What Is Affiliate Marketing?
Affiliate marketing is an advertising model whereby a business compensates third-party publishers (affiliates) with commission fee incentives to generate traffic or leads to its products or services.
eCommerce businesses usually provide affiliates with a unique link that tracks traffic directed to their website.
Affiliate marketers don’t develop, manufacture, pack or ship products. Their only job is to refer leads to a business. Essentially, they expose a business’s target audience to new products or services, and only if sales occur are they paid a commission.
Affiliate marketers typically place paid ads or market products or services on their website, app, blog, or vlog. Given its nature, affiliate marketing works exceptionally well with influencers. To date, the global industry is worth $12 billion.
How Does Affiliate Marketing Work?
Generally speaking, affiliate marketing is a results-orientated marketing approach with a straightforward process that relies on cultivating and maintaining good relationships with affiliate marketers.
- The successful affiliate marketer and business form a relationship, either through an affiliate marketing network or direct contact.
- The affiliate marketer shares a company’s product or service to their network via a link or coupon on their website, blog, YouTube channel, or social media platforms.
- Potential customers click on the affiliate link.
- The link takes customers to a business landing page or affiliate website, specially designed for an affiliate sale.
- The customer makes a purchase.
- The company receives a new sale and pays the affiliate marketer a commission.
A quick note on landing pages and commissions:
- In digital marketing, a landing page is not the same as a website page. It’s a standalone page created specifically for a marketing or advertising campaign.
- Affiliate marketing commissions are usually anywhere between 5-30%. However, if your business only sells a few specific products with a set price, then having affiliate marketers operate on a fixed commission might work better.
The Biggest Misconception about the Affiliate Marketing Industry
Affiliate marketing sometimes has a bad reputation because people confuse it with pyramid schemes. To be clear, they are not the same thing.
A pyramid scheme is an illegal business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying a commission from the sale of a product.
Essentially, it pays members higher up in the structure with funds from new members. Most times they are misleading and fraudulent. Only one person can be at the top of the pyramid.
However, the way a standard affiliate marketing structure works is affiliate marketers are paid a commission from the products they refer potential customers to if their referrals result in a successful sale.
Affiliates are not paid spokespeople or employees, so there’s little conflict of interest for anyone making money as an affiliate.
According to Shopify, older internet affiliate marketing strategies came under fire due to black hat marketing efforts (using unethical tactics to increase sales). Brandjacking, spyware, trademark infringement and cookie stuffing were common and businesses couldn’t determine if their affiliate marketing strategies were really worth the time and effort.
A poorly managed affiliate marketing program can suffer the same fate, but this needs not be the case today with all the technology and marketing expertise available.
Does Affiliate Marketing Still Work in 2024?
The stats don’t lie. 20% of marketers still rank affiliate marketing as a key driver for customer acquisition, and it’s not going anywhere anytime soon.
The proliferation of online shopping and use of the internet in consumers’ everyday lives, as well as AI, have been game-changers to affiliate marketing campaigns. AI alone improves affiliate marketing sales by 30%.
As a pay-for-performance marketing scheme, the affiliate system offers numerous benefits for online businesses:
Access to a Broader Market
You can find affiliates for every type of business niche, whether it’s CBD products or vintage clothing. Many affiliate marketers have large audiences you may not have the resources to explore.
A bigger target audience simply means more reach, and a greater interest in your products and services, which leads to increased sales—all at nominal costs to your business!
Fewer Resources
Because promotion is left to affiliate marketers, you spend less time planning campaigns and promoting products. Instead, you save material and financial resources for other marketing strategies and business activities.
A Win-Win Model
When an affiliate makes a sale, they make a profit, and so do you. Hence, it’s a low-risk strategy if you vet the right people to promote your products.
It also offers the potential to significantly scale your earnings without officially hiring new employees. You can simply introduce new products or services to current audiences and build campaigns for them, while exiting campaigns continue to generate revenue.
High Return on Investment
Because you’re channelling marketing efforts through affiliates who already have direct access and influence over a highly targeted and receptive audience to what you’re offering, your ROI will automatically be higher.
Affiliate Marketing vs. Digital Marketing
Technically, affiliate marketing falls under the umbrella practice of digital marketing. It is one of the many strategies used by marketers to improve income online. However, unlike SEO, it is not a prerequisite since it doesn’t suit all businesses.
We might compare the two as follows:
- Definition: Digital marketing entails using a wide range of internet-based platforms and tactics to reach a target market. Affiliate marketing, on the other hand, is a specific form of marketing where affiliate products are promoted online by niche influencers to earn a commission.
- Components: The three main components of affiliate marketing are the affiliate marketer, the customer, and the product owner. Digital marketing is far more complex, and often requires an agency or in-house team of specialists to pull off.
An affiliate marketing strategy is advantageous because affiliates promote a business instead of buying ads. This increases visibility and sales without forking out more for your advertising budget.
The Best Strategy for Affiliate Marketing in 2024
Because affiliate marketing relies on other people to promote your physical products and services, there is inevitably a degree of influence required. This can be on the scale of popular influencers, niche influencers, or merely friends referring products and services to their communities and networks. All affiliate marketing is built on transparency, authenticity, and trust.
Influencer Marketing
In digital marketing, there are three types of audiences; earned, paid, and owned. Owned audiences come back to a brand, publication, or influencer because they enjoy the content they produce. They return out of their own volition. We could say that many influencers have owned audiences because they produce quality content.
Influencers can do everything new affiliate marketers can, but on a larger scale because they already have an engaged audience. If you want to start affiliate marketing with influencers, you should take a proactive approach and provide them with a free product for them to assess whether your company is a good fit. You can also launch an affiliate program for influencers to join to leverage multiple audiences.
Blogging
A strong marketing strategy has diversified affiliates that use different marketing tools. Blogging mavens tend to talk about products they’re passionate about, and becoming an affiliate marketer may provide them with an opportunity to earn more money online.
Chances are, that like influencers, they’re already part of sponsorship deals, and it won’t take them much to mention your affiliate marketing product in a blog post.
92% of marketers use blogging as part of their content marketing strategy, so affiliate marketing fits perfectly within this strategy. Many affiliate marketers who are bloggers will provide a review about the product or service offered (And 90% of customers read reviews before purchasing a product.)
So, it’s a win-win for both parties. The most significant advantage is that you’re also getting premium content marketing for your online business at a low cost. Of course, it’s vital to select affiliate bloggers carefully.
Referral Links
Referral links are quick and easy to set up and work well with micro-influencers and, basically, anyone who has a network that can be leveraged. It’s like a digital word-of-mouth initiative to incentivize existing customers to introduce their family, friends, and contacts to affiliate products.
When a customer joins a referral program, they’re assigned a unique affiliate link that keeps track of every referral that comes from them. It tracks each step of the referral campaign in real-time, so you can clearly see where and how customers are in the marketing funnel.
This valuable data can help maximize your affiliate marketing efforts. Referral links can be shared on social media, through email marketing, and even via WhatsApp to generate leads.
Social Media
Almost everyone uses social media, so affiliate marketing on social media platforms is a no-brainer. The only thing to consider is which social media platforms your audience uses, and then tailoring content to suit those platforms. For example:
- An influencer can convey your product with an image or story review on Instagram or a YouTube video.
- Businesses selling software or tech might fare better with a demo or video review on YouTube. Take famous camera equipment reviewer Peter MacKinnon’s YouTube Channel, for example.
- You can ask affiliate marketers to get users to follow you online or like your social media page when they share their affiliate marketing link, which may bring in extra website traffic.
In general, it’s safe to assume that most affiliate marketers prefer the path of the least resistance. If your business is new to affiliate marketing, then social media is a good place to start promoting your products because the vast majority of new customers are likely already there.
The Easiest Way to Do Affiliate Marketing
There isn’t a shortcut to success; however, there are several tools to accelerate positive outcomes of your affiliate marketing strategies.
Operating online necessitates software to streamline your workflow. It’ll measure results and help you stay on top of performance.
Tools like Google Analytics, SemRush, Linktrack, and OSI Affiliate will make your life easier. Whether it’s for content marketing, SEO analysis or affiliate sales management, there is available software to cater to all your needs.
An affiliate marketing platform also helps prevent fraud and protects you and your affiliate’s privacy, which bolsters trust, and can encourage potential affiliates to join your program.
How to Develop an Affiliate Marketing Plan
Affiliate programs are relatively niche and your company will need to meet several requirements to make an affiliate program lucrative for your business.
- You must be willing and able to pay affiliates a cash commission (or store credit) every time they make a sale.
- Companies with high customer retention rates are best suited to affiliated marketing because they can afford to pay out commissions for affiliated sales.
- For these reasons, affiliate marketing works especially well for eCommerce or subscription businesses with high margins.
If you’re looking to scale on budget and your competitors are using affiliate marketing, then an affiliate marketing program can help your business earn more money.
Set Goals
Without goals, you don’t have anything to measure your success or failure against. Marketing and business goals should be SMART: specific, measurable, achievable, realistic, and time-bound.
An example: In three months, you want to have 20 affiliates who bring in a minimum of 500 leads.
Setting measurable goals identifies the strengths and weaknesses of your affiliate marketing strategy, so you can improve things for better results.
Some actionable goals to determine include:
- The amount of revenue you want affiliates to bring in either monthly, quarterly or annually.
- The average order value each affiliate brings, and the number of unique sales they should make over a specific period.
- Clicks, website traffic, and other marketing metrics, etc., are also other KPIs you’ll need to establish.
The best advice we can impart when it comes to goals is to make sure you’re tracking the right metrics, and that whatever you decide they are, they move your business forward, i.e., drive sales.
If you’re clueless, don’t stress—it’s unusual for anyone who isn’t a professional marketer to know much about the affiliate marketing industry.
This is why a successful affiliate marketing business like ours exists! We’d be more than happy to help you boost affiliate sales!
Decide on Products
Let’s assume you already know who your target audience is and where they are online. Next, you need to decide on the products you want to include in your affiliate marketing program.
Keep in mind: Not all your commodities will suit inclusion in an affiliate program. Affiliates may also not have the right audiences for certain products.
We recommend focusing on one or two high-value ones with decent profit margins that are bound to make you better profits with fewer sales (it is also more enticing for affiliate marketers).
Determine Affiliate Commission
While you want to remain competitive, one-upping rival affiliate programs isn’t always the best strategy.
You have to take care of your company’s needs first. Calculating customer acquisition costs, retention rates, and your average customer lifetime value will help you determine what payment model is most sustainable.
- How much does it cost to acquire a new customer?
- What percentage of customers do you retain in a given year?
- How much revenue does each customer (reliably) bring in?
You might also offer a commission to the most loyal affiliates who meet certain revenue goals, or who fall into the top percentage of your affiliates.
Generally, there are three ways to structure affiliate commission:
- Percentage rate commission: This gives affiliates a set percentage of each sale or a percentage of the customer’s total order. It’s especially attractive for big-ticket items and premium products.
- Flat rate commission: A set, specific one-off fee per item sold. Flat rates work well to entice new affiliates.
- Tiered rates: Many programs offer this rate structure to motivate affiliates. For example, for between 1-25 sales, you might pay 10% commission, whereas for affiliates selling 75+ and above you offer 18% commission.
If you decide to offer tiered rates, just make sure you leave your business with enough room to grow, without committing to rates you can’t afford.
Create Supporting Marketing Materials
With any affiliate marketing strategy, you have to look beyond positioning. Its seldom prospective customers buy directly through affiliate links.
Affiliates appraise what you’re offering, and provide customers with social proof. You still have to nudge potential leads down the sales funnel.
Perhaps you have to create a landing page with more product details, or the affiliate link you provide takes you to your website to find out more.
Therefore, you have to polish your sales funnel. If your general content marketing is poor, then your affiliate marketing will also be ineffective.
Decide on Key Aspects of Your Affiliate Program
You’ll need to develop a program guide for affiliates in which you stipulate performance requirements, the base level of commissionable transaction per quarter per affiliate, as well as provide supporting marketing tools and guidelines.
Things to consider include:
- How will an affiliate promote and distribute an affiliate link?
- Which marketing platform should they use?
- How long will affiliate cookies be active?
- Will you hire a dedicated affiliate manager for your program?
- What are the terms and conditions?
Build Your Affiliate Network
You can either recruit affiliates from existing affiliate networks or build your own. There are pros and cons to each.
An existing network can help you build a base of representatives quickly; however, they charge a finder few in addition to the commission you pay affiliates directly. Occasionally, it’s as high as 30% of the commission you charge.
Affiliate networks track performance and automatically pay affiliates, and while this is convenient, you won’t have direct control of affiliate data.
If you decide to form a personal network of affiliates, it’ll be up to you to manage, track and compensate them. Using affiliate management software helps.
In most cases, affiliate management software costs less than the fee you’d pay to tap into an existing affiliate network. Plus, it will give you full data control.
Monitor Your Affiliate Program
As with all digital marketing strategies, you should keep track of which affiliates bring in the most sales, and whether your program is meeting its SMART goals.
Affiliate marketing strategies can take up to six months to start paying off. You and your affiliates’ ability to develop great content, ensure search engine optimization, and reach targeted traffic will determine your success.
Affiliate Marketing Tips
The sky’s the limit when it comes to creative affiliate marketing campaigns. The best ones have strong credibility, high audience attention levels, and friendly audience reception.
Below are suggested strategies to leverage affiliate promotions and campaigns:
Include Comparisons
Comparisons help customers determine which products best suit their needs. This works well with influencers if your affiliate product is new on the market and consumers have no nothing to compare it to.
Use Micro and Nano Influencers
Some businesses don’t have huge affiliate marketing budgets, but still want to leverage the reach that social media influencers have to grow their business. For them, micro and nano influencers are the perfect collaborators.
They provide more brand exposure to niche audiences (between 10,000 and 100,000). Because their audiences are smaller, they cultivate a personal relationship with them, which leads to a higher engagement rate.
Encourage Affiliates to Create an Affiliate Shop on Instagram
Instagram is an ideal platform for affiliates because its content formats—images, videos, and livestreams—showcase a 360-degree view of products before purchasing.
The corporate relationships built between business owners and affiliates deliver great benefits. It’s a win-win for businesses eager to be featured on Instagram and influencers looking to profit from collaborations, both in terms of monetary compensation and PR.
Build an Affiliate Network on Facebook
Building an affiliate network from scratch can be daunting. Yet, connecting with like-minded people on Facebook can help develop relationships with affiliate marketers. Once you’ve vetted potential affiliates, you can invite them to join.
A Facebook group is also a useful resource to post tips, guidelines, and other facebook types of content on how affiliates can increase their sales. Think of it as a support group and forum rolled into one.
Implement Robust Onboarding
Affiliates will join your program for a variety of reasons. Therefore, you’ll want to demonstrate your program is worthwhile in the early stages of your partnership.
Walk them through everything they need to make their first sales. It’s your product, so you’re the expert, and you’ve got tons of knowledge to share.
The best way to build partnerships is to make good money together. Creating a solid onboarding process is how you do this.
Optimize Affiliate Landing Pages
The goal of all affiliate landing pages is to get leads to complete and action. Think about how you can leverage design, images, headlines, copy, social proof, your business’s unique selling proposition and call to action.
Good UI and IX design will motivate visitors to buy your products. Part of this entails designing an attractive page. Since a landing page is built with one goal in mind, it’s preferable to have a simple and clean layout with ample space.
Try to minimize distractions and focus on your call to action. Using contrasting colors and having a call-to-action button can make your offer stand out.
You’ll also want to grab visitors’ attention with your headline and encourage them to read more.
Effective landing pages also have images. Whether you decide on a photo or graphic design, the image should supplement your headline and communicate what you offer to visitors.
What Is an Affiliate Marketing Agency?
Affiliate marketing agencies curate social media influencers, content creators and other creatives for partnerships with clients.
They have connections in various industries and will identify the best affiliate partners for your business.
An agency also has valuable data and experience with attribution, incrementally, and the value of individual publishers.
Not only do they have access to unique and creative partnerships, but they can also negotiate favorable commissions if you’ve found the affiliates yourself.
The more successful agencies come with the resources to measure your KPIs and will offer diverse marketing strategies to manage your existing affiliate marketing efforts or build new ones to bring in more business.
Digital marketing is all about optimization, which begs the simple question: why go through the trouble of finding affiliates when you can hire professionals to do it for you?
A dependable agency understands the importance of quality traffic and conversion rates. They will keep tabs on your competitors, monitor your campaigns, and make recommendations to improve affiliate sales.
Check the following before hiring an affiliate marketing agency:
- Whether they’ll assign someone to your account. Some agencies assign entire teams!
- If they have experience in your industry.
- Who their current clients are, and if they’re in your industry or at least industry adjacent. Have they worked with any successful or notable businesses?
- If they have the right affiliates to promote your products.
We advise chatting to a few agencies. You don’t have to hire the first one you come across on Google!
Is Affiliate Marketing Worth It?
For many businesses, subscription-based services, and within the review sector, affiliate marketing has proven hugely successful. The secret is to match the right affiliate product with the right marketers and affiliate strategies.
You have to know who your audience is and the types of affiliate products and marketing they best respond to. Affiliate marketing spending improves website traffic, increases brand awareness, and enhances social awareness without using much marketing budget.
Here are some notable statistics highlighting affiliate marketing pros:
- More than 80% of brands have affiliate programs
- Advertisers generate between 15% to %30 of all sales from affiliate marketing programs
- Affiliate marketing is responsible for 16% of global eCommerce sales
Before setting up affiliate marketing, you need to determine your business goals, understand your competition, decide on commission structures, and select marketing channels and methods popular with your customers. You’ll also want to establish a vetting process for potential affiliates to ensure they’re authentic and produce quality content.
Want to talk with an expert?
Then contact us here with all your affiliate marketing questions. We are always ready to help
Partner with a Professional Affiliate Marketing Agency
Affiliate marketing is almost always a worthwhile investment. If you need assistance with an affiliate marketing strategy to promote products, we can help.
Comrade Digital Marketing Agency specializes in comprehensive marketing services that bring in more traffic and revenue. Although each of our clients is unique, they all share similar success stories after working with us.
We can help you implement a variety of affiliate marketing strategies to improve online business sales. Why not speak to one of our affiliate marketing specialists today?
Keen to speak to one of our affiliate marketing specialists?
Frequently Asked Questions
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