Affiliate marketing involves a business paying commission to another online business or entities in general, known as affiliates. For example, Business A pays a commission to Business B,C,D etc for any transactions (or conversions) that they may have received from a user referral.
Affiliate marketing is performance based, meaning that if the affiliate refers many users to the website but they don’t complete a transaction or conversion, Business A doesn’t have to pay the affiliate.
Because affiliate marketing is performance based, it can often have a higher ROI than other digital marketing tactics such as pay-per-click (PPC), where it is easy to spend a ton of money on clicks without users producing any actual conversions.
The Roles within Affiliate Marketing
Affiliate marketing consist of four main roles:
The merchant is the retailer or brand that is trying to attract users or make sales. The network is the store which contains offers for the affiliates to chose from and handles the payments. The publisher is the affiliate who is producing content that attracts users or managing the website that your ads appear on. The customer is the user who visits the affiliates website then is referred to the merchant website and converts.
How Do You Know Where a User Came From?
To track the users from affiliates, often times it is a unique URL that a user clicks on giving them an ID and a cookie that can expire after a predetermined time-length. This way, when the user visits your website and completes a transaction, your affiliates will get credit.
The URL may look something like https://www.yourwebsite.com/?ref=123abc
About & Managing Affiliates
As mentioned above, affiliates are incentivised to introduce your brand and direct users to your website. They may do this by writing a blog post about your newest or top-selling products, or your current promotion. Affiliates may feature banner ads on their site that drive users to your store, or offer coupon codes as incentives to users to purchase the product after visiting their site.
Some merchants choose to manage their affiliate programs in-house, other looks for an outsource program management (OPM) solution or an external marketing agency. Whoever is in charge of managing the affiliate marketing is responsible for many items which include the daily management or affiliates at choosing quality affiliates.
As with many things in life, affiliate marketing benefits from quality over quantity. Having many affiliates that drive traffic can be seen as a good thing, but this may spread your team too thin preventing them from focusing on the quality affiliates that are generating the most conversions, especially since the strategy and marketing collateral most likely won’t be the same for each affiliate.
Developing an Affiliate Marketing Strategy
As mentioned above, there isn’t one strategy for affiliate marketing, but there are some guidelines that you can follow. These guidelines include:
First and foremost, identify and clarify your business goal for starting your affiliate marketing program
Do your competitive research
Know the capabilities of your team for producing content and focus on your team’s strengths
Focus in one area first, and become good at it
Remember to always add true value to the consumer
Remember technology (mobile, table, etc)
Be aware of trends, and develop content prior to trends
Focus on topic targeting, not keyword targeting
Affiliate marketing is a great tactic to generate brand awareness and sales, but it may not always be the right tactic for your business. Do your research and talk to an expert in the field for advice before starting.
If you do use affiliate marketing, be sure that you have an analytics software in place to track your progress. Be sure to share this article with your friends and colleagues if you thought it was valuable.