaggerated claims in blogs, hoping they would stimulate interest in the products advertised on their sites.

The Japan Affiliate Service Kyokai, a Tokyo-based industry association of affiliate program operators, last year drew up guidelines to prevent mishaps.

In other cases, Net users lost money after being solicited by racketeers who told them they would be able to make big money easily.

A female company employee in her 30s in Nara Prefecture was contacted by telephone in October, and told that she would be able to earn at least 70,000 yen a month. The caller said she had to pay a 600,000 yen registration fee, but she lost contact with the caller shortly after transferring the money to a designated bank account.

The Tokyo metropolitan government's consumer consultation center said it has received about 40 complaints about affiliate programs since fiscal 2005.

"Some people were required to pay about 400,000 yen for training or forced to buy software costing about 900,000 yen," an official at the center said. "We recommend that people who want to start affiliate programs check very carefully when they sign a contract for a large amount of money."

Source: yomiuri.co.jp

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