Think about a place where you, as an online shop representative, can work not only with one specialist in AdWords but hundreds. With thousands of experts in SEO or Facebook, in e-mail marketing, blogging or web development. You see there anytime the results they have generated for your business. More than that, you pay them only when they generate those results. That’s the beauty of affiliate marketing, „that place” where you can pay only for results and where you can enjoy the crowd marketing advantages.
One of the oldest and biggest problems in marketing was very well summed by John Wanamaker at the beginning of 20th Century:
Half the money I spend on advertising is wasted; the trouble is I don’t know which half.
Well, in affiliate marketing you don’t have this dilemma because as an advertiser you pay only for the results. To be more specific, an online store will pay only if the sale generated by an affiliate is finalized and he will pay exactly the amount of money that he had previously established and communicated to its partners. So, if with display advertising, social media or pay-per-click advertising you pay for reach, views or clicks, in affiliate marketing you pay only if the channel generates revenue for your business. For this reason, we can say that affiliate marketing is not necessary advertising. Some experts recommend to be approached as a sales channel, with a focus on paying for results.
At its very core, affiliate marketing is about business relationships. Let’s find out how people fall in love with affiliate marketing and manage to grow these relationships based on a win-win-win model.
How Affiliate Marketing works
Affiliate marketing is performance based marketing at its best. It is a channel made up of an ecosystem of affiliates (or publishers), networks and advertisers (or merchants) that interact to increase the number of conversions that an advertiser makes online.
IAB UK has a relevant description for it: “Affiliate marketing works like a virtual sales team, paid only on commission. Because payment only happens if a placement performs, this channel is widely used by advertisers to grow sales in a highly measurable and cost-effective way.”
Affiliate marketing connects advertisers (most of them online shops) with affiliates – online marketing experts, publishers, bloggers – through affiliate networks. All of them eager to earn the online customers attention.
The system works quite simple: an advertiser creates an affiliate marketing program and gains access to thousands of online marketing experts who can promote its products at a cost establish from the beginning. Also in the initial phase, the advertiser defines the action he wants to reward (sales) and the commission offered – fixed or percentage. An advertiser can choose with what affiliates he wants to collaborate.
In order to manage to attract their attention and involvement, because the affiliates are the ones who pick the campaigns, the advertiser must create a very strong and appealing affiliate program. Luckily, nowadays, the new advertisers have the advantage of learning from the others experience. So, according to a study developed by 2Parale network in Romania, in choosing the advertisers, the commissions offered for every sale, the shop’s reputation and the available promoting tools are top selection criteria for the affiliates. So, the advertiser must draw carefully the coordinates and strengths of its affiliate program, also peeking to its competitors offers.
Going forward, the affiliate choose also the promoting methods and tools, from banners to links and product feeds. Affiliates can use these tools to direct visitors to the advertisers’ website and they are rewarded with a commission from sales, previously establish by the advertiser.
A very important mention is that the affiliates have the promoting responsibility, acting as a sales agent. The advertiser doesn’t have to worry about that, he must focus on developing the partnership with its affiliates, as well as on improving the customer experience on its website. In this process, the affiliate network – like 2Performant – optimizes the technical platform for this process to be possible, develops the network, makes the governing rules and follow their compliance.
Who can be an advertiser?
- Any online shop where the check out happens online and can be monitored.
- Companies interested by leads: newsletter subscriptions, promotions sign up, new accounts, reservations.
Who can be an affiliate?
- Online marketers, experts in PPC, Social Media, e-mail marketing, SEO, content marketing.
- Forums, communities, Q&A websites.
- Special Projects Developers (cashback, price comparators, vouchers).
When to use it
As an advertiser
- If you want to grow sales in a highly measurable and cost-effective way, affiliate marketing is a must.
- For customer acquisition. Affiliate Marketing is one of the top online customer acquisition channels – source Forrester Research. Also, affiliate marketing is in the Top 3 channels of driving e-commerce orders.
- If you want to expand your marketing mix for better results. You can integrate affiliate marketing into your overall marketing&sales strategy, as more and more companies, from e-commerce sector to Beauty, Finance and Telecom industries, do so.
As an affiliate
- It is a great opportunity to show your marketing&online skills and super powers and to work with top brands (national or international). You are rewarded based on performance, not based on your name/brand or education.
- It is an additional income. If you already have experiences and skills in online or marketing (PPC marketing, blogging, Social Media, e-mail marketing, web development etc) or if you are in the process of learning.
- If you want to monetize your web properties with zero effort for sale: publishing or niche sites, newsletters, blogs, Facebook pages, etc.
- If you want to monetize your unused display inventory.
- If you want flexibility and control.
What makes Affiliate Marketing special
- Affiliate marketing, as we see it, is leading to marketing democratization. Anyone with experience in online can contribute to any company’s marketing, receiving in return some of the profits generated. As an independent professional you can collaborate with international brands, with top companies or small business from emerging industries.
- On the other side, an advertiser can work with thousands of marketing specialists who will use their entire knowledge and experience to bring him results. Including on different markets and in countries where the advertiser doesn’t have experience.
- This leads to a win-win-win partnership, based on performance, in which the advertisers, the affiliates and the platform gain all together.
- As an advertiser, you can start your own affiliate program within minutes in 2Performant.com as the platform works after a self-service model. You don’t have to wait for bureaucratic terms and you can totally control your affiliate program.
- You don’t need a huge budget to test affiliate marketing if you are an advertiser. Also, you don’t have to worry about your spending, here bigger budgets means bigger sales and more money in your account.
- For an e-commerce business, the customer acquisition cost is often the lowest compared to other online marketing channels, since you can control your affiliate program cost.
- As you create your own affiliate program, you receive access to all 2Performant affiliates, professional with unique experience. They apply to your affiliate marketing program and you can decide if you want to work together.
- In order to control and optimize an affiliate program, as an advertiser you gain access to real-time statistics including an all-in-one dashboard and you have the possibility to upload different advertising tools for affiliates.
- Affiliates don’t pay anything to sign up, in less than a minute they can be part of the 2Performant marketplace and start doing money.
- As an affiliate, you choose the suitable affiliate programs for you and you have a great autonomy in choosing the marketing instruments and mix.
The Affiliate Marketing results
- Unlike other marketing models, where you have to wait until the end of a campaign to measure and analyze your results, in affiliate marketing you can see your results in real-time. At 2Performant, we like to open our homepage and to admire our partners conversions, live. „ A commission of €8,98 was registered for a sale of €89,8 in Fashion category!“. You can try it by yourself!
- If you are wondering how much you can sell or earn by affiliate marketing, we can tell you that are affiliates who earn, each month, enough money to support their families or to live their dreams.
- Because we are speaking about a business based on results, let’s see ones. According to the Online Performance Marketing study conducted for the Internet Advertising Bureau UK (IAB) by PwC, in 2014, consumers made 125 million purchases via affiliate websites – totaling £15.4 billion. This equates to a return of £15 for every £1 invested by advertisers – 6% higher than in 2013.
- The volume of sales that a successful affiliate program can generate is somewhere between 10% and 30% of current sales.
Tips&Tricks for success
To be honest, we can write a book about success in affiliate marketing, it is a very generous topic. But the reality taught us that there are no recipes, you have to test tools, tactics, campaigns, niches etc. And you have to profit by opportunities… before others will do. We will share our experience on this topic in future articles, so follow us.
We would like though to guide you with some important recommendation.
We – advertisers, affiliates, affiliate network – are a team with the common goal to win more. Success depends on each member, we win or we fail together, nobody makes money without others involvement.
Communicate constantly – part of the win-win-win effect, the communication is the foundation of establishing long-term partnerships. In 2Performant, both affiliates and advertisers can use the internal messaging systems in order to communicate updates in affiliate programs, to ask for special promoting tools or to negotiate better collaboration conditions.
Be tenacious. In many cases, the results are not immediate neither for an advertiser nor for an affiliate. It takes time and continuous optimization from all the parties.
You pay only for results. It should be approached as a sales channel, with focus on results. The affiliate marketing is not advertising.
Set the right expectations. The affiliates aren’t those who create the demand for a product, but the ones that accelerate sales for the advertiser. So, as an online shop be sure to set the right expectations.
Follow the performance. An online shop must treat the affiliates as its business partners. If you have super affiliates in your campaign, reward them with bonuses and preferential commissions.
Be more than average. An online shop can be more than its competition. Offer above the average commissions, be faster and improve your approval rate and processing speed for commissions. Optimize constantly your conversion rate.