The advent of internet brought about tremendous growth and new opportunities for business owners worldwide. With new technological advancements the internet expanded into a massive e-commerce machine, offering startups and multinationals equal opportunities to market their products and services to millions of consumers around the world.
Early form of internet advertising quickly evolved into more mature and accountable forms of online advertising, eventually giving birth to affiliate marketing.
So, What Is Affiliate Marketing?
Simply put, affiliate marketing is an effective way of making money online, where you as a publisher are rewarded for helping a business promote their services. At its core, this kind of outsourced marketing is a relationship between three parties: the advertiser, publisher and the consumer. An advertiser is a merchant or the business owner who wants to sell his products or services through a publisher who is an individual or a company that promotes the advertiser’s services in exchange for a commission to a consumer, the visitor or target audience of the advertiser who will buy his products and services.
A highly profitable business model in which companies sell their products by signing up individuals or other companies, called affiliates, to market their products or services by offering a certain amount of commission on each sale.
An affiliate marketing flow comprises of an individual or company joining an affiliate network, searching for the products they want to advertise on their website or blog, start promoting those products and services, track sales and earn commission for each sale made.
Understanding the Types of Affiliate Marketing
Affiliates make money by generating sales, leads and traffic for merchant businesses. An estimated 52% of affiliate advertisers are part timers while 58% college students indulge in this type of performance marketing. However, before you get too excited about earning profits, you need to identify the preferred affiliate models you will be most comfortable working in.
Business owners who seek affiliate business activities typically use one of the 3 basic affiliate models for performance marketing:
Also known as CPC or per-per-click, this model of unattached affiliate marketing does not require any direct presence or authority of the publisher in relation to the end consumer for promoting the product. This is done generally by adding your affiliate’s link on your website via any type of advertising model i.e. Google AdWords or Facebook Ads etc. and then earning a commission when a visitor clicks on your placed link and buys a product. Also known as the Single tier affiliate program, it is one of the most popular and commonly used income generating models of performance marketing.
The CPA model involves an affiliate referring a visitor to the advertiser for the purchase of products and services. This is also known as the Two-tier affiliate program that allows the affiliate to earn directly and indirectly by earning a profit on referring another affiliate.
CPL is the Multi-tier affiliate program. In this structure the affiliate refers a visitor who takes some kind of an action, which includes, singing up on a form and leaving their contact details on the advertiser’s website.
A Keen Look at Affiliate Marketing Terminologies
There are a few affiliate marketing terminologies that pop up frequently in communications among professionals of the industry. It is therefore imperative that you get yourself acquainted to the affiliate marketing vocabulary before venturing into this field. Given below are a few generally used novel terms and concepts of the performance marketing field.
A business owner, merchant or organization who is offering products or services to his/her target audience or consumers and uses various means of affiliate marketing for promoting these products and services.
Also known as a publisher, partner, external marketer. This individual or company owns a website, blog or mobile application, on which they promote the advertiser’s products or services.
A unique ID used to distinguish each affiliate from the other.
A central platform where you can track, compare and analyze all the stats of your affiliate campaigns including clicks and conversions.
A long but unique URL that contains your Affiliate ID which is shared by you (affiliate) on your website, blog, social media or app which consumers will click to visit the advertiser’s website.
These are short and easy to remember URLs which are branded with your personal domain name and are created in place of Affiliate Links (as they are very long and can be taken as spam by users).
Also known as Affiliate Commission. This is the amount of payment generated within a certain time frame, generally received with a delay of 1 to 2 months.
An arrangement between the advertiser and publisher whereby the publisher promotes or recommends the advertiser’s services or products to consumers via a number of activities including CPC, CPL, CPA and gain incentive or commission on each sale or lead generation. In short, an affiliate program allows publishers to earn profit by promoting third party products and services.
A system that works as an intermediary between the advertisers and publishers. It allows advertisers or merchants to reach out to a larger audience and grow their outreach while affiliates can easily find relevant programs and suitable inventory to generate income.
An affiliate manager operates in big affiliate networks and are assigned for the benefit of affiliate marketers, helping them improve their commission by offering tips and personalized creative services etc.
This strategy is taken under spamming and must be avoided at all costs as most affiliate programs are strictly against it.
A targeted action taken by a consumer, generally taken through an event created by the affiliate on their website or blog. This action usually consists of a subscription, lead or sale of some kind that is valuable to the advertiser or merchant. The conversion generated through the affiliate’s efforts result in a conversion which leads to a profit that is paid by the advertiser.
The percentage of clicks converted into leads or sales.
Also known as a click-through ratio. It is a tracking method used to measure the advertising response of particular clicked links. The percentage is generally calculated based on the number of click-throughs on each advertisement.
Also known as server post-back URL or server to server URL, it is used for server-side conversion tracking.
The unique advertised link affiliates use to send clicks for a particular offer given by the advertiser or merchant. This link can be used behind a banner or ad placed on the affiliate’s blog or website.
An automatic notification received by affiliates, through an Affiliate Software, in real-time for every conversion made.
A payout program where affiliates are paid a fixed commission and a percentage of their total earnings, for each new affiliate they refer to the affiliate program.
Also known as server to server tracking. Advertisers or merchants require this type of accurate tracking at the backend to track conversions. This tracking system is based on sending post backs from the advertiser’s system to the affiliate’s tracking software to gain the total amount of conversions received.
The Attractive Power of Affiliate Marketing
For decades, performance marketing has been enabling affiliates to earn high income by referring visitors from the comfort of their homes. The high revenues and profits for sellers or publishers is what basically attracts people towards affiliate programs, making it one of the most sought after marketing models internationally.
The power of affiliate marketing is such that you can earn commissions in a scalable way, without being directly involved or active in the online sale, by recommending third party services or products and driving traffic their way. The greatest benefit of affiliate marketing is that it is essentially a low risk pay for performance program.
Understanding the Pros
This performance marketing model offers long term benefits for both advertisers and publishers alike, including:
- EARN QUICK INCOME – One of the most attractive features of the affiliate marketing model is the quick income generating process, making a lot of people plenty of money. In a competitive market that is hungry for website listings, charging a fixed amount of fee for listings can generate valuable income.
- COST EFFECTIVENESS – Affiliate are paid only when they refer a visitor who subsequently becomes a customer. This is cost effective for the advertisers or business owners as there is no chance of losing money in this model.
- PAY FOR RESULTS – Business owners or advertisers set up their own commission structure and pay only for results, making this a risk free marketing model.
- BENEFICIAL COLLABORATION – The advertiser and affiliate both benefit from this performance marketing program. The advertiser gains valuable website traffic and improved sales while the affiliate gains impressive incentives and exposure of their brand.
- CUSTOMER ACQUISITION – As an affiliate you know your website or blog audience better therefore you get to choose the kind of ads that are best suited for your audience and their demographics.
- IMPROVED BRAND VISIBILITY – Traffic that seeks the services you promote as an affiliate will eventually find you through search engine listings, giving your brand a better visibility.
- BROADER MARKET EXPOSURE – Unlike traditional marketing, affiliate marketing gives advertisers a broader market to expose their services to. By developing a strong affiliate network, business owners can reach out to a worldwide market with an array of demographics.
- GAIN BETTER RANKINGS – Each affiliate link is an authentic link that improves your search engine ranking and helps you gain better search results for your targeted market.
- NEVER LOSE MONEY – This model allows you to gain measurable results and with its commission structure you almost never lose money
Knowing the Cons
If not understood properly and actively tracked, this performance marketing model can hit you hard with its drawbacks in the long run. Here is what you need to be wary about:
- GIVING OFF THE WRONG MESSAGE – As an advertiser you want to be careful about the message your affiliates are promoting regarding your brand. If represented poorly for the sake of making money only without consent for your brand, it can easily lead to bad leads and business loss.
- COMPROMISING ON LEAD QUALITY – Not every affiliate will send in quality traffic to your website. You cannot compare organic quality traffic to the affiliate traffic that comes your way. Constant vigilant tracking of your affiliate traffic will be able to help you distinguish between the good and bad traffic.
- BECOMING AN UNREPUTED AUTHORITY – This is correlated to the points given above. Mismanaged traffic coming in from un-reputable sources will eventually lead to a bad rep of your brand.
- EXCESSIVE COMMISSION – Other than the commission you will be paying to the affiliates, you will also have to pay an overhead pay to the affiliate networks, should you choose to join them.
- DISHONEST MERCHANTS – Affiliates must be aware of dishonest and unscrupulous advertisers. Being careful in choosing your affiliate network will save you from merchants who might close down programs without informing and refuse to pay commission.
- LINK HIJACKERS – Certain link hijackers can hijack affiliate links and steal the commission of the real affiliates.
How to Run a Successful Affiliate Marketing Campaign?
While affiliate marketing is incredibly lucrative, it will be naïve to consider it as easy money. There are plenty of factors involved in a successful affiliate program including high traffic ratio, building visitor trust, finding relevant quality products and creating good sales. Another thing to remember about this performance marketing is that it doesn’t necessarily works for all kinds of blogs or on all products, hence it is essential to find your own specific niche where you feel at par.
The key to an affiliate’s success is always making ‘serving the audience’ a priority over earning money
Whether you want to be an independent affiliate marketer or join an affiliate network, determining your affiliate marketing method before choosing a preferred set of mode enables you to gain certain discrete benefits. However, before you begin your affiliate marketing venture you need to make your operating choices wisely.
Here are 7 tips to keep in mind for ensuring the success of your affiliate marketing programs:
1.Choose your Merchants Carefully because you will be working closing with them. Therefore it is imperative that they
a. Must be closely related to the industry you specialize
b. Have a clean and trustworthy track record of commission payment
c. Are cooperative regarding procedural changes and operational terms
2. Be Accessible to Merchants by facilitating them and enabling them to control their advertisements in an improved method.
3. Stay Open Minded as an Affiliate regarding the kind of products and campaigns you want to promote and keep experimenting with ideas to find the ones that will work.
4. Decide on a Display Method for advertisements by adding value to the design in order to create an impact with specific focus on multimedia and banner commercials with impactful creative.
5. Reap Benefits from SEO Tactics by harnessing the Search Engine Optimization techniques for attracting organic traffic and quality visitors to your website or blog and making the maximum from the results.
6. Understand your Market and keep yourself informed about its nature and distinctive values by keeping yourself up-to-date on the latest revenue generation techniques, risks and challenges in order to learn more.
7. Build Strong Relations with your Advertisers or merchants and reach out to them for a conversation and offer assistance where you can to build long standing associations.
Steps for Commencing an Affiliate Marketing Venture
For those who like to run independently, dealing directly with advertisers (merchants) will allow you to save considerably on outsourcing costs and garner more commission. While entering an affiliate marketing network, you derive constant assistance from other reputable affiliates and gain monetary gains.
Here are the steps required for starting an affiliate marketing project
1. Research, Research and Research about your industry and experiment with different niche before you decide on the right industry for yourself.
2. Select an Affiliate Marketing Mode in which you have more experience. There is an array of modes to choose from that includes pay per click, email marketing, content hosting, online discounts, product evaluation and cash back schemes.
3. Decide on a Commission Structure to maximize your revenue chances by structuring a commission framework and selecting the various rates for discrete categories.
4. Prep your Website for Hosting your merchant’s ads by obtaining relevant images, logos, multimedia, bookmarks etc.
5. Create Competitive Content your competitors can’t compete with to provide value to your website in the searches and as a result to the merchant’s ads.
6. Be Confident in your Recommendations and only promote products you trust to your audience, marketing it as if it were your own.
7. Form a Terms and Conditions page to educated concerned parties regarding legal terms to avoid any issues.
8. Cross Share your Affiliate Links and don’t be afraid to share your recommended pages more than once through different ways on various mediums like content, videos and podcasts etc.
Successful Affiliate Marketing Case Studies Examples
Here are a few examples of successful affiliate marketing case studies that prove how effective affiliate marketing campaigns can be when smartly sought out:
#1. Virgin Atlantic Case Study
Virgin Atlantic developed a flexible performance marketing program that gave monetary and non-monetary incentives to publishers.
Program Objectives Strategy
Focus on improving on the long tail publishers, growing revenues by 25% and integrate valuable methods of acquisition. The Virgin Atlantic program setup deals with individual publishers in return for superior exposure by offering non-monetary incentives including access to company benefits. Whereby publishers engaged users by offering unique opportunities through members-only competitions and similar unique content.
As a result sale-generating publishers increased by 53% while a 132% improved Ad impressions were noticed and revenue from new publishers grew by 551% y-o-y.
#2. Mazda Case Study
Mazda invested in its first performance marketing campaign focusing on lead generation with the aim of expanding its reach.
Program Objectives Strategy
The program’s main objectives included increasing year to year performance of the company by 100%, maintaining commission rate while improving the volume delivered and expanding the specific publisher base for supporting other channels. To ensure maximum conversion, the company worked on creating closer relationship with its publishers and developing an effective brand creative to appeal to them.
The performance marketing program of Mazda was instrumental in generating valuable leads, resulting in a 166% increase in the active number of publishers while a clear sales growth could be seen overall via other channels which made up of 15% content, 2.5% vouchers, 26.5% of leads and 56% of new emails.
#3. Dream Euro Trip Case Study
‘Dream Euro Trip’ is a travel website created by a Swedish college student, who calls himself DJ Yabis, that focuses on how to travel in Europe on a limited budget and time while having fun.
Program Objectives Strategy
Travelling is one of the most competitive and big budget niche and the main objective of this company’s performance marketing plan was to captivate travelers of all demographics with specific relation to Europe and small budget through captivating content. The website captured the audience with its smart content play focused on special offers for travelling around Europe, various attractions and hotels that cater to a specific budget. It smartly funnels visitors with its ‘Estimate your Trip Cost’ widget into an emailing list and captures a large audience this way.
The website earns an estimated $4000 per year through affiliate marketing, proving how zeroing in on a specific niche picked off a crowded industry has the potential of being monetized smartly by creating a lot of personable quality content.
Affiliate Marketing – Oh the Places You Will Go!
So there you have it, this highly underrated but immensely profitable means of increasing your business has become a brilliant source of additional income for many worldwide. Affiliate marketing or performance marketing, whatever you prefer calling it, is an essential tool that can improve an affiliate’s goodwill and a publisher’s standing. If you are keen on jumping onboard the affiliate marketing ship, then our ‘Definitive Guide to Affiliate Marketing’ would have, by now, given you a good understanding of this lucrative field and a guidance regarding the associated risks and challenges.