Businesses of all shapes and sizes go through development at some point in their lives. It could manifest as a brand update or it could come to life as a merger with a larger corporation. But, more often than not, the most common developments that businesses will see are to their marketing practices.
In this digital age, sustainability is the necessity of invention, where businesses must be ready to adapt to sudden cultural and technological shifts before they become mainstream. The most common form seen in the past decade was the necessary shift to social media. Businesses that neglected growing on the platforms eventually ran into trouble, as social media became a cultural touchstone for many, becoming the central marketplace for many to engage with brands.
Marketing adaptation will be needed for businesses looking to grow from their current model, but what could that look like? For a number of notable businesses, both small and enterprise, professional marketers are turning to affiliate marketing strategies for continued growth and success.
What Is Affiliate Marketing?
Affiliate marketing is the process through which a person or business promotes the products and services of a merchant. This relationship works when the merchant seeks out an affiliate who then promotes that merchant’s products. This affiliate promotes a product to their audience in hopes that it will garner attention from their own followers and customers.
If a conversion — where the follower of the affiliate makes a purchase with the merchant — is made, the merchant will then pay the affiliate for their work. Depending on the affiliate marketing model, this payment may be a percentage of the net profit made from that sale, or it may be a locked-in rate that is paid per-conversion. These conversions and sales are tracked by affiliate links that are given to the affiliate by the merchant, which can either be a URL that — with the help of an affiliate network — will track engagement, or it can be a unique coupon code that identifies affiliate-related customers.
How Does Affiliate Marketing Work?
As mentioned above, there are a few relationships that are inherent to making affiliate marketing work. The parties involved include the:
- Merchant, seller, and/or creator
- The affiliate
- The consumer
What’s the significance of these three positions and how do they work in the greater sales funnel?
- The Merchant, Seller, and/or Creator
The merchant is the very first part of the process, as they are the person who has created a product and is looking to sell it or are simply a retailer looking to sell merchandise. They have a service of some kind that needs to be marketed to a greater audience, and they are in need of a professional who can properly promote them.
- The Affiliate
The affiliate can either be an individual, a small business, or a large corporation that specializes in promoting content to potential consumers. They have a knack for niche marketing and are able to target niche audiences whenever possible. In collaboration with the merchant, they provide a service that is invaluable, so they promote a product or service to a dedicated audience, which may potentially lead to sales.
- The Consumer
Unaware of their importance, the market decisions consumers make are the primary reason that affiliate marketing strategies work. Without consumers, there would be no one to promote to. Even if they are not thinking about it, the channels they use — Twitter, Instagram, blogs, YouTube — provide them with advertising tailored to their interests. This makes them the perfect target for affiliates looking to promote a merchant’s products, as they can be marketed to through specific channels, making that affiliate process easier and more likely to succeed.
How Much Affiliate Marketing Costs
The way in which affiliate marketing is paid out tends to be simple, but the approach is different between merchants. There are three common ways payments are issued. Knowing which is right for your business will involve understanding your budget and how you’d like to entice and pay affiliates.
- Pay per sale
This is the most common for merchants developing an affiliate marketing program, where either a flat-rate or percentage-of-sale will be paid to the affiliate when a consumer makes a purchase after following an affiliate link.
- Pay per lead
A little more complex, affiliates are paid not when a sale is made but when a consumer visits the merchant’s website and completes a desired action, such as signing up for an email newsletter or downloading a trial version of a software product.
- Pay per click
More in line with traditional digital marketing, affiliates are paid when a consumer clicks on a merchant link posted by the affiliate. This level of engagement can also develop lead generation, but the merchant is more interested in generating site traffic.
The Types of Affiliate Marketing
While there is the strategy known as affiliate marketing, there are numerous subsets that can be implemented by a business to successful ends. While each subset of the affiliate market works to promote a merchant’s product or service, not every approach will be the same. Here are the most common types of affiliate marketing and how they are utilized by marketers and affiliates alike.
- Influencers
Influencers hold a lot of power when it comes to the world of social media. With 59% of the world’s population uses social media, there is a lot of monetary worth to having a captive digital audience. Influencers work as exceptional affiliates, as they are able to share your brand with their followers, whether reviewing a product of yours or simply letting them know that your services exist and that they should check it out.
Word-of-mouth marketing still works, and that’s shown by influencers day after day. Their greatest trait is the trust their audience has in them, where they have become committed to following their content out of a sense of loyalty, honesty, and care. Thus, if they’re promoting your brand, their audience will understand they’re doing it for a good reason.
- Bloggers
Although blogging isn’t as big as it once was in the early 2000s, it is still an incredibly useful tool for businesses and brands. Thanks to search engine optimization (SEO) techniques, brand and business blogs are able to create engagement through engines like Google by producing relevant content related to common searches.
Consumers often have an issue in life that they’re looking to solve. Brands and businesses fill that gap with their products. Moreover, they can provide insight and guidance through the publication of professional blogs. Similar to influencers, a notable blog will carry followers of its own — people who trust the information shared, knowing the publisher is an honest, reliable source.
This is perfect for affiliate marketing purposes, as it allows merchants to reach out to noteworthy blogs for potential promotion. A simple hyperlink to your company’s website can be enough to promote what you have to say and offer to consumers, bringing you engagement and potential sales conversions.
- Email campaigns
Email campaigns are not a new method of reaching out to past customers and potential customers, but, if it ain’t broke, don’t fix it. Email campaigns have a level of success because of the personalization they offer to marketers. With a thorough email list, marketers and affiliates will have a trove of people to reach out to with content specialized to their interest, whether informing them of a new product launch or letting them know about an upcoming sale.
And this isn’t even considering the fact that artificial intelligence (AI) will have a drastic effect on the way email campaigns are researched, developed, tested, and implemented. Greater analytics will make it easier for businesses to understand their customers and members of their email list, from what content they’re most interested in seeing to what headers are most likely to make them open an email.
- Coupon sites
It might not be your first thought, but coupon sites are an excellent way to produce affiliate marketing campaigns. In this current economic climate, consumers are looking for deals wherever they can find them. Apps like Honey have made the process easier, scouring the internet for coupons to provide consumers with the best deals imaginable, while other sites allow consumers to look for exceptional deals one by one.
The advantage of working with them is that, through an affiliate partnership, you can increase traffic to your website, all while increasing sales thanks to coupon offers. While this might make it difficult to track the success of your company’s efforts, it is still largely beneficial, as the large audience makes it easy to get eyes on your website and products.
- Incentive programs
Along with coupon sites, you can also work with incentive programs. These sites often work by providing customers with points when they make a purchase, where the incentive site offers points similar to “cashback” when a member completes a sale with an affiliate merchant.
The benefit of being promoted on one of these sites is that their members are more likely to make a purchase with you, especially if the incentive is seen as being “worth it.” However, the disadvantage is that it won’t be providing organic traffic — similar to people shopping on a coupon site. Any purchases made are likely going to be one-time customers, meaning you won’t have the leads and sales produced as you would see with an influencer affiliate program. But if you’re willing to take the disadvantages along with the advantages, this type of strategy can work out for you, especially when implemented alongside a blog or influencer strategy.
- Loyalty programs
Similar to incentive programs, loyalty programs are sites that often offer their members with notable discounts and potential cashback with every purchase — which will sometimes be tiered based on how much money is spent in one transaction.
Affiliate strategy performance will be similar to the last two strategies mentioned, where you are bound to see a spike in one-time sales, meaning a lack of lead generation. This can be beneficial when utilized alongside other affiliate strategies or implemented while also running a social media marketing campaign.
- Traditional media
You might hear on a regular basis that traditional forms of media — TV, print, and radio — are dying, but they still have a loyal customer base that consumes their content on a daily basis. This loyalty makes it ripe for an affiliate marketing campaign, as you’ll have attuned consumers willing to hear about your brand and the products you offer.
Similar to traditional affiliate marketing, all you have to do is reach out to the media outlet you’re interested in and provide them with a pitch — show them what you want while telling them what they’ll receive in return for their work.
- Review sites
These sites are fantastic for affiliates, as they are the perfect place to promote your project while also providing a solid review of your products and services. By being linked in to one of their lists or singular reviews, your company can expect to garner organic traffic likely to generate leads. And, if you’re lucky enough to receive a glowing review, it’s likely you’ll end up with some conversions, too.
- Large media websites
Large media websites are well regarded within the affiliate marketing world for one reason: high traffic. These sites capture millions of viewers on a regular basis, all converging to consume content. With a well-placed ad, you can capture their attention and potentially redirect them to your website. Here, your company will find great engagement numbers — all while, hopefully, increasing conversion rates.
The Bottom Line
When venturing into the world of affiliate marketing, there is no one true path to success. As with any other venture, your business will have to do its research and potentially test out some approaches. With patience, you’ll find what works best for you. If you have any questions in the development phase, don’t hold back from reaching out to a Refersion representative to hear how our affiliate network can benefit you.
Join our events and access our guides to learn how Refersion can manage, track, and grow your affiliate marketing program.
