How affiliate marketing works
Instead of a seller advertising to consumers directly, they can partner with advertisers or affiliates, to sell a product. This strategy enables a seller to spread their advertising and marketing responsibilities among multiple people with the potential to reach a wider audience.
Every affiliate marketing relationship includes the seller, the advertiser and the consumer. The seller can be any big or small company that has a product or a service to sell and that is willing to share their profits with others who advertise their product or service on their behalf.
The affiliate can be an individual, like a blogger, or another company. It’s their job to persuade others to purchase the product or service through their marketing efforts. The seller rarely has any input in how the items are marketed, enabling the affiliate to personalize their techniques to their target audience, making it more authentic.
Consumers are the ones who click on affiliate links and make a purchase. Many like doing business this way because they receive recommendations directly from people they trust instead of doing all the purchasing research on their own. In other cases, the person making the purchase may not realize a portion of the purchase they are making will pay an affiliate.
Benefits of affiliate marketing for sellers, advertisers and consumers
Affiliate marketing continues to be a popular way for sellers and advertisers to make money because it works and it benefits all parties involved.
Working with an affiliate can take some of the marketing pressure off of sellers by enabling their affiliates to do the marketing for them. They know the target audience and can customize their marketing strategy to reach them.
Affiliates work hard to market those products and services because they have a vested interest in garnering sales. The more people they get to click on their affiliate links, the more money they make. Although affiliate rates can be as low as three percent, with a large following, some affiliates can make an entire year’s salary on commissions from the products and services they promote. However, a large following is key. Without it, a lot of time can be spent with very little to show for it.
Affiliate marketing can be beneficial for consumers, too. They are exposed to products they might not know about and they’re able to buy them directly from people they trust, knowing the person promoting the product will get a small portion of the sale.
Ways advertisers can get paid
The standard payment structure for affiliate marketing is pay per sale. Whenever a product or service is sold through the link provided by the affiliate, the affiliate gets a portion of that sale.
Pay per lead involves compensating the affiliate if they are able to send leads to the seller’s website. Once there, they would need to do something like:
- Sign up for a product trial
- Fill out a contact form
- Sign up for a newsletter
- Download software or files.
Pay per click advertising has the potential to make the most money for affiliates because it only involves a customer clicking on a link to visit the seller’s website. No action or purchase is needed. If the consumer moves to the seller’s site, the affiliate is paid. However, payouts for this kind of marketing tend to be lower than other forms of affiliate marketing, so more clicks are needed. They can also be the most complex form of advertising, especially when partnering with Google Ads.
Types of affiliate marketing
There are multiple ways for affiliate marketers to make money. Arguably, the first affiliate marketing strategy was used on blogs. Bloggers may write a comprehensive review of a product or add a link within an article that addresses a broader topic. Many bloggers also include ad space on the website, in addition to links within the website content itself.
Influencers are increasing in popularity as a way to use affiliate marketing effectively. Many influencers have huge followings, which makes it easy for them to direct customers to websites through social media posts and blogs. They may include the affiliate link in a blog article, or they may offer a personalized discount code that can be tied back to the influencer when a purchase is made.
Microsites are gaining in popularity because they are a way for sellers to take affiliate marketing into their own hands. These smaller, distinct sites are advertised on a partner site. Due to their focused content, they have the potential to increase conversions.
Email lists continue to be an effective way to market. Hyperlinks can be included in the emails, resulting in a commission when the link is clicked or the product is purchased.
Large media websites are also popular for sellers looking to work with affiliates because they get millions of hits every day. They can provide a business with a lot of exposure and revenue, but it does take a less personalized approach to marketing.
Strategies for success
Sellers can encourage affiliates in the 21st century by adjusting their affiliate reporting and attribution. In the past, the last click before the sale would get all the credit for the conversion. Today, sellers can pay their affiliates more fairly by seeing if another affiliate primed the consumer before they made a purchase through a different link.
Those who want to get into affiliate marketing would do well to only recommend products that have been thoroughly reviewed and that they stand behind. Offer many different products from different merchants, and keep an eye on analytics that can be altered to boost clicks, and in turn, sales. Focus on increasing conversions instead of increasing visitors, which means doing things like optimizing landing pages and testing calls-to-action.