what is affiliate marketing

What is Affiliate Marketing? Success Guide

When it comes to buying electronics or appliances, if you’re like me, you do as much research as possible. You open a million different product review site tabs, read through them until you decide on the product you like, then click on the company’s website to make your purchase – hopefully with a generous discount code.

This is the journey through the affiliate marketing ecosystem — but only from the shopper’s point of view.

There is also the merchant selling the product, the affiliate promoting the product in exchange for a discount, and in most cases an affiliate network that ensures the process runs smoothly for both parties.

What is Affiliate Marketing?

Affiliate marketing is an arrangement where an affiliate, such as a publisher, earns a commission by promoting another company’s products. The member gets a share of every sale that passes through his channel, and this process is followed by specially coded links.

Affiliate marketing is a form of performance marketing. This means that an affiliate is paid (and only) when its marketing requests a measurable action – a sale (or in some cases, a lead) for the business that owns the product.

Regulation has been around for almost as long as e-commerce itself. Amazon helped popularize affiliate programs after launching one in the mid-1990s. Around this time, blogs began slapping Amazon affiliate links on their sites in hopes that visitors would click and buy an item so they could get a commission.

Of course, the idea of ​​splitting revenue in this way is much more ancient and evokes the era of door-to-door salespeople working on commission.

Affiliate marketing is an integral part of e-commerce these days, whether you’re a retailer bringing your product to the masses or a publisher generating an additional revenue stream.

Advertisers in the United States 8 billion dollars In affiliate marketing in 2022. said a report 81 percent of advertisers and 84 percent of publishers use affiliate marketing.

It is no longer associated with spammy blogs or offensive vendors. mainstream. And for many – lucrative.

Image: Built-in

What is Common?

Simply put, affiliates are people who make money to successfully promote another company’s product.

It could be bloggers, journalists, social influencers or performance marketers. They are not employees of companies whose products they are promoting. They’re probably not even customers. And they often have such a large audience that complete strangers buy products using their affiliate links.

(Affiliate marketing is slightly different from referral marketing, where a customer is rewarded for recommending a product or service to a family member or friend.)

Derek Hales ran the mattress review site Sleepopolis as editor-in-chief for three years. He founded the site in 2014, just as the bed-in-box business was booming and people were starting out. googling “best mattress” at high volumes.

Aspect Fast Company reportedHales has helped these companies sell a large number of mattresses and has made a lot of money as an affiliate. He would usually end each review with an affiliate link that comes with a digital coupon shoppers can refer to at checkout. Sometimes he would negotiate his commission directly with mattress companies, other times he would pull them from affiliate networks, sites like Hales that listed affiliate marketing offers for publishers to use.

Affiliate marketing isn’t just for entrepreneurs alone. Older publications such as most New York Times and new York magazine both rely on product recommendation websites, Wirecutter and The Strategist, to bring in millions of dollars in affiliate commissions each year.

Other affiliates are taking a different route: They specialize in creating ads on platforms like Facebook to drive visitors to landing pages promoting products using affiliate links.

Affiliates tend to partner with vendors or find offers from merchants through intermediaries called affiliate networks.

What is Affiliate Network?

There are many affiliate networks, including currently. ShareASSale, Click Bank, CJ Partner and Rakuten, to name a few. They handle the link tracking and payment processes involved in affiliate marketing and ensure that both merchants and affiliates get what they agree on. For traders, this is a specific action taken by a visitor; For affiliates, it gets paid for it.

However, if no action is taken, the money does not change hands. This is why you will see the acronym CPA (cost per action) used to describe affiliate marketing. The trader does not pay for impressions, but for actions performed – leads or sales.

Affiliates rely on networks like these to help them grow their affiliate marketing efforts. For example, if you are a publisher and promote products from 50 different companies, you are responsible for following links and getting paid from 50 different companies. That is, unless you run your program through an affiliate network that works for you.

“[Affiliate networks] Take away the many stresses of managing the affiliate program. ”

“It takes away a lot of the stress of managing the affiliate program,” Thomas McMahon, senior business development manager at affiliate network ClickBank told Built In.

Networks like ClickBank also function as marketplaces, allowing affiliates to discover products and high commission-paying offers that their audience may find interesting.

Traders also find affiliate networks helpful. In most cases, they prefer to disable the management of these transactions rather than create their own programs and payment processing technologies in-house.

Another reason traders use networks is to recruit affiliates. If you’re a sneaker brand, for example, it takes a lot of time and research to figure out which streetwear and sportswear bloggers and influencers you should reach out to for affiliates.

However, with a network, traders can set their commission structure and what qualifications they want in an affiliate, and the network will reveal publishers or influencers that fit those parameters. Once the merchant approves the affiliate, the network takes it from there and facilitates tracking and payments between the two parties.

Affiliate networks make money by getting a share of every sale they enable. Thus, merchants not only pay the affiliate, but also pay the affiliate network.

To readProgrammatic Advertising: Pros and Cons

What is Merchant in Affiliate Marketing?

Sellers—sometimes referred to as advertisers, brands, or businesses—sell a product or service. They usually get into the picture when they want more sales or leads, so they partner with affiliates who have an audience.

Merchants selling consumer products like accessories and appliances seem to dominate the affiliate marketing landscape. But businesses in almost every industry have dared at some point.

According to Nicole Ron, vice president of product marketing and business systems for the affiliate network, CJ Affiliate has more than 4,000 clients representing “literally every industry.” This includes retail, travel, finance and technology and services.

“There are very few types of businesses that don’t benefit from loyalty marketing.”

Ron told Built In that commission structures vary by category. But the main reason why traders use networks like CJ Affiliate remains the same: They want to be promoted by authoritative sources, by audiences ready to take action.

While not every product is up to it, ClickBank’s McMahon said, “There are very few types of businesses that don’t benefit from loyalty marketing.”

How many affiliates do traders typically use? Adhere to. Ron said some of CJ Affiliate’s customers use more than a thousand affiliates in total, counting influencers and creators in addition to traditional publishers. Others hold “very small, curated programs with 20 to 30 partners.”

Where Are Agencies Located?

Some merchants hire agencies that specialize in affiliate marketing management. These agencies do not handle the technical aspects of the process the way networks do. Instead, they consult traders on strategy and help them find ways to make their affiliate program more successful.

They do this primarily by finding affiliates that they think certain traders should partner with.

“When we recruit a customer, it’s easy to see immediately who the top producing subsidiaries are in Turkey. [the client’s category]Kyle Mitnick, President Purple AdvertisementA marketing agency specializing in affiliate management told Built In.

From there, his agency determines which of its affiliates — Mitnick said has worked with more than 100,000 companies — will promote the merchant’s products. Then they start preparing the ad copy and determining the appropriate bid for the affiliates.

What Are Common Hesitations?

Mitnick sometimes meets customers who are new to the affiliate marketing process and are concerned about it. Two great hesitations arise often, He said.

One misconception is that affiliates are all coupon sites and some merchants prefer not to be associated with them. (Maybe out of fear brand value It takes a hit.) Whatever the case, many traders don’t realize that affiliates are generating service journalism, not spam.

“This stamp comes up all the time,” Mitnick said. “We deal with data.”

The other issue causing traders to pause is focusing on sales attribution. In Mitnick’s experience, many brands fear a hypothetical scenario where they accidentally pay twice to acquire a customer – once the customer clicks on one of their Facebook ads and the second time the shopper clicks on one of an affiliate’s links.

“There are many technical solutions that prevent brands from paying twice,” Mitnick said.

What Are Best Practices for Sellers?

“The misnomer is that affiliates are cheap and easy,” McMahon said.

When advising clients who are indecisive about affiliate marketing, he tries to help them understand the importance of client acquisition and the lifetime value each new client provides. Low affiliate commission fees only work against this strategy to get better upfront margins.

“Where people stumble upon is just making a generic, bland affiliate offer,” he said—or offers so low that they don’t get high-quality partners excited enough to promote the merchant’s products.

Instead, McMahon said, merchants – especially SaaS businesses – should configure much higher commissions.

This “opens you up to real performance marketing partners, not just bloggers, not just influencers,” he said.

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