By Raymond Iwor
Affiliate marketing is a performance-based marketing program in which a business rewards publishers (or affiliates) by means of commission for each visitor or customer brought to the business by the affiliate’s own marketing efforts.”
The affiliate marketing program can rightly be seen as an extension of your in-house marketing team. Instead of paying them salaries, you pay them for each new lead or sale they acquire through their marketing efforts.
If you have a product and want to sell more, you can offer publishers financial incentive through an affiliate program as a merchant by having them promote your product in exchange for giving them a commission from the sales that they make.
At its basic level, an affiliate marketer simply signs up with a company or a network to sell their products or services. He gets paid typically every time someone either buys something or executes a desired action.
The concept of affiliate marketing has been around for a long time, but as the internet has become more and more available in recent years, affiliate marketing has risen to prominence, and the affiliate software market is blooming. While publishers are still generating the majority of their revenue from advertising, affiliate marketing is growing fast. Today it accounts for 15% of the total revenue earned by the digital media industry.
How does affiliate marketing work?
The affiliate marketing program is a revenue sharing process where product creation and product marketing are being spread across different parties. Each party receives a share of the revenue according to their contributions.
- When an affiliate joins the merchant’s program, he or she is given a unique ID and a specific URL to use when promoting the company’s product.
- The affiliate includes the link in their blog content and/or via their email marketing efforts and invites readers to click on it to learn more.
- When a prospect clicks on the link to visit the affiliate partners’ site, a cookie identifying the affiliate shows up on their computer. The cookie ensures that the publisher is credited with the referral sale even if it occurs days or weeks later.
- Whenever a buyer completes the sale process, the merchant checks the sales record for a cookie identifying the source of the referral. On finding the cookie with the affiliate ID, he credits the affiliate with the sale.
To participate in an affiliate marketing program, you’ll need to take these five simple steps:
- Find and join an affiliate program
- Choose which offers to promote
- Obtain a unique affiliate link for each offer
- Share those links on your blog, social media platforms, or website
- Collect a commission anytime someone uses your links to make a purchase.
The Parties Involved in Affiliate Marketing Model
Affiliate marketing is the process of product creation and product marketing across different parties. As a performance-based process, it leverages the abilities of individuals to provide a powerful marketing strategy. Therefore the parties involved in a successful affiliate marketing system are depicted in the following image;
The publisher, who in effect is the affiliate, promotes the product or service and receives a commission on sales. They’re the middlemen connecting the customer to the product or service. They create the marketing funnel that includes the ads, landing pages, and whatever additional means necessary to persuade the customer into making a purchase or signing up. Their job is, but not limited to;
- Finding products or offers to promote.
- Finding potential customers or traffic sources for the products.
- Creating marketing material such as ads,and landing pages.
- Optimizing the marketing campaigns until sales is concluded.
An affiliate network is where affiliates can go to find reputable offers to promote, and advertisers also go there to find lots of affiliates. It therefore serves as marketplaces for products or services that companies are trying to sell. In other words, the networks serve as the middleman between affiliates and the product/service owner. You can log into any affiliate network and find hundreds of offers to promote.
Affiliate networks, however, are optional for the publisher. He can choose to work directly with the advertiser or merchant. Sometimes they have their own internal affiliate program that you can sign up with directly. But it’s easier for a start-up affiliate to go through an affiliate network at the point of entry to become familiar with the terrain..
While networks connect advertisers with publishers, it also provides the tracking technology, and processes the affiliate’s commission payments in what is known as the “Commission Junction
Some popular networks include ClickBank and ShareASale:among others.
- THE ADVERTISER
Sometimes they’re called Merchants, Advertisers represent the company that owns the offer. Every company has a marketing team, but affiliate marketing is a way for them to get more sales with low risk. The advertiser only pays when the affiliate sends a conversion.
Merchants are also referred to as the creator, the seller, the brand, the retailer, or the vendor. They create the products that affiliates promote. Some companies don’t even have marketing departments but rely solely on affiliate marketers for their sales. They focus on their strengths, and outsource the marketing to affiliates. Merchants can be anyone from a solopreneur to a big company as long as they’re able to pay out commission to their affiliates. Examples include Hubspot, and Amazon
Consumers are the end users who purchase the product or service. As the people who finally buy the product or service from the affiliate, they constitute the part that makes the affiliate system go round. Without sales, there aren’t any commissions to hand out and no revenue to be shared.
Here are some of the models by which affiliate commissions are paid;
- Pay-Per-Click (PPC): Under PPC arrangement, the affiliate gets paid for all clicks that were generated, regardless of whether a lead or sale happened. This is fairly rare since all the risk is borne by the product creator.
- Pay-Per-Lead (PPL): This is the model where the affiliate gets paid for every lead they generate. It could be an online form submission, trial creation, or any pre-purchase arrangement. Pay-Per-Lead model is a shared risk on both the merchant and the affiliate.
- Pay-Per-Sale (PPS): The affiliate gets paid for every sale they generated. This is the most common model and places all the risk on the affiliate.
Affiliate Marketing Medium
- Influencers – An individual who holds the power to impact the purchasing decisions of another person. It’s easy for them to direct consumers to the seller’s products through social media posts, blogs, and other interactions with their followers
- Bloggers – The blogger writes reviews of the seller product and services and promotes the brand, driving traffic to the seller’s site
- Paid search focused microsites – These sites are advertised within a partner site or on the sponsored listings of a search engine. It offers content focussed for a specific audience and it leads to increased conversion rate
- Email lists – It is an old and effective way of affiliate marketing to promote the seller’s products. The affiliate sends an email newsletter that includes hyperlinks to products to target people and earns commission after the consumer purchase the product
- Large media websites – These sites are created with a focus on building a huge audience and they promote seller’s products to these audiences through the use of banners and contextual affiliate links.
Benefits of the affiliate marketing model
- Affiliate marketing offers several benefits to affiliates, one of these is its ease. In the marketing equation, he is simply involved handling the “marketing” side of building and selling a product—educating customers. He doesn’t have to worry about the harder tasks, like developing, supporting, or fulfilling the offer.
- Affiliate marketing is a low risk venture. Since there’s no cost to join affiliate programs, you can start making money with an established affiliate product or service without any upfront investment.
- Affiliate marketing also can generate relatively passive income through commission;- and that is the ideal money-making scenario. Though initially he’ll have to invest time creating traffic sources, his affiliate links can continue to deliver a steady paycheck.
- Successful affiliate marketing offers the potential to significantly scale your earnings without hiring extra help. He can introduce new products to his current audience and build campaigns for additional products while his existing work continues to generate revenue in the background.
- Advertising specialists turn to the affiliate industry to boost their conversion rates and improve online purchases. Additionally, 83% of them use it to increase brand awareness, and 79% of them use it to engage existing customers.
Want to Become An Affiliate Marketer?- 10 Amazing Facts You Need to Enhance Your Decision.
If you are a website owner with the ability to deliver high quality content, what are you able to make out of the opportunities affiliate marketing has got to provide? Or if you are already an affiliate, how can you remain relevant in view of the prevailing global and economic uncertainty? You need to be mindful of the following factors to enable you make the most of your career goal as an affiliate marketer.
- Technology is changing, and at same time introducing some incredible advancements to our world. It is hoped that affiliate marketing will be taking a leap too. For example, it is believed that over 50% of Google searches are already zero-click searches, and the result is that affiliate and brand marketers have to rapidly innovate to meet these shifting user preferences. Therefore, smart affiliate marketers must keep an eye on trends like this and keep making changes so as not to be left behind.
- It is imperative that they create and adapt their content for voice-activated searches, ensuring that their content is best optimised for voice search queries. We are gradually moving away from traditional text searches, affiliate marketers would too, need to be on the same page.
- Looking up consistently long-tail keywords and phrases that they can dominate, and creating voice search-friendly content that many large-scale websites overlook might be the winning streak you need to remain on stream.
- Affiliates should learn to track their own affiliate content, too, to see what has performed well and what they can promote and improve upon. Understanding what content resonates best with your audience will show you what to focus on for future affiliate marketing opportunities.
- At the end of the day, before becoming an affiliate, you have to align your expectations to your earning potential. Take note that the kind of industry or niche you operate in, and the kind of work you do determines to a large extent what, and how much you make out of it.
- Promote the right product. A brand that promotes products incessantly without regard for bringing real value to its audience will find affiliate marketing to be a short-lived source of income. Choosing the right products to promote, stemming from a true passion for what the product does, should form the basis of all your promotional activities
- Searchers are no longer just using keywords to find their favourite brands or products information, they involve using images and screenshots to find information instead. Affiliate marketers therefore need to keep an eye on trends like this and keep making changes so they are not left behind. Likewise, you need to make sure that your content is best optimised for voice search queries.
- Some experts are concerned that affiliate marketing will slowly and then more rapidly decline in the years to come. They believe that with the creation of search and site retargeting, building relationships with other businesses as a way of gaining leads through affiliate marketing, may no longer be necessary. This school of thought is strongly of the opinion that there is an over-saturation of affiliate marketing sites that are essentially providing the same information on the products they are affiliated with. It is obvious to them that this trend doesn’t go down well with search engines since listing sites with the same information (a kind of duplicate content) provides a bad user experience on Google.
- Affiliate marketing has been one of the best ways to monetize a blog, and the most successful publishers are selective about the brands they promote. This strategy helps them to establish authenticity and build trust among their followers.
- Advertising specialists turn to the affiliate industry to boost their conversion rates and improve online purchases. Additionally, 83% of them use it to increase brand awareness, and 79% of them use it to engage existing customers
Did You Also Know That…?
- The affiliate marketing industry statistics has continued to show steady growth. In fact, the US affiliate marketing spending increases annually by 10.1% and it’s expected to exceed $6.8 billion by the end of 2021. (Digital Global) Affiliate marketing has become one of the most popular strategies used by digital marketers to capture customers’ attention and engage with existing customers, thus driving sales and generating revenue. According to Web Market Support, 81% of brands and 84% of publishers are already leveraging the power of affiliate marketing to grow their revenue. (Web Market Support)
- Industry report by AM Navigator revealed that fashion is the niche with the highest number of affiliate programs – it accounts for 18.7% of the total share in the industry. The sports and outdoors niche category is placed second with 14.6% of total share. They are closely followed by health/wellness, and beauty at 11.1%, and travel at 8.6%. Interestingly, it’s been observed that the idea of passive income through affiliate marketing attracts more men than women, hence 54% of current total affiliates are male while 43% are female. (AM Navigator) (Top 10 Website Hosting)
- Affiliate marketing is a fast-growing market. Today, merchants see an average of 23% of their revenues coming from affiliate marketing, which is on par with SEO and PPC marketing. (Authority Hacker) ShareASale is the favorite affiliate network for marketers, holding first place for the industry’s market share. Rakuten comes next on the list of the largest affiliate networks; while LinkShare, Avangate, and Ebay Networks follow consecutively, with 40.64%, 31.08%, and 30.32%, respectively.(Datanyze)
- Many publishers choose affiliate marketing as a form of passive income. The majority of them feel that the ease of generating affiliate marketing revenue is the greatest benefit behind this scheme. Additionally, 65% of them said that it generates additional revenue, and 45% like affiliate marketing because it doesn’t disrupt the user experience. (iAffiliate Management)
- Mobile-first technology is changing the marketing landscape, opening more possibilities for brands to reach potential customers. Did you know that there are over 2 billion smartphone users worldwide. It means that the most lucrative form of traffic is generated from mobile devices. This development has brought about the rise of mobile affiliate marketing, which involves the process of using offers and tactics created specifically for mobile users. (Awin)
- Affiliate programs have been adopted and have been made accessible by affiliate networks. This trend is currently delivering great value for both publishers and merchants. It is only natural therefore to expect affiliate marketing to take a more significant portion of the marketing campaigns and budgets in the future. (Inc.com)
- The e-commerce store now known as Rakuten Rewards was founded as Ebates in 1998 by two former deputy district attorneys, Alessandro Isolani and Paul Wasserman. Funded by venture capital firm Foundation Capital, Ebates.com was launched on May 3, 1999 offering up to 25% cash back from about 40 online retailers. In September 2014, however, Ebates was acquired by Japanese e-commerce company Rakuten for US$1 billion. In 2019, the Ebates brand was phased out and replaced with Rakuten Rewards. With this acquisition, Japan’s largest e-commerce firm gained entry into the growing US market, and Ebates became the highest-paid affiliate network.
- Groupon, an e-commerce marketplace, was considered a failure until late 2009. Then like a magic, Groupon leveraged the power of affiliates to make their turnaround. Within a short time, it transitioned from being broke, to becoming a powerhouse with the largest IPO by a web company. Groupon recorded its success by focusing on creating relationships directly with its affiliates and commissions (Quick Sprout)
- Amazon Associates, one of the most popular affiliate programs in the world decided to calculate their affiliate commissions by category, not by the number of products sold. By this approach, they’re providing opportunity for affiliates to increase their income based on the verticals they’re selling on. For instance, creators earn up to a 10% commission for promoting luxury items, and only 1% commission for promoting video games. This commission range lasted for several years until April 2020, when they made a sharp downward review of their affiliate commissions (Inc.com)
- How much affiliate marketers earn has been the most frequently asked question. Only 3.2% of affiliate marketers earn over $150000 per year. 48.36%, make less than $20,000. 35% of them earn over $20,000. Out of the 35% of affiliates who earn more than $20,000 per year, 12% earn more than $75,000 in affiliate income.
(InkWell Editorial) ; (Job2Joy)
Now that you have known some necesary facts about affiliate marketing and how to be successful at it, following the footsteps of successful affiliate marketers would make it easier for you to succeed.
If you would want to explore the world of affiliate marketing,, visit www.thedigitalmarketinginstitute.org to get hands-on with digital marketing, from the basics, to the advanced. Then, you’ll be able to position yourself for business success.
Raymond Iwor is a Licensed Digital Marketing Master at The International Institute of Digital Marketing™