Marketing is a continuously changing thing. With each technology advancements, it evolves and becomes more and more appealing. Let it be any geographic or economical condition, it is always there. Selling something to someone is a non stop process, even for the biggest giants like Pepsi, Coke, Facebook which doesn’t need an introduction.
There are endless topics in this genre. But, today we will focus on all you need to know about Affiliate Marketing. If you are a good sales man, it can bring wondeful returns for you. It is one of the main instrument of getting passive income.
What is Affiliate Marketing?
Affiliate marketing is a sort of advertising in which a firm pays third-party publications to drive traffic to its services and products. These third-party people or publishers are called affiliates and charge a commission or fee to promote the company’s business.
Let us understand it in more depth.
The internet boosts the concept of affiliate marketing. This was majorly popularized by Amazon, which highly promoted websites and bloggers to add or put the links to Amazon’s page for a discussed or reviewed product. The advertisers were paid a ratio of commission when any purchase was made with any particular advertisement. In short words, it is a type of pay-for-performance.
So, in a nutshell, affiliate marketing is about selling a product or service across a broad network, via any third party vendor. Now-a-days. it predates the internet. Cookies and analytics are the major factors that led it to become a billion-dollar industry in digital marketing. A company with an affiliate marketing business program can track the links of several users who are interested in their products or services. Therefore, they can generate leads with the help of internal analytics and predict how many of them can be converted into sales. You can gain more knowledge regarding this topic via this website.
How does Affiliate Marketing work?
First of all, we need to understand who are all models involved in affiliate marketing. Check out the step by step process.
1. Brands/advertisers/merchants:
These are the companies that sell their service or products to other customers. The industry includes direct-to-consumer, retail, travel, broadband, financial Services, B2B places, marketplaces, and many more. This companies are the manufacturer of the service.
2. Affiliates (Partners/Publishers):
They can be anyone. Marketing partner to brands, bloggers, content sites, active social media posters, product review sites, niche content sites, mobile apps, shopping sites, mass media sites, app-to-app marketing platforms, coupon and reward websites, loyalty, and even other brands. It can be an individual or a big company. These are the entities that spread awareness of the product to masses.
3. Affiliate Networks:
Affiliate networks do all the handling, tracking, payment, and reporting to affiliates. Along with technical support, some affiliate networks also provide self-service management or full-service management of a program. Access Affiliate networks also give access to networks of affiliates to those who apply to join their network, which in turn provides access to hundreds or even thousands of affiliate programs.
4. Software as a Service (SaaS) Platforms:
These provide companies with a track record of performance, payment, and reporting, but they do not provide access to a network of affiliates and do not manage affiliate programs. Technical aspects of the affiliate program are the main focus in this case.
Brands select either a SaaS platform or an affiliate network as their technology partner but not both at the same time.
5. Affiliate Agencies:
These affiliate agencies manage and oversee day-to-day operations and program strategies on behalf of brands, which in turn handle and look upon partner recruiting, partner relationships, optimization, and activation. They work directly with SaaS platforms, Affiliate networks, and affiliates that meet the program’s technical needs.
6. Customers:
This is the last part of this entire affiliate marketing ecosystem. The audience or customers plays a significant role. The affiliates require to influence purchases, fill the form, sign a newsletter, test out a service, become a new customer, etc. So, the end result is not only restricted to sales only. It varies as per clients and their requirements.
Insights of Affiliate Marketing
The inner working of affiliate marketing can be a little bit confusing and mysterious and some marketers even have a mindset that this is a type of channel that can be turned on and off at any time as per their requirements. The truth is that these affiliate partnerships are multifaceted; this huge network or structure provides genuine relationships with clients along with transparency, not one-off transactions. The main motive of an affiliate program is to produce a win-framework for both affiliate partners and brands. This structure is strategically managed and established correctly and can generate a significant ratio of online revenue of brands with low CPA and high ROAS.
Take, for example, affiliate marketing as a means of achieving scale.
- The brand’s service or product is promoted by an affiliate partner on their site.
- Interested candidates/consumers notice the promotion on the website and click on the ad. The SaaS platform or affiliate network then stores a cookie on the consumer’s browser, allowing them to track their progress through the brand’s shopping cart.
- The consumers are being redirected to the brand’s website.
- Then, they purchase the product from the brand’s website.
- The commission is then paid to the affiliate automatically through the network or SaaS platform.
How to measure Affiliate Marketing?
The following things are required for its working.
1. Affiliate Program Management:
Either a company manages their affiliate programs by themselves or hires an affiliate agency to manage day-to-day requirements for the smooth running of the program. A “hybrid” approach is sometimes taken up, particularly by the enterprise brands, where they oversee elements in-house and partner with agencies for day-to-day management.
2. Performance Tracking:
The performance track of consumers on the company’s products is carried out with the help of cookies tracking and a pixel placed on the brand’s site to track the marketing activity. From this tracking structure, the metrics generated from this tracking structure proves to be more tangible than other forms of marketing and thus, lead to a high-reliability ROI calculation for the brand, including:
- Subscriptions, sales, and orders
- Conversion rate
- Registrations, email, giveaway entries, and sign-ups
- Cost Per Action (CPA)
- Conversion rate
- Average order Value
- Customer Lifetime Value
- New vs. Returning customer