What is Affiliate Marketing and How to Start?
May 31, 2022
Affiliate marketing is an advertising model that can help a brand, company or manufacturer scale up sale of products and services with the help of third-party influencers, marketers, bloggers, vloggers, and others. However, before you step into a world that lives by its own rules, it is important to understand the nuances of this thriving model.
This blog will deal with “what is affiliate marketing?”, along with the fundamentals and practices of the industry. We are here to acquaint you to the benefits, different models, and strategies to achieve predetermined goals.
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What is Affiliate Marketing?
Affiliate marketing is a process by which an individual or company earns commission by selling or promoting products and services of another individual or business. It is often referred to as a business tactic, strategy, or process, but the goal remains the same – drive sales and generate revenue. Affiliate marketing helps to achieve the final goal quickly!
What are the different types of Affiliate Marketing?
Affiliate marketing depends on the people or companies who advertise for merchants or brand. Hence, the types of affiliate marketing are differentiated as per the relationship or the involvement of the affiliate with the product, service or brand.
- Unattached Affiliate Marketing – As the name suggests, there is no attachment of the affiliate marketer to the product, service or brand they are promoting Some of them may not even have any experience or expertise in the features and applications of what they are promoting. Their job is to promote as per predefined parameters. For example, a sportsperson promoting a beauty product.
- Related Affiliate Marketing – The level of involvement of the affiliate is more than that of the unattached affiliate. The attachment to the offering could include a platform dedicated to the niche. Since they could have a reasonable or high-level of expertise, they could influence decisions to generate traffic. Customers are more likely to trust a related affiliate marketing campaign over an unattached marketing campaign. For example, reviewers sharing positive reviews about an electronic item – such vlogs are popular online.
- Involved Affiliate Marketing – In this type of affiliate marketing, there is a deep connection between the marketer and the offerings they are promoting. They could have used the product, and are more than happy to share views, advise and recommendations on the products benefits. The relationship and experience they have with the offerings make them the go-to-source for information for that niche. For example, food bloggers sharing their experience of dining at a restaurant.
Additional Read: How to Remove Bad Reviews from Online Platforms
The Advantages of Affiliate Marketing for Merchants
The major advantages of affiliate marketing are:
- Exponential increase in sales – if done through the right channels, expect exponential increase in sales. Affiliate marketers have thousands of followers, and by utilizing their channels, it is easier to build trust and sales.
- Develop multiple sales channels – reach out to affiliate marketers across geographies. You are building multiple sales channels simultaneously.
- Commission based model – pay commission only on a metric like traffic, leads, etc. Some affiliates also take a fixed commission for speaking, writing or endorsing products and services.
- It is measurable – advertising through TV and print media is not directly measurable. Pay commission on metrics such as pay-per-click or cost-per-acquisition
- Helps to builds brand visibility – more people get acquainted with the brand and what it represents. You are reaching out to new audiences!
- Built on trust – each transaction between the marketer and merchant is built on trust and transparency!
Also Read: SEO For Branding: How to Use SEO to Build Brand Awareness
The affiliate network of individuals and companies basically works as a marketing arm to increase traffic, leads, and conversions.
How does Affiliate Marketing Work?
Since this is a commission-based model, it is crucial to understand the workings of affiliate marketing. We have divided the working into three parts: the players, the sale journey and the performance.
- The merchant – businesses, brands or individuals looking to add another marketing channel and increase sales
- Affiliate marketers – individuals or companies who will endorse or promote a merchant’s product and services for a pre-decided commission.
- Affiliate services – companies or service providers who will help merchants reach out and manage partnerships and promotions. They also take on the task to track, monitor and pay the marketers.
- Customers – The audience merchants want to reach out to through affiliate marketing.
- Software as a Service platform.- are used to track performances and create reports to enable payments
An affiliate service provider acts as a bridge between the merchant and affiliate partner. For them it becomes important to setup a structure or flow that helps with the end objective – amplifying the brand and increasing the online revenue. It is important for the brand and service provider to treat affiliate marketing as a project management process to ensure high returns on investment and low cost of acquisition.
The Sales Journey
The most interesting aspect of affiliate marketing is the sale journey. Check out the action below
The journey clearly shows ‘how does affiliate marketing work’. The next step is to check the performance and track the effectiveness of the people and journey.
Performance Tracking in Affiliate Marketing
The journey shows the importance of the SaaS Platform and cookies. Pixels and tracking cookies are not used only on the customer’s browser; they are also placed on the client’s targeted web pages. The highly-tangible marketing helps to track as well as measure the partner’s activities.
Let’s look at what you can measure:
- Number of registrations & sign-ups – indicates the interest of the customer, even if it was for an instant
- Subscription, orders, and sales – indicates the actual number of customers who paid for the product or service
- Ticket size – indicates the average order value per customer, determining the success
- Comparing customers – indicates whether you are getting new customers or customers are returning – both are good
Getting the exact metrics for the following:
- Conversion rate – a percentage of the sales vs interest shown
- Return on investments – what are the earnings of the brand or merchant
- Cost per action – what did each promotion cost
- Cost per acquisition – what did it cost to acquire a customer
- Customer lifetime value – average revenue generated during the relationship between customer and brand
Affiliate Marketing Strategies to Employ
Understanding what is affiliate marketing and how does affiliate marketing work is not enough to garner the success you want to achieve. As mentioned above, you need to treat this as a project management process, and for that, the correct strategy becomes crucial.
A quick look at what strategy you should adopt in 2022, to meet annual sales targets and bring more customers into the fold.
- Are you interested in promoting a single service, a line of products, or your brand. Clarity is important to set the right strategy.
- Are you going to work on a single payment model or a combination of all three – pay-per-click, pay-per-lead, and pay-per-sale
- Your affiliate marketing agency should also have clear targets. Are these conveyed directly and clearly?
- Create a content distribution plan or calendar – will you create blog posts, infographics or videos? Which are the platforms you are going to use – Guest posting sites with high DA, Facebook, YouTube or any other?
- What are you going to discuss with your audience? B2B content should focus on information, while B2C content should focus on creating an emotional connection.
- Who is going to execute the program? Will you hire an affiliate marketing agency? Or will you reach out to an affiliate marketer directly?
Did you Know: Techmagnate also offers complete expertise in Guest Posting Services
- Yes, even the affiliate partners need support. Do they have the buzzwords or hashtags? Do they have access to all the tech or other industry-related details that can break or make a sale? Have you shared the materials providing information? Are they aware of the benefit they are supposed to highlight?
- More importantly, are the partners and agency aware of the end objective – increase sales, or promote brand awareness? Have you shared your past experiences with them to ensure mistakes are not repeated?
- From the first go, it is important to set metrics in place – are you going to measure traffic or leads? Which tool will you use to measure the result?
- Assess the risks and outline the action to take if you do not get achieve the goals.
Network Marketing Vs Affiliate Marketing
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One of the most frequently asked a question is what is the difference between affiliate marketing and network marketing.
The table below captures the differences between both the forms of marketing:
||It is a marketing method using affiliates in the online world
||Person-to-person sales via a network of distributors – both physical and online stores
||Commission based on sales, leads, or other predetermined metrics
||Profit-based model on every product sold
||Digital platforms like vlogs, social media platforms, blogs, via posts, infographics
||Physical stores in malls, markets adn emcommerce sites
|Point of sales
||Followers, friends, family subscribers of the affiliate
||Customers of the distributor
||Modern & can reach thousands in one go across several cities
||Traditional & reaches only those who enter the store – ecommerce site may help to reach many cities, but physical store is limited to local population
||Possible to connect with a targeted audience within minutes
||Distributor may deal with many products diluting the target customer pool
||Affiliate has an emotional connect with followers – trust between the two is high
||Chances of emotional attachment are low – however, distribuor is more likely better informed on product benefits
Brands and merchants require both the forms of marketing to garner a higher reach to increase both brand awareness and sales. However, affiliate marketing is the new norm wherein it is possible to reach thousands of customers. Network marketing, is the traditional form, which allows brands to set up spaces to showcase their products in the best light.
Affiliate marketing is a necessity for brands looking to create value for their products and an emotional connection with their customers.