Affiliate marketing has a plethora of benefits, as can be seen from the great results of those who implement it into their marketing strategies. Acceleration Partners’ Hayley Lambert is here to give an overview of affiliate marketing – “affiliate marketing for dummies” if you want.
For those looking to show their CEO or CMO the benefits of affiliate marketing, this introduction and guide will detail exactly what it is, who the key players are, and how to get started.
What is Affiliate Marketing?
The definition of affiliate marketing in the Oxford English Dictionary is as follows:
“A marketing agreement where an online retailer pays a commission to an external website for traffic or sales generated by their referrals.”
Affiliate marketing is a performance-based model that enables an advertiser to work with individuals or companies to promote their products and / or services.
It includes three key parties, an advertiser, a partner, and a customer.
Whatever the partner does – sales promotion, leads, new customers, etc – you don’t pay them until they take the desired action. The performance model is results-oriented.
A successful partner program offers a win-win framework for both advertisers and their partner partners. And if successfully set up and managed, the affiliate model can add a significant percentage of your online sales.
Here is an example of how the affiliate model can be used to drive a sale:
Who are the key players?
Advertisers – Companies that sell their products and / or services through the affiliate marketing channel. (Also known as Brands and Dealers)
Member organizations – A person or company promoting an advertiser’s offer and driving a predefined desired action, such as B. a sale or a lead, is paid performance-based. Affiliates are marketing partners of an advertiser. (Also known as a publisher and partner).
Affiliate marketing agencies – An independent company providing affiliate marketing services to advertisers. The agency works directly with affiliates and with the affiliate network or SaaS platform that serves the technological needs of the program. Some affiliate marketing agencies also offer advisory services.
Affiliate networks – An affiliate network acts as an intermediary between affiliates and advertisers. They usually track, report and pay affiliates. Affiliate networks offer advertisers either full service management or self-service management.
Customers – The audience that is influenced by the affiliates. Actions can include making a purchase, submitting a lead gen form, signing up for a newsletter, and more.
Media agencies – Usually a full service digital agency with an attached department. You can manage an advertiser’s entire digital strategy or just the affiliate channel.
SaaS platforms (Software as a Service) – SaaS platforms provide advertisers with tracking, reporting and payment; However, they generally don’t offer an account managed service, which is what sets them apart from affiliate networks.
How does an advertiser start?
To become an advertiser, the most important requirement is that your website is transactional and that the “desired action” such as a sale or lead generated by filling out a form can be taken online by the customer. It’s also important to make sure you have a compelling product or service that partners are looking to promote to their audience.
Why Use Affiliate Marketing?
The popularity of affiliate marketing is due to the flexibility, transparency and measurability of the model. The benefits for advertisers include:
- Low risk. The affiliate model means advertisers pay for performance, not clicks, which makes it a low-risk form of marketing. Whether it’s the sale of goods, a new lead or even just addressing new customers, the affiliate channel can deliver.
- Flexible. The affiliate model is incredibly flexible. You will find the right solution for your company, be it setting up an in-house team, working with a network or outsourcing management to a specialized agency. You are in control of how you run your program and which partners are promoting your brand.
- Inexpensive. Although some initial investment is required, payments are then made based solely on performance metrics once the initial setup is complete.
- Increase brand awareness. The affiliate channel is an excellent stepping stone to promote your company; There are hundreds of thousands of affiliates on different channels using a range of advertising methods. By working with affiliates, you can increase brand awareness among new audiences and increase brand loyalty among existing customers. You are in control of who you work with and choose the partners who best fit the brand.
- Data insights. The affiliate channel is measurable and transparent. Detailed data insights enable you to manage your overall ROI or campaigns with specific partners. Decisions can be made based on real-time performance, making the channel scalable and flexible.
- Grow into new markets. Affiliate marketing is an inexpensive and low-risk way to enter new markets. Many partners have global audiences, which can be a great way to test consumer interest in a new market.
- Scale quickly. Affiliate marketing enables you to scale your business with minimal cost and low risk. You can test new markets, new messaging, and collaborate with various partners while monitoring spend and ROI.
Affiliate marketing is an integral part of the marketing strategies of many brands. The channel is constantly evolving, flexible, and low-risk so you can cost-effectively reach a diverse customer base on a large scale.
With a well-managed affiliate program, you can target not only the right customers, but also the products and spending behavior for profitable, incremental growth. Essentially, you can build an efficient sales team that is really flexible about your needs.
