Introduction to Affiliate Marketing – What, How, and Why

Introduction to Affiliate Marketing - What, How, and Why

Would you like to hear a secret? What’s the secret ingredient of Amazon’s marketing sauce? Is it social media marketing or search engine marketing? Well, while they’re important components of their marketing mix, they’re definitely not a secret. Nor is email marketing or TVCs. So what is it? Imagine the brand wishes to sell a new backpack series for mountaineers – how do you think it would market it better and more strategically?

You can check those out on their social media but then not everyone there would be a part of the adventurous crowd they are looking for, right? That’s where the secret ingredient comes in. They market it on Gear Patrol, one of Amazon’s leading affiliate websites. You’d always find them reviewing different new products and wearable and then pointing out to Amazon as the place where you can buy them. Yes – that’s the secret sauce – affiliate marketing.

Almost 80% of marketers go with Affiliate Marketing to build connections with their customers and 40% of them consider this marketing strategy a crucial skill to have. However, before moving to how to get into this Affiliate Marketing industry, there are a bunch of things you must know about.

In this article, you will find everything you need to know about the world of Affiliate Marketing. Read on.

 

What is Affiliate Marketing?

How many times have you noticed your favorite YouTuber coming up with a new video that says this video is ‘sponsored’, or ‘ in collaboration’ or “paid partnership”? What do you think they are doing? They launch a video just to share a link companies share with them to promote and as you click on it, or maybe buy something, the YouTuber gets a commission. That’s what Affiliate Marketing is all about.

Affiliate Marketing

Source: Shift4Shop

To put it simply, Affiliate Marketing is a performance-based marketing strategy that works when on every purchase or visit, the company rewards affiliates for all the efforts they put in. Now you realize how many times you have clicked on a link just because an influencer has shared it on his/her post. That’s part of this marketing game. Hold on – don’t confuse influencer marketing with affiliate marketing. While influencers are also affiliates, affiliate marketing encompasses much more than just collaboration with influencers. In affiliate marketing, you can tie up with other brands, bloggers, review sites, news platforms, content syndication platforms, listing sites – the sky is the limit.

 

Why does Affiliate Marketing matter?

Why does Affiliate Marketing Matter

Source: Avera

We get it – every business decision, including whether or not to invest in affiliate marketing needs a strong business rationale. So, before getting you acquainted with the benefits of affiliate marketing. Aside from the fact that affiliate marketing is one of the most up-and-coming marketing strategies, here are a few key reasons why affiliate marketing is a great option for your business.

It’s cost-effective

It’s not always feasible to hire an advertising agency for every brand campaign that you plan. Affiliate marketing becomes a much more affordable option, especially for startups.

It builds your brand

Whether for SEO or online and offline presence, when you have people from your industry and niche talking about you, you boost your reputation and build your brand presence across your domain.

It gets you targetted traffic

Do you know what the latest sales motto is? Don’t give us a million leads – just give us a few thousand relevant ones. When you market using affiliates, each of them has their own niche that’s yours to tap into. So, you don’t just get more traffic but also relevant, targeted leads.

It’s flexible

Not every campaign is the same, right? Sometimes you need to go all out, sometimes you want to work on a smaller market. Can’t have the same budgets, right? Affiliate marketing gives you the flexibility to work with affiliates on a project basis, depending on your requirements.

It’s worth it

One of the best bets about affiliate marketing is that it is a type of performance marketing. This means that you pay only for what you get. In affiliate marketing, you set a goal for the affiliate and pay only when that goal is accomplished.

 

The Pillars

To understand how Affiliate Marketing works, you must know all the roles it has. So, to make it easy to understand, let’s begin with a deeper system, or what we can say 4 elements of Affiliate Marketing.

The Pillars of Digital Marketing

1. The merchant/seller

First up, there is a merchant or business (like yours!) whom we often recognize as a seller, brand, vendor, or simply, retailer. This is the party that has the product and wants to send it to the final consumer, therefore, it can vary from a big company, a small startup, or an individual. Just like Mariah Coz, a female business coach.

One thing to keep in mind is the merchant always stays behind this whole Affiliate Marketing platform and doesn’t involve much in advertising. Mostly, they work with the sole goal of selling the product.

2. The marketer/affiliate

This is the part where real marketing takes place. An affiliate often works as a publisher of the ad and that be an individual like Pat Flynn, or a big agency.

As an affiliate, you can make as low as a few hundred dollars or as much as a million dollars every year. However, that is possible only if you are able to advertise well, attract the right audience, and convince them to buy the merchant’s product.

3. The consumer

Yup, there is no reward for the consumer unless it is some discount they are getting to use the link shared by the affiliate. Otherwise, there is just the purchase of stuff that they do as a part of the affiliate cycle. Besides, there are ways to get to the right consumer, and undoubtedly, the most famous one is via content marketing in which affiliates use SEO strategies and make a sale.

Nonetheless, a customer must know that whatever they are purchasing is a part of an affiliate program. To highlight this, something goes like this – ‘If you click on this link, I may earn some small commission. Show your love and support.’  Seems like you have heard it somewhere? That was Affiliate Marketing for you.

FYI, no high price is offered to you as a consumer. It’s just the retail price that includes the commission affiliate earns.

4. The network

True that not many experts consider affiliate networks as an element of the whole Affiliate Marketing game but this is kind of important. This is the bridge that connects the merchant and the affiliate together and also handles the responsibilities like payments and delivery of the product.

Network is very important because many sellers work only on the network to make a sale. Do you get it? They have this product database on their affiliate network out of which you get the choose the one you are okay with.

 

How does Affiliate Marketing work?

How does Affiliate Marketing work

Now that you know about the key elements; let’s talk about how affiliate marketing really works.

Step 1: Create an affiliate program – As a business, you need to have a plan for how you wish to engage with affiliates.

Step 2: Promote your program – You then need to reach out to affiliate networks, promote your program on your website and other digital mediums to let people know about the program.

Step 3: Engage your affiliates – Find the right affiliates and share your objective, goals, KRAs with them, and share as much company and campaign information with them so that they can create meaningful content for you.

Step 4: Track progress and payments – Share an affiliate link with the partner and track the leads, traffic, and conversions they bring and pay accordingly.

That brings us to the next point – how do you pay these marketers?

 

What are the payment models for affiliate marketers?

As a business, if you get into Affiliate Marketing, you would have to engage with marketers on different parameters and deliverables depending on the scope of the work. However, more often than not, there are three key payment models that affiliate marketers work with.

Payment models for affiliate marketers

Source: Dream Time

1. Pay Per Lead

The first payment model is based on a marketing objective where you have to pay the affiliates for every lead they get you. Here the key is a dextrously define what qualifies as a lead as it could mean different things for different brands. A lead essentially is anyone who acts on the Call to Action shared by the affiliate. This could be either filling out a form, taking a survey, signing up, downloading files, or simply, subscribing through their newsletters.</>

2. Pay Per Sale

This one is pretty common out of all the other payment methods. What happens on PPS is the seller pays a percentage on every purchase of the customer via an affiliate link. To put it simply, you have to pay the affiliate commission for every lead from their affiliate link that gets converted.

3. Pay Per Click

Sometimes, brands are just looking for visibility, then their goals change. Then, all they want is for them to get known in the market. That’s where the pay-per-click model works best. PPC is about rewarding the affiliate on every visitor’s click that takes them from the affiliate website to the seller’s website. The affiliate gets the payment as per the clicks and the merchant gets the website traffic he has been looking for. So, a win-win for both parties.

 

Conclusion

Affiliate Marketing is known to be one of the best and not-so-complicated ways of earning an online passive income. However, the timing is changing. A few years back, it was just about sharing a bunch of links via emails or blogs but social media had turned it around. No matter what way you pick to start your affiliate business, be sure to with the relevant products and clear niche.

Hope you like this introduction. Stay tuned as there is more to come to give your Affiliate Marketing business a better Kickstart.