Think about a place where you work not only with one specialist in Google AdWords, but with hundreds, and also with thousands of experts in SEO or Facebook, in e-mail marketing, blogging or web development. And you pay them only for the results they have generated for your online store. That’s the beauty of affiliate marketing, „that place” where you pay only for the advertising that brings results and where you can enjoy the crowd marketing advantages.
One of the oldest and biggest problems in marketing was very well summed by John Wanamaker at the beginning of 20th Century:
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Well, in affiliate marketing you don’t have this dilemma because as an advertiser you pay only for the results. To be more specific, an online store will pay only if the sale generated by an affiliate is finalized and he will pay exactly the amount of money that he had previously established and communicated to its partners. So, if in display advertising, social media or pay-per-click advertising you pay for reach, views or clicks, in affiliate marketing you pay only for the advertising that generates revenue for your business. For this reason some experts recommend affiliate marketing to be regarded as a part of the sales channel. Whether you see affiliate marketing as being a part of marketing or sales channel, it should be the best in terms of efficiency, because allows the advertisers to have control over the customer acquisition cost.
At its very core, affiliate marketing is about business relationships. Let’s find out how people fall in love with affiliate marketing and manage to grow these relationships based on a win-win-win model.
How Affiliate Marketing Works
Affiliate marketing is performance based marketing at its best. It is a channel made up of an ecosystem of affiliates (or publishers), networks and advertisers (or merchants) that interact to increase the number of conversions that an advertiser makes online.
IAB UK has a relevant description for it:
“Affiliate marketing works like a virtual sales team, paid only on commission. Because payment only happens if a placement performs, this channel is widely used by advertisers to grow sales in a highly measurable and cost-effective way.
Affiliate marketing connects advertisers (most of them online shops) with affiliates – online marketing experts, publishers, bloggers – through affiliate networks. “
The system works quite simple: an advertiser creates an affiliate marketing program and gains access to thousands of online marketing experts who can promote its products at a cost establish from the beginning. Also in the initial phase, the advertiser defines the action he wants to reward (sales) and the commission offered – fixed or percentage. An advertiser can choose with which affiliates he wants to collaborate.
In order to manage to attract their attention and involvement, because the affiliates are the ones who pick the campaigns, the advertiser must create a very strong and appealing affiliate program. Luckily, nowadays, the new advertisers have the advantage of learning from the others experience. So, according to a study developed by 2Parale network in Romania, in choosing the advertisers, the commissions offered for every sale, the shop’s reputation and the available promoting tools are top selection criteria for the affiliates. So, the advertiser must draw carefully the coordinates and strengths of its affiliate program, also peeking to its competitors’ offers.
Going forward, the affiliates choose also the promoting methods and tools, from banners to links and product feeds. Affiliates can use these tools to direct visitors to the advertisers’ website and they are rewarded with a commission from sales, previously established by the advertiser. A very important mention is that the affiliates have the promoting responsibility, acting as a sales agent. The advertiser doesn’t have to worry about that, he must focus on developing the partnership with its affiliates, as well as on improving the customer experience on its website. In this process, 2Performant as an affiliate network runs and develops the technical platform, grows the network by attracting new advertisers and affiliates, makes the governing rules and follows their compliance.
Who can be an advertiser?
Any online shop where the checkout happens online and can be monitored.
Companies interested by leads: newsletter subscriptions, promotions sign up, new accounts, reservations.
Who can be an affiliate?
- Online marketers, experts in PPC, Social Media, e-mail marketing, SEO, content marketing
- Forums, communities, Q&A websites
- Special projects (cash back, price comparison websites, vouchers)
When to Use It
As an advertiser
- If you want to grow sales in a highly measurable and cost-effective way, affiliate marketing is a must.
- For customer acquisition. Affiliate Marketing is one of the top online customer acquisition channels – source Forrester Research. Also, affiliate marketing is in the Top 3 channels of driving e-commerce orders.
- If you want to expand your marketing mix for better results. You can integrate affiliate marketing into your overall marketing& sales strategy, as more and more companies, from e-commerce sector to Beauty, Finance and Telecom industries, do so.
As an affiliate
- If you want to monetize your web properties with zero effort for sale: publishing or niche sites, newsletters, blogs, Facebook pages, etc.
- It is a great opportunity to show your marketing& online skills and to work with top brands (national or international). You are rewarded based on performance, not based on your name/brand or education.
- It is an additional income. If you already have experiences and skills in online or marketing (PPC marketing, blogging, Social Media, e-mail marketing, web development etc.) or if you are in the process of learning.
- If you want to monetize your unused display inventory.
- If you want flexibility and control.