Introduction to Affiliate Marketing
“Affiliate Marketing has made businesses millions and ordinary people millionaires.” ― Bo Bennet
Affiliate marketing is known to set up online revenue earning system while engaging both selling and advertising. This is final form of marketing and communications process because of its payment on performance feature. Basically, this system engages web traffic on the third party sites and creates leads to the merchant or business sites producing the goods and services. The art of affiliate marketing lies in creating business while investing less time and toil to sell a product. Here, the business pays the affiliates for each visitor or online traffic earned by marketing attempts of the affiliates. Here, the retailers prize the influencers for every customer who came because of affiliate’s marketing struggles. To be precisely said, it is a kind of bounty the affiliate marketing companies rewards the publishers for the each new purchase they impel.
Four partners are involved here
- The producing business or the merchant or the retailer or the advertiser,
- The affiliate or the publisher or Associate (they advertise mostly, in the form of banner ads, useful text links, searches, etc., the products and services of brands in lieu of commission on every sale),
- The affiliate network (the mediator between affiliates and the merchant, such as Google Affiliate Network, ClickBank, etc. The network tracks technology and tools and manage the payments), and
- The potential customers.
And the market has grown leaps and bounds, hovering around agencies managing the affiliates, super affiliates, and dedicated vendors. These parties use SEO (search engine optimization), SEM (search engine marketing), content marketing, e-mail marketing, and display advertising. In some cases, they use reviews on products and services.
Three different ways the affiliate marketing employs the digital marketing tactics:
- Reach: Tactics to make a firm brand building that includes SEO, PPC, social media marketing, and Online Public Relations
- Act and alter: Steps to measure the online business strategies, such as generating the leads, effective ecommerce applications (e.g., home page or index page optimization)
- Involve: This tactics majorly convert one-time users to repeaters through mobile marketing, various promotional, content marketing methods (newsletters, press releases, white papers, blogging, infographics, etc.), and giving proper customer support
Most often, affiliate marketing is puzzled with referral marketing since both these marketing techniques use other partners to steer sales to the merchant. Still, both these concepts are different: while affiliate marketing depends solely on the financial incentives to promote sales, the referral marketing purely depends on faith and special rapports.
How does affiliate marketing work?
- Affiliate registers with the merchant/brands/retailer/advertiser in the affiliate bonding
- The publisher puts an affiliate link every time he makes a note to the advertiser on his website
- Any potential customer drops in at the affiliate website
- The customer clicks on the targeted affiliate link to navigate to the merchant website
- Backend a cookie was left in the consumer computer
- The potential customer purchases the products from the company’s webpage
- When the customer is on his exit steps, the advertiser tracks the affiliate cookie on his PC
- As the advertiser gets an affiliate cookie, he arranges for the sale commission to be credited to the affiliate as per the affiliate terms and conditions
- The advertiser then prepares for the affiliate or publisher a report presenting the traffic details and sales history
- On a monthly basis, the advertiser pays the affiliate for all the matured sales
Reasons to develop into an affiliate
- You would need a meagre amount to set up an affiliate business
- You would experience an open avenue to new marketing channel
- You can create simple content to attract your visitors
- You do not need employees to run your business. When you grow, there is every chance to outsource your work
- You do not need any specific product or service
- You do not require any expert understanding on any topic. Only, a fire-in-the-belly to learn and approach the right people for the right items will be fine
- You will have chance to earn spontaneous income. For your day-and-night struggle, you will keep on earning
- You can enjoy the flexible hours to work from anywhere you choose
Affiliate marketing payments
Two major payment modes are followed – PPC (pay per click wherein payment is based on each click by the customers; this is the low-paying option) and PPA (pay per action done or the cost per acquisition/CPA; this method is very useful as compared to the PPC used more for online traditional ads). Gradually, CPA tends to swap the CPC/PPC as the merchant has raised the interference control on the percentage settled. The CPA is calculated as CPA= 100 / conversion rate% X CPC.
Other than the commission percentage, network and placement charges with affiliate marketing agency costs are also observed. The revenue goals must be achieved, retaining the ROAS target (return on ad spends). Sometimes, people set aside a portion of the calculated budget for future publicity.
The metric used to calculate the performance improvements is earnings per click (EPC/earnings at every 100 clicks created).
History of Affiliate Marketing
Affiliate marketing may be a very old school of marketing; contemporary believers should not think the World Wide Web started these marketing activities. It existed long back when one brand rewarded its clients for referring another new customer. Though it was very tough to track offline, affiliate marketing was very much there. Then, the advent of internet, obviously, paved the way to a successful set-up of affiliate marketing in the form of product information, reviews, and recommendations. In such cases, the internet became a sole means for several marketing strategies of brands. The introduction of web 2.0 and cookie tracking system made the whole objectives much simpler on the purchase channel. Thereafter, came the invention of e-commerce in the late 70’s, and in the outset of 2000, the blogging, and thereby the user-generated content, gave a boost to the affiliate marketing.
Just four years after the invention of World Wide Web, the revenue sharing system or the commission for referred leads took place. William J. Tobin invented and patented and put the affiliate marketing into practice in 1996. And this practically garnered extensive worldwide interest especially from the retailers who by now believed they could rely on these marketing efforts.
Different Models of Affiliate Marketing
Payment is generated from the affiliates’ websites by one of the models described below:
- PPC (Pay per click system) – The affiliate advertises the products or services in its websites and get paid when a user clicks on that advertisements.
- RSS feeds or Blogging – This system basically stands on the publishing of the reviews on the products or services of the merchants. Blogging helps spread the relevant, useful, and consistent content among the users who would be informed about the product features, and they would revert with leads. The content would have targeted keywords meant for the potential customers. Also, in the form of online citations or the brand mentions these keywords would implicitly link to the relevant product information sites, finally leading to promote
- Shopping Directories or Review Sites – These sites function the same way like the personal blogs, giving enough information about the products sought.
- Loyalty Rewardz Sites – In case of cash back or points back system, the loyalty rewards sites do take place.
- Coupons – As part of marketing and promotions the coupons sites operate, giving enough mileage to the affiliate marketing.
- E-mail Marketing – Through e-mail marketing, the product features are targeted to the users of specific demography.
- Registration – When a person registers with any site, for any purpose – subscription or newsletters or any for any other information – other company offers are displayed or advertised.
- Network – Multi-tier or Multi-level formats are used in case of different affiliate marketing networks.
Advantages and Disadvantages of Affiliate Marketing
Following are advantages and disadvantages:
Affiliate marketers are nothing but the expert digital marketers
Some of the well-known digital marketers have their roots in the affiliate marketing. Affiliate marketing has similar technology, plans, and principles of today’s digital marketing. Some tools and techniques that today’s aspiring online marketers use are improvised on their old counterparts that got developed because of affiliate marketing (e.g., tracking scripts, CMS scripts, Spy tools, and split testing scripts). Let’s find what makes affiliate marketers the best:
Affiliate marketers are the lean marketers
- Through the advertising methods and well-structured home/index pages the affiliate earns well
- Affiliates always believe in continuously improving their advertising methods and strategies to earn properly
- Constantly, they split-test the index pages and advertisements to improve click through rate (CTR)
- Most applicable metrics and hard data are used to see the popularity
- The affiliate marketers know when to pivot the offers, traffic sources, and messaging
The affiliates are well versed with the technicalities
The knowledge of marketing basics
The digital marketers simply lack the skills to be conversant in enhancing the percentage of the unique visitors to a webpage that switch to the potential customers, building good relationships with the customers at every phase of sales channel, retargeting, and marketing automation. So, they have to rely on their team members to tackle. On the other hand, the affiliate marketers have already exercised all these effective tools of marketing.
Attention on small areas will ultimately increase the revenue
In cases when digital marketers are glued to analyzing the smaller things, such as setting the right appeal of an ad or running the ideal split test to track the marketing effectiveness, the affiliate marketers quickly overcome the smallest problems to get the enhanced revenue and customers. All they are concerned is increased ROI (return on investment). Giving attention on the smaller details is good only when these are able to make a massive effect on the broader business goal.
Affiliate marketers are the experts
When you go for a critical heart operation, would you rely on a doctor who is a general surgeon or on the cardiac specialist? Obviously, you would take advice from the specialized doctor. Similarly, in case of so many intricate matters in the digital marketing, an affiliate marketing specialist is a running encyclopaedia who has deep knowledge in at least 1 or 2 areas, such as PPC, SEO, Display advertising, referral marketing, contextual marketing, retargeting, content marketing, or social media marketing. They have invested large sums of money and time, so they are very concerned about getting the ROI back as much as possible. They always surpass the digital marketers or any other start-ups.
Moreover, the affiliate marketers have good network and industry contacts that would actually help them alleviate the whole process of setting up digital marketing platforms. This, a digital marketer is not able to achieve.
As the big players, such as Facebook, Google, Bing, Yahoo, MSN, etc., having several PhD’s in their run to outsmart the affiliate marketers lose continuously, you might think you are no good to perform uniquely of your own. But when an affiliate or publisher starts something he/she is interested in: ROI and period to attain it. They are simply not bothered about the office politics or any other hindrances (e.g., the Friday party or micro-managing of human resources). When big companies are hiring more marketing professionals, an affiliate ardently works days-nights-and-weekends to track and raise ROI.
Affiliate marketing strategy from an affiliate’s side
Following are the affiliate marketing strategies:
1. First impression is the last impression
First impression marks the stepping stone of the affiliate marketing success in terms of visitors’ whole understanding of the website. You can tell your visitors to click at the first visit, and that would undoubtedly put you in the trouble; the website having advertisements (online banners and text links all around) would be something like this. Chances are the visitors will skip to another site outright. It is always desirable to build a website keeping in mind that visitors come to your website not to click first, but with a query to know something, and that customer sojourn will accompany relevant ads for them to click. Now, you know what your visitors want and give them something as per their needs. This will work for sure.
2. Promote if you are user of a product or know start from scratch
This will always be good to promote a product if you are its user; you can realistically add some personalized features that you experience out of using that product. This will be great – you can give an original touch to the advertisements. Visitors can easily relate to those links and ads. But sometimes you cannot use any and every product. In such cases, acquaint with the products as far as possible. This will also help you structure the campaign.
3. Describe an affiliate link
Only a banner ad or a text link beneath a post without any description will not help sate the visitors. Once you promote a product, you must know something about it, and describe it as long as possible. Always, a brief narration works rather than a mere link.
4. Proper use of relevant and contemporary content
You should explain the product that you endorse. Also, the content that you would describe should be consistent, relevant, and valuable. It should be current and be aligned with the promotions. The affiliate manager must monitor content and design in that respect. Many a times, the merchant uses the current product feeds to keep promotions and product pricing up-to-date.
5. Cookie expiry period
For tracking the affiliate sales, whenever a buyer clicks an affiliate link, a cookie is set in the browser of the buyer. This cookie stays at most 90 days and configured in the Account Affiliate page. This period determines earnings per click (EPC); if the sale took place within this period, the affiliate would get the sales commission, but if it happened after this period, the cookie would have expired, and there would be no question of sales commission to be credited to the affiliates. If the same link is used by another affiliate after this period, the cookie period would be reset with the new affiliate details, and the old counterparts will never get any commission on the sale.
6. Focus on one or two of the same types of products
You should not promote more than two of the same kinds of products for the below reasons:
- You cannot promote more two of the same products as visitors will not believe you.
- You should promote more products as it would be difficult to choose the right one among the promoted ones.
- When you promote the same product time after time, your visitor will realize the potential of the product you are talking of
7. Promote the products that pay you, not the ones that don’t
Many a times, you will have banners of the products you know well, and those will pay you. But sometimes, there are so many other products banners that don’t pay you. There may be several reasons for this. You should forget them and focus on the ones that pay you.
Affiliate marketing strategy from a merchant’s side
It would be incomplete if we don’t highlight affiliate marketing strategy from the angle of the merchant.
A sound relationship with the key affiliates must be maintained for the sake of successful affiliate marketing initiatives. The retailer must convey to the affiliates about the new product information and promotions.
2. Utmost planning
A retailer or advertiser must source all relevant information from the affiliates regarding forthcoming affiliate openings in respect of the corresponding marketing plan.
3. Well crafted commercials
The merchants should create commercials regarding commission rates, PPC guidelines, cookie time, and rules on voucher codes.
4. Hire new affiliates to search for prospects
In times of launching an affiliate program, it is imperative to hire as many affiliates to seek fresh business opportunities as possible.
5. Authenticate sales and delight the affiliates
The merchant should build an auto-validating system to track the sales record and make sure to send the affiliate commission on time after each sale through them takes place. One thing must be considered that the merchant must motivate the affiliates by crediting them their dues on time.
6. Current product information
The merchant should be careful to send the live product updates and feeds to the affiliates to help them promote the products and services as per the existing information.
7. A dedicated page to your affiliate program on the website
There should be a dedicated page on affiliate program in the merchant website. This page will house information on rates of commission, cookie period, feeds on products and banner details, and FAQs for affiliates to join the affiliate program.
8. The role of incentives and promotions
The incentives help persuade affiliates to endorse the affiliate program. The merchants can give voucher codes to affiliates who, in turn, give the incentives to the customers to purchase the products. There can be an implicit bonus made to increase the sales of some brands and products. Also, affiliates commission can be increased to increase the affiliate efficacy. Sometimes, a cash reward or bonus can be given if the sales targets are attained. So, incentives are important aspects of affiliates program.
The affiliate marketing as discussed above deals mainly with human’s basic needs to spread the use of products and services through referrals of others. Here, the financial incentives are prime concerns behind popularising any product. The primitive marketing activities got a systematic shape with the advent of internet. Tracking, analysing, and closing sale reps are done in a timely manner. More and more people will have trust on this marketing dynamism. This open marketing spectrum has added sales funnel thereby easing the whole process of sales. The affiliates need labor, time, intelligence, and energy to succeed, while the retailers require a good sustainable relationship with the affiliates. And all these would require a firm tackling and strategising the affiliate program. There is no short cut to success. When there is no such demand of typical official protocols, it should surely require a basic thing, and that is hardship to augment the ROI.
Here are some articles that will help you to get more detail about the Affiliate Marketing so just go through the link.