Eskil
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I've posted about this before as I have been on both sides of the affiliate fence. When I was an affiliate myself, I learned a lot about what makes a good offer to promote, networks to deal with, etc. I later took that knowledge to build out my own affiliate program once I had a physical product.
Of the options you mention here, #1 is by far the most common. Most affiliates never see or touch the products they sell but they can still do so successfully. If you're gonna send product to people, you're moving more into brand ambassador territory, which can be great on its own. But don't worry about this for the majority of the affiliates signing up. The 80/20 rule applies here of course so you will want to take good care of those few affiliates who are bringing in the most sales.
You do want to make sure affiliates agree to your terms, mostly to protect yourself from shady practices, or affiliates promoting your product with false claims and promises that can't be met. There's always those sketchy Bro Marketers (tm) who will do anything just to get those commissions and those types of guys could give two shits about your brand reputation. So - create a least a basic agreement that says they can only say certain things about the product and not say other things.
Also, and just as important is to specify where they are allowed to drive traffic from. If you're advertising on Facebook and Google yourself for example, you don't want any of your affiliates competing for ad space on those same platforms. Be clear on this. Same with bidding on your brand term, approval of ad creatives, etc.
I recommend setting up an email autoresponder for all new affiliates signing up, with frequent tips and tricks on how and where they can earn more by promoting your product. Also offer things like incentive bonuses, exclusive offers they can promote, higher commissions, etc. if they meet sales goals. These are things that will keep your affiliates active and happy long term. When the number of affiliates becomes too much for yourself to manage, I suggest outsourcing at least a part time affiliate manager (with experience, look on UpWork.com) to communicate and engage with them on a regular basis.
Of the options you mention here, #1 is by far the most common. Most affiliates never see or touch the products they sell but they can still do so successfully. If you're gonna send product to people, you're moving more into brand ambassador territory, which can be great on its own. But don't worry about this for the majority of the affiliates signing up. The 80/20 rule applies here of course so you will want to take good care of those few affiliates who are bringing in the most sales.
You do want to make sure affiliates agree to your terms, mostly to protect yourself from shady practices, or affiliates promoting your product with false claims and promises that can't be met. There's always those sketchy Bro Marketers (tm) who will do anything just to get those commissions and those types of guys could give two shits about your brand reputation. So - create a least a basic agreement that says they can only say certain things about the product and not say other things.
Also, and just as important is to specify where they are allowed to drive traffic from. If you're advertising on Facebook and Google yourself for example, you don't want any of your affiliates competing for ad space on those same platforms. Be clear on this. Same with bidding on your brand term, approval of ad creatives, etc.
I recommend setting up an email autoresponder for all new affiliates signing up, with frequent tips and tricks on how and where they can earn more by promoting your product. Also offer things like incentive bonuses, exclusive offers they can promote, higher commissions, etc. if they meet sales goals. These are things that will keep your affiliates active and happy long term. When the number of affiliates becomes too much for yourself to manage, I suggest outsourcing at least a part time affiliate manager (with experience, look on UpWork.com) to communicate and engage with them on a regular basis.