As businesses grow and competition increases many owners now regularly inquire about the possibility of a commission based digital marketing strategy which is still cost-effective and effective. All while allowing them to only pay when a successful transaction happens, known as CPA – Cost Per Action. Surely there has to be a way for me to leverage digital marketing without guessing or the need for long organic S.E.O as per se. In steps affiliate marketing.
What is Affiliate Marketing?
Affiliate Marketing can be dubbed as more less a revenue-sharing venture between two businesses. Your business pays another business/website a commission for sending new customers to your site. So the affiliate hosts your ad on their website basically and is paid when the lead is converted. Affiliate campaigns are ideal for businesses that are trying to get new customers. Your business can easily have hundreds of affiliates marketing your products or services, often at a lower customer acquisition cost than other channels
Affiliate marketing is founded on the Affiliate networks which connect companies/advertisers and website owners/publishers. An Affiliate Network is remunerated primarily on a performance basis although monthly fees, setup fees and sometimes performance minimums may be required. Companies and advertisers pay a fee to the network for the sales, sign-ups or leads that are accrued through the network’s affiliate partnerships. They additionally they provide tracking, reporting and handle all affiliate payments, the go-between.
Most affiliate networks offer the option of managing your campaign for you though it’s costly. They also help companies pair with the best affiliates for their program. The affiliate network remuneration normally includes options like percentage of commission, a percentage of sale value, a Flat rate per lead, flat rate per sale. Most of the networks are negotiable on their fees and commissions based on their own projections of returns, program scope and the information you have provided them.
How it Works
So the potential customer visits affiliate/publisher website. Upon seeing the advertising banner/link he clicks with interest and will be tracked via an affiliate tracking link. The customer will most probably fail to realize they have used an affiliate link. So the click is tracked by the affiliate network and a cookie is placed on the potential client’s device to identify them as being referred by an affiliate agent. The customer then proceeds to complete an online purchase
The Company/advertiser then activates the affiliate network’s tracking tag which reports the sale to the affiliate network as there is a cookie present to validate. The Affiliate Network reports the sale to the company/advertiser and they pay the agreed commission for that sale. The Affiliate Network pays the commission to its agent/publisher as a reward for generating the sale. A pretty simple and smart commission system.
Its why this marketing is considered part of the ‘performance’ marketing family, implying the return on investment is guaranteed and the advertising client is only paying for advertising that has succeeded. It’s a flexible and versatile channel and quite effective at driving actions for companies and small businesses selling consumer products or services across a wide range of spheres such as fashion, travel, electronics, health, beauty, telecommunications, and groceries.
Types of affiliates.
PPC Affiliates: A Pay-Per-Click affiliate is more or less a search specialist who drives traffic to an advertiser’s site by bidding on relevant keywords via a custom-built landing page.
Email Affiliate: this affiliate sends targeted emails to his own third-party database to drive conversions on behalf of a larger brand or company.
Content sites and blogs: These types of website affiliates are often focused on a particular niche interest and feature unique content relevant to the advertiser client. Examples are product review sites, blogs, and online forums.
Reward sites: This type of affiliate drives sales by rewarding its website members through a share of the commission it earns from an advertiser. They also generate sales by offering their users a discount code that can be redeemed online against their purchase.
Comparison websites: These sites similar to content sites, do offer consumers the opportunity to compare products of different advertisers like credit cards or phone plans.
Social Affiliates: This type of affiliate works via highly targeted posts on social networks or sponsored tweets, which can help to drive awareness and assist in generating convertible leads.
Chances of Fraud
All this aside, correctly and accurately measuring success is critical to setting up affiliate marketing. Very occasionally an affiliate may try to generate sales fraudulently while some members of cashback and loyalty sites will try to exploit a loophole. The great cover is that most affiliate networks have tools and processes to monitor the space and flag any fraudulent activity so that you are not charged for it.
Commission and Remuneration
The payouts are normally set by the company advertising so it could be tempting to go really low. Be aware though, that no decent affiliate is going to choose to promote your competitors over you if they have better payouts. So companies seeking this advertising stream need to be tactical with the commission and offer higher rewards to affiliates based on their business models and return potential.
Despite the traditional sites and blogs, their other channels to explore for your affiliate campaign like email marketing, mobile apps, paid search, remarketing widgets or campaigns, offline promotions and social campaigns. Although having an affiliate program is a great way to grow your business, it is important to note that this is a marathon and not a sprint, it takes time. But is worth it in the end.
Though pretty cost effective successful affiliate campaigns require a serious commitment and involve many ongoing tasks like recruiting, launching new promotions, managing and reviewing affiliate applicants on your network. Some companies have a huge affiliate network at their disposal which guarantees them a constant flow of traffic but it’s all about management. So we’d recommend you find professionals who can do this for you seamlessly for increased traffic and sales that affiliate marketing can deliver.