Online marketers continuously strive to improve digital marketing to optimize ROI. One of the most innovative and latest strategies is affiliate marketing. But why this particular form of digital marketing is becoming so popular? Why advertisers are ready to invest in this? This blog will answer all the questions. Everything you need to know about affiliate marketing is explained simply.
Let’s start!
First, we look at the basics of affiliate marketing to better understand the larger picture.
What is affiliate marketing?
If you are running an ecommerce store, you know very well how digital business works. In this age of digitalization, it comes very important to make your brand visible. Your brand must stand out in the market if you want to reap benefits from online business.
Affiliate marketing operates on this principle. In this form of digital marketing, publishers use an affiliate link to promote the services and products of another retailer or advertise. The publisher earns a commission for using the affiliate links.
Affiliate marketing, like other forms of digital marketing, is carried out the enhancing sales, but other ecommerce objectives can also be secured. Such as leads, free-trail users, clicks to websites, and an increased number of downloads are some worth-mentioning adds-on benefits.
How Affiliate Marketing Works:
Affiliate marketing involves four actors and each actor has a specific role to play. These actors are as follows:
The Affiliate:
An affiliate or publisher could be an individual or an organization that promotes the products and services of an advertiser. In other words, they are online marketers doing marketing on the behalf of advertisers.
The Merchant:
The merchant is an individual or firm that sells the products and services promoted by a publisher or affiliate.
The customer:
These are individuals who purchase products and services promoted by affiliates and sold by the merchant. Customers are the main objective of affiliate marketing. Both merchants collaborate with affiliates and strive to convert the audience of affiliates into actual customers.
The affiliate Network:
It is some sort of intermediary between the affiliate program of the merchant and the affiliate. It is a channel where both develop relationships.
Some Examples of Affiliate Marketing in Ecommerce:
As it has earlier been explained that affiliate marketing involves a partnership between an online retailer and an influencer. Influencer uses their influence to promote the product and get a commission for every sold product and service. There are many firms which are offering affiliate marketing services. For instance:
Shopify Affiliate Program:
Shopify affiliates are content creators, course educators, and influencers who offer their services to help the audience start their ecommerce business on Shopify. In return, they earn a competitive referral commission.
Amazon Associates:
Amazon Associates is one of the most extensive affiliate programs in the market. This affiliate program permits affiliates to earn up to 10% of the advertising fee by linking to millions of products available on Amazon.com and its various subsidiaries.
eBay Partner Network:
This famous network allows affiliates to earn a commission if they succeed in driving traffic and selling to eBay. The Affiliates are empowered to promote anything from fashion to electronics and earn up to 70% of total eBay’s revenue.
Here are a few examples of successful affiliate marketing. There are a couple more, but we move to our main point of discussion, which is why affiliate marketing is becoming the most important pillar of digital marketing.
Importance of Affiliate Marketing in Digital Marketing
Affiliate partnership under affiliate marketing is important because it offers many advantages.
1- Cost-Efficient Form of Marketing:
Cost-effectiveness is one of the most obvious affiliate marketing pros. It is a performance-based model of marketing. The advertisers pay only if there are tangible marketing outcomes are on the horizon such as sales and leads. This property has made affiliate marketing very cost-effective because payment is made when is the outcome. Meanwhile, in traditional marketing, an upfront cost is required for running a campaign.
2- Low-Risks:
Since most of the marketing activities are carried out by affiliates, and you have to pay only there is the generation of sales. Therefore, you don’t need to worry about losing the money. This in particular comes in handy if your organization has a tight marketing budget.
3- Extended Reach of Brand:
Affiliate marketing is a great way to tap into the influence, audience, and customer base of affiliate partners. Affiliate partners promote the products and services of merchants, introducing them to wider demographics, and reaching new audiences. This extended reach could incur significant costs, if organizations secure these marketing objectives through other channels of digital marketing.
4- Enhanced Conversion Rates:
Usually, affiliate partners have specific niches and audiences. In the words, their audience is already targeted and self-motivated. So, affiliates engage in the promotion of products and services, organizations automatically target the relevant and interested audience. In this way, affiliate marketing proves extremely helpful in improving conversion rates and thus enhancing sales.
5- Flexibility and Easy Scalability::
Flexibility is another important aspect of affiliate marketing. You can easily scale up or scale down the campaign with little or no cost at all. Hence, you can easily achieve specific marketing objectives without breaking the bank.
6- Higher Return on Investment (ROI):
Multiple studies confirm that affiliate marketing offers the highest ROI among all digital marketing channels. One particular reason for this comparatively higher ROI is that the targeted audience hears directly from influencers. Since they have already a receptive mind, the promotion leads to enhanced conversions and improved sales.
7- Trust & Credibility:
Trust and credibility are what makes affiliate marketing stand out among other digital marketing strategies. Affiliates have a trust-based relationship with their followers or audience and thus act as trusted source of information and recommendations.
So, whenever, an affiliate partner promotes a product or service, his message always carries the weight of trust and credibility. This in return increases the brand reputation of merchants and they find it easier to reach a wider audience and boost sales.
8- Convenient Way of Marketing:
Affiliate marketing is very starting to start, manage and run. They offer multiple convenient means to run and manage the campaign. For instance,
- It provides easy access to verified marketers and publishers. So don’t take many headaches about whom you should engage or whom you don’t in running a marketing campaign.
- You can manage and control multiple affiliates partners at a time.
- Affiliate marketing doesn’t want any additional resources to scale up the marketing efforts.
- Security against fraud and full compliance with applicable data protection laws and regulations is other sources of convenience for merchants or advertisers.
9- Performance Tracking & Analytics:
Affiliate marketing is a clear framework for performance tracking and analytics. The tools and analytics resources help advertisers measure the performance of their campaign, keep an eye on the affiliate-led increase in leads and sales, and more.
The management of Key Performance Indicators (KPIs), data measurement, and optimization are some analytics and performance tracking options of affiliate marketing.
You can keep track of many KPIs such as
- Orders
- Revenues
- Impressions
- Clicks
- Leads generation
- Commission earned
- Conversions
- Cost per acquisition
In short, the more insight you gain from some analytics tools, the better you can optimize your affiliate marketing campaign. It helps you where to invest more and where to avoid to ensure maximum ROI.
10- Benefits for Customers:
One particular reason for the raising popularity of affiliate marketing is that it offers distinct benefits to customers as well. For instance,
- Customers can easily discover high-quality products and services that can solve their problems.
- Customers can get discounts, bonuses, reviews, and tutorials provided by affiliate partners.
11- Diversification in Digital Marketing Channels:
In digital marketing, diversified means of marketing channels prove a great help for advertisers. When you deploy affiliate marketing, it automatically increases the number of marketing channels dedicated to the promotion of your products and services.
Affiliate partners use various channels such as
- Websites
- Social media
- Blogs with enhanced powers of Search Engine Optimization (SEO) and content marketing
- Paid online advertisement through Facebook, YouTube, Pinterest
- Email marketing
- Professional and personal networks
When your products are promoted simultaneously through these changes, the visibility of your brand increases and you tap into a new audience.
12- Improved SEO and Backlinking:
Affiliate marketing helps a great way in improving the visibility and ranking of your website in search engine result pages (SERPs). Affiliate partners add the backlinks of your website within their promoted content. This backlinking helps establish the authority of your website or store which improves the SEO and helps attract organic traffic.
Key Considerations while Implementing Affiliate Marketing:
- You should make sure that affiliate marketing aligns with your overall business goals and objectives.
- Make sure that the affiliate partner(s) you choose have an audience whose interests align with your niche or industry.
- Give serious consideration to whether your business needs an in-house affiliate program or an already existing affiliate network. Each option would have distinct pros and cons.
- Determine first which commission structure best serves your interest. Whether it is a fixed fee, percentage-based commission, or a hybrid model that suits you the most.
In addition, budget and resources, performance measurement and optimization, compliance with relevant regulatory laws and regulations, and affiliate support and resources, among others, are also some important key considerations.
Final Thoughts on Affiliate Marketing:
Affiliate marketing offers many advantages that are not possible with other channels of digital marketing. It is a cost-effective and convenient way to market your products and services. Businesses can deploy affiliate marketing to improve conversions, attract organic traffic, and complement their digital marketing strategies.
You should give serious thought to marketing goals and expectations, your niche and audience, and your affiliate program and support before implementing an affiliate marketing strategy.