An affiliate is an individual or a company that sells the products of another business by arrangement, for a commission. Affiliates do their own marketing to their customer base, promoting the products of the supplier company. They are essentially an external branch of a business’s sales and marketing force, who are only paid when they make a sale.
Most people think of ecommerce when they think of sales affiliates, but the practice predates the internet and can involve businesses outside of the digital realm. An example of this is a consultancy that recommends a product or service of a particular supplier to their client and then is paid a commission by the supplying company if a sale is made. The convention of paying an external company a referral fee for a completed sale is a very old one indeed.
In our modern internet age, with advances in analytics, digital marketing, and web technologies such as cookies, online affiliate marketing has become a billion-dollar industry. Statista estimates that the affiliate marketing industry in the United States will be worth in excess of 8 billion dollars by 2022. Internet content creators and publishers can make income on their blogs, social media or websites by referring their audience to buy a particular product
Affilliate marketing comprises of three parties –
- the seller whose product is purchased,
- the customer who purchases the product,
- and the affiliate, who directs the customer to the seller.
The process of affiliate marketing is fairly straightforward:
- The publisher joins an affiliate program and has unique tracking codes assigned to them.
- The publisher shows an advert or a link to buy a product. The link has a specific tracking code.
- The customer clicks on the link and is taken to the seller’s website.
- The customer purchases the product on the seller’s website.
- When the purchase is confirmed the publisher is paid a commission for the sale.
There are five common ways for affiliates to earn income through affiliate programs on their platforms:
- Pay per sale, where a commission is paid for each sale made
- Pay per action, where a commission is paid for a specific action, such as signing up for a newsletter
- Pay per install, where a commission is paid for the installation of an app or piece of software on a device
- Pay per lead, where a commission is paid for a signup to something
- Pay per click, where a commission is paid for every click on an affiliate link
There are three primary models of affiliate marketing:
Unattached affiliate marketing
This is the most uninvolved type of affiliate marketing. The publisher has no connection to the services or products they are promoting and makes no claims about them.
Related affiliate marketing
In this model, the affiliate has some relationship with the products or services promoted, such as being in the same market niche, but still makes no claims about the product or service.
Involved affiliate marketing
In this type of marketing, the publisher is directly involved in recommending the product or service. The publisher may be actively using the product or may have done so in the past, and they are considered an authority within their niche. Their audiences trust them and are likely to buy products recommended by them.
Many companies run affiliate programs, especially online retailers such as Amazon, eBay and Shopify. Most affiliate programs are free to join, so there are no start-up costs other than the expense of running the publisher’s chosen platform.
However, while there may not be costs involved with joining an affiliate program, many of them have strict terms and conditions. There may also be banned practices, such as installing adware or spyware on a customers browser. There also may be restrictions on content. Some may even have specifications on how a product or service is to be referenced in the content before a link is validated. The affiliate program may also have a required sales quota before commission is applicable.
Affiliate programs can be very attractive to both sellers and publishers. Sellers get access to a motivated and creative sales force and reach a broader market at a relatively low cost. Publishers in return can generate an income without producing their own products or services, but by selling established brands. Earnings can range from a few dollars a month up to six figures, depending on the products marketed, how much influence and reach the affiliate has, and how much time is invested. As with most things, the more you put into it, the more you are likely to get out of it.
If you are interested in getting involved in affiliate marketing, here are a few steps to get you started:
Choose your platform
How will you reach your audience? Platforms can include niche topic and review websites, social media, or even events and courses.
Decide on your audience
What is your niche? Choose something you are interested in and knowledgeable about. Coming across t as authentic and trustworthy within your nice is vital to building trust with your audience.
Find your products
What products do you think your audience would be interested in and likely to buy?
Join an affiliate program
Research available affiliate programs and join one or more based on your needs. Make sure you understand the terms and conditions of the program you join.
Create great content
Once you have signed up as an affiliate make sure that you have interesting and engaging content to entice your audience to buy.
And remember that you don’t have to be an online content creator to be an affiliate. If there is a business that you know has great products and services, why not reach out to them and see if there is a possibility for referred sales?
Did you know that we at Baer’s Crest have our own affiliate program? Talk to us about becoming an affiliate for our financial products and services.