How to Use Foreign Currency Rate Fluctuations to Your Advantage as an Affiliate Marketer

by: Rosalind Gardner

When I started affiliate marketing back in early 1998, getting paid in U.S. Dollars was a huge bonus to me as a Canadian resident.

At that time, one US dollar was valued at $1.43 Canadian. By late 2001, the greenback translated into $1.60 Canadian.

Woohoo!

Even if my merchants' product prices and commission rates remained the same, I got a raise simply by virtue of fluctuating foreign currency rates.

For example, let's say that one month I sold 100 dating service memberships at $29.95 for a 50% commission and earned $1497.50 US. In January 1998 that $1497.50 was worth $2141.42 Canadian, and by November 2001, it was worth $2396.00 Canadian dollars, or almost $255.00 CAD more than in 1998!

Unfortunately, the U.S. greenback has been slipping steadily against other currencies since early 2002, and on January 14th, 2005, it was worth $1.20 CAD.

Using the example above, my $1497.50 USD commission check is only worth $1797.00 CAD in January 2005 - a whopping $599.00 LESS than it was worth in late 2001.

Affiliate marketers in many other parts of the world faced the same scenario.

Here are some examples of how the US dollar has been performing against various currencies since early 2002.

British Pound
January 2002 - 0.698241 GBP
January 2003 - 0.618284 GBP
January 2004 - 0.547846 GBP
January 14, 2005 - 0.53124 British Pound

Australian Dollar
January 2002 - 1.93418 AUD
January 2003 - 1.71592 AUD
January 2004 - 1.29591 AUD
January 14, 2005 - 1.30581 Australian Dollar

Euro
January 2002 - 1.13226 EUR
January 2003 - 0.941605 EUR
January 2004 - 0.791328 EUR
January 14, 2005 - 0.75643 Euro

Those are fairly sizeable drops across the board... and a pretty depressing situation for non-U.S.-based affiliates who earn their incomes in US dollars.

However, there are a couple of things affiliate marketers can do to protect their affiliate income from these disastrous declines.

The first option is to work about 25-35% harder to bolster revenues to 2001 equivalent values.

However, because I'm basically lazy, working harder is never my first choice.

The second option involves using foreign exchange rate changes to your advantage by selling products offered by merchants located in your own country, priced in your own currency.

For example, although Canadians are less resistant to purchasing in U.S. dollars now that the Canadian dollar is so strong, they still hate to see a $120.00 charge on their credit card for a $100.00 item. Logic aside, something tells you that a buck should be a buck, and anything more feels like a rip-off.

The primary benefit of promoting 'local merchants' is to help your visitors save money by reducing shipping costs and eliminating customs duties on goods imported from the U.S. Basically, most of us prefer to shop locally if we can get the same product at the same or lower price.

Your task then is to find merchants that price products and pay their affiliates in your own currency.

That unfortunately is still easier said than done.

The pickings were pretty slim when I searched Google for "Canadian" "affiliate programs".

A site that listed itself as a directory of Canadian affiliate programs - wasn't.

Furthermore, most of the Canadian merchants that set Canadian dollar prices on their sites, either pay their affiliates in U.S. dollars, or are affiliated with networks that pay affiliates in US dollars.

U.K. affiliates will have an easier time finding U.K.-based merchants that pay in Pounds Sterling.

Here's something to watch for if you decide to affiliate with merchants who work in your own currency.

At Commission Junction I discovered that if you promote the Canadian Shopping Channel which sells and pays commission in Canadian dollars, your commissions are first converted to U.S. dollars for CJ?s purposes, then back into to Canadian dollars when they deposit the commissions in your Canadian dollar bank account.

You?d lose money each time the commission went through the exchange process.

To avoid being penalized by currency exchanges before the commission hits your bank, I suggest setting up a separate Commission Junction account just for affiliations with your 'local merchants'. Be sure to set the 'functional currency' on that account to your country's currency.

U.S. affiliates can also take advantage of drops in the U.S. dollar by selling for foreign-based merchants. When or if the U.S. dollar drops, you will actually get a raise on each of those promotions.

Expand your reach by taking advantage of any and all opportunities at home and abroad. It is the WORLD-WIDE web after all.