What is affiliate marketing?
Affiliate marketing is a form of marketing in which one or more affiliates are rewarded by a business for each customer attracted through their marketing efforts. It can be a very effective way to increase your commercial reach, drive sales and improve your customer base. Employing several affiliates to promote your business in exchange for a small commission, gives you a much larger audience to market to and to hopefully convert into sales.
There are four main players in the affiliate marketing process; the merchant, the network to contain the offers for affiliates to choose from and to deal with payments, the affiliate and of course, the customer. The benefit to the retailer is that it’s easily scalable and can greatly improve sales if well targeted. Additionally it can be very cost-effective as generally the business will only pay an affiliate for each sale they achieve. Hence there is a large incentive for the affiliates to promote your products effectively as their compensation is directly based on their performance.
As affiliate programs have become so popular, it can be easy for companies offering these schemes to get lost in amongst all the other thousands of programs. It also makes comparing different programs very tedious, as you have to visit each one individually. This is where Affiliate Networks come in. They maintain the relationships between an affiliate and the companies offering the affiliate programmes. Affiliates can sign up to these networks and then view products and services that are available for them to promote as well as the compensation per conversion. In exchange for handling recruitment and payment of the affiliates, the networks take a small cut of the commissions.
Using affiliate networks can be beneficial for both the affiliates and the companies offering commission. For companies, it removes the hassle of having to deal with the affiliates directly – it is far easier for a network with an established system to take care of it. For the affiliates, it can also be useful, even with the networks taking a cut of the money. Most importantly, many merchants will only pay Net 30. This means that an affiliate will have to wait for 30 days once the month is over to receive commission for that month. This means an affiliate would have to be able to go for 60 days without payment. In comparison, when using a network, it is common to receive weekly wire payments if they are generating a certain amount per week (depending on the network).
Affiliate marketing can be a very effective and lucrative for both companies and the affiliates – it’s a fairly cost-effective way for companies to get their products or services promoted and for the affiliates, it can allow them to earn a substantial amount of money, with the compensation usually directly related to the amount of effort put in
How effective is affiliate marketing compared to other marketing channels?
With a sophisticated, well thought out strategy, affiliate marketing is just as effective a marketing channel as any. In fact, there are few marketing options that are as effective at driving traffic and converting sales as affiliate marketing. This is due to it maximising visibility of a brand’s products on third party websites and capturing a new audience.
There can be a much higher success rate on conversion from third parties because the customers trust the third party to not be bias towards a specific company. As of this year, 30% of affiliates are sending at least 20,000 visitors a month to retailers, according to Econsultancy.
So, can you make affiliate marketing work for you?
Choosing the right affiliate partners is key to a successful affiliate strategy. Thousands of potential partners offer their services but each has varying degrees of effectiveness, cost and ability to drive traffic. Look at credibility and quality of content to measure if a partner will be a good match for your business.
Ensuring you have a good relationship with your partners is also important to the success of your campaign. Having one partner with a strong relationship has more potential to drive traffic and sales than contracts with many different partners. Nurture a relationship and see your partner allow you more prominence on their site, giving your product more visibility than your competitors, thus attracting potential new customers.
Finally, it is imperative that your business thinks not only about the promotional offers you want to offer your customers but also the content within the offer. Customers want to know that they are paying as little as possible for their product. Continue to offer new promotions and refresh creative to keep your customers interested and your campaign should see you drive increased traffic and converted sales
What’s the best way to find affiliate marketing partners?
In the UK, affiliate marketing – or the use of third party websites to boost traffic to your own in return for sales-based commissions – is growing rapidly. But it remains intensely competitive and a potentially high stakes business, so finding the right partners matters. After all, partnership is where the real power of affiliate marketing lies.
Remember that most affiliate partners with large numbers of visitors run their sites as full-time operations. So they’re sensitive about who they work with and how their partners treat them.
As with all enduring relationships, care and effort matter. Work out which affiliates are the best-performing, and which are most likely to give your website the traffic you need that will convert to revenue. Think about what really matters to you in your affiliates, whether that’s quality of user experience, audience reach – or perhaps both?
Then you can forge direct relationships. This usually takes place in one of three ways:
- By using a network like LinkShare, ClickBank, ShareASale or Commission Junction.
- Through an individual arrangement, established directly by both parties.
- A relationship is run via the merchant’s own affiliate platform.
The overwhelming majority of affiliate marketing deals will be set up via companies’ in-house platforms or through a network. Where direct relationships are established, the two parties probably already know each other in some capacity. And given that they shoulder many of the administrative burdens, networks are an essential element of affiliate marketing.
Once your relationship is established, don’t forget to keep working on it with regular contact, including email newsletters and updates. Call your best partners every month to see how they’re doing.