Affiliate marketing is a process in which an affiliate will promote a business’s products and services and receives a commission if the affiliate achieves a sale.
An affiliate is a person that utilizes its networks and online marketing capabilities to promote products and services.
Affiliate marketing and the use of affiliate marketers is a sales and performance-based advertising method that offers many benefits to both the business and the marketer.
When a product is excellent, and the marketers’ online marketing skills match, both will achieve higher sales and brand awareness.
Affiliate marketing is a beneficial method for any business that wants to grow. It’s sales without spending on a traditional advertising budget.
Growing your affiliate marketing strategy is a long process that involves individuals and giving them the right tools and incentives to promote your brand and products.
Most commonly, companies and marketers use affiliate marketing in the online marketing world. It can also include the contribution of offline and physical sales if that’s what the company desires.
The combined benefits to both parties make affiliate marketing an essential part of any digital marketing strategy.
But first, let’s look at how affiliate marketing works.
How Does Affiliate Marketing Work In A Nutshell?
At its core affiliate marketing is simple, and here it is in six simple steps:
The affiliate and the business get into a relationship either through a third-party (an affiliate network) or directly.
An Affiliate shares the product and service to their network of choice (typically a link or a coupon)
Potential customer engages with the link.
Customer lands on the businesses landing page
The customer makes a purchase.
The business gets the sales, and the affiliate marketer receives a commission.
How Does Affiliate Marketing Work In A Nutshell
Affiliate marketing, therefore, consists of three (four if you’re utilizing a network) stakeholders: The marketer (also called a publisher), the product provider (or the one who distributes the products and the services), and the customer.
The relationship between the marketer and product producer depends on the nature of the deals in place between them. A customer will purchase from a business, and the customer’s first interaction will be with the marketer.
A business can streamline its affiliate process and won’t need to manage the process themselves, using an affiliate network, although increased costs are something to consider.
A perfect affiliate marketing campaign is beneficial for every stakeholder. The business and the marketer gains revenue, and customers get more personal recommendations from a trusted source.
The Stakeholders Of Affiliate Marketing
Affiliate Marketing Benefits For Businesses
A New Profitable Sales Channel
Benefits A Variety Of Products
Increase Competitive Advantage
New Audiences Through Influencers
Affiliate Marketers And Access To Their Channels
Knowledge From Affiliates
Analytics and Campaign Performance
Easy To Start And Manage
Benefits of Affiliate Marketing
A New Profitable Sales Channel
For a business, affiliate marketing offers a much-needed scale without accessing large advertising budgets. Even one successful affiliate can bring much more traffic, leads, and sales than a traditional marketing campaign or even a highly effective online advertising campaign.
When comparing the benefits of advertising with publishers, or allowing the publisher to become an affiliate, becoming an affiliate will create better and long-lasting relationships that benefit both parties.
When done correctly, affiliate marketing might become your most important and influential sales channel that can grow sales and brand awareness over time.
The convenience factor for a business is the fact that you can diversify your revenue and promotional sources.
Benefits A Variety Of Products
Products that are perfect for affiliate marketing has a couple of the following characteristics:
High end or high margin
Online (or online distribution)
Fits a niche
Shareability for virality
Amazon has shown that low margin products are still a viable option for affiliate marketing, but small percentages for affiliates might affect more extensive opportunities. But as customers would trust the supplying company and the affiliate, it’s a combination hard to miss.
Eventually, low commissions will drive the best affiliates into other venues, which means when optimizing commissions, you need to think ahead, what else is in the marketplace in your industry, how much they pay in commissions, and on which terms.
A product that has a considerable commission potential will drive more affiliates to you. Still, if the product also matches the other criteria of the perfect product, you’re more likely to drive more affiliates into your products and services and to your program.
If your company produces a range of products and services, it might be worthwhile to pick the best suitable one for affiliate marketing rather than a general link for everything. The benefit of the methods is that it’s easier to build more effective campaigns when you have a clear product for promotion.
General links can work (Like Amazon), though, but might require additional effort to create better marketing resources or affiliates need to create a more specific story around a company.
In general, a large variety of products is viable for affiliate marketing, which means most businesses can utilize it to grow their brand awareness and sales.
Sometimes it’s better to find your influencers first and work together with an affiliate deal with a product that matches the most to their audiences.
Access To Influencers And Their Networks
Affiliate marketing allows a business to target particular niches that match with a business’s core audience.
Every industry and customer segment has its influencers that can connect with your target audiences in a way that most commonly is almost impossible for a company selling products.
While not impossible to gain a natural following as a product company, not reaching out and utilizing influencers, you might be losing out on valuable customer data that is essential for scaling your business effectively.
In most cases, the audiences of influencers might bring new data that can widen your audience related opportunities.
For example, if we look at an online clothing company, through testing and targeting online advertising found a perfect audience for their products. Then the company would reach out to an influencer whose audience matches the description, only to find out that the influencer’s audience is broader than initially thought. And if the audience performs better than the average, the data leads to better decisions about data-driven audiences.
Another benefit is the discovery of entirely new audiences. In some industries, their target audiences might be harder to reach through traditional methods. In this case, offering an influencer an affiliate deal could potentially help you achieve this new audience.
Conversion rates are higher when promoting products through a network where trust has built up for a long time. Building new funnels and trust with new customers only through online advertising can take a lot more brand awareness to convert finally. Word of mouth is a powerful tool to utilize.
An affiliate can promote your products and services through their networks, increasing conversion rates as their network will trust the marketer more than indirect online advertising models.
Because of the nature of affiliate marketing being performance-based, the way it can produce results compared to other online advertising channels can be drastically different.
For one, the use of affiliates to promote a business instead of buying ads creates a model that increases visibility and sales without spending any further on an advertising budget.
Online advertising does have a benefit over affiliate marketing, and that is speed and more control. Affiliate marketing can take time, and you might not achieve the wanted results.