What is Affiliate Marketing?
Affiliate marketing is a form of digital advertising that drives traffic to websites through incentivising promotion. Marketers sign up to your affiliate program, and promote you in a variety of ways – sending people to your website and earning a commission for each visitor that becomes a client or customer. There are numerous methods of promotion that you can choose from based on the needs of your business and market, including advertisements, banners, and blog posts.
The traffic driven from your affiliate marketers is tracked using cookies, and when a desired action is taken, it is rewarded with a payment, usually either a percentage of the sale or a flat fee. These include:
- Cost per acquisition: Affiliate is paid based on visitors they send to your website that end up purchasing your product or service. We recommend this, as it has the least risk and the highest reward, and this article will focus on it.
- Cost per Lead: Affiliate is paid based on all traffic they drive to your website. Can be quite easily manipulated by dishonest marketers.
- Cost per click: Affiliate is based on each visitor who clicks a desired link on your website. Also quite risky.
If you don’t have the skills required to analyse this data, there are established affiliate marketing networks that take the work out of your hands. They attract a wide range of potential affiliates, track performance and collect payments from you which are delivered to your successful marketers. This can be useful, but does mean you have less control over who your affiliates are, depending on the program.
What are the Benefits?
If you choose to have your affiliates use blogs or social media to promote you rather than running advertisements, you’re skipping the hard line sales tactics in favour of influence. Influencer marketing is a huge buzz term right now. Celebrities and popular internet personalities promote a service or product, and the generated sales tend to be impressive due to the reach these individuals possess. You might not be able to afford to have Kylie Jenner wear your company’s clothing on Instagram, but affiliate marketing can have similar reach through using many, smaller affiliates – and you don’t have to pay them unless they actually help you achieve sales.
If your affiliate program is attractive, ideally you will entice marketers who have an audience that looks up to or trusts them, and will listen to their opinion on your company. Back to Kylie’s Instagram - she doesn’t tell people to buy the clothing she wears, her audience simply sees her looking good and the pieces sell out in no time. The only difference is that your affiliate marketers will include a link so you can record traffic and sales driven by them for commission purposes. Research shows that people respond well to this type of low pressure sales tactic.
Advertisements and banners are still beneficial, if slightly less trusted than content directly from your affiliate. If it is clear that they are not automatically generated based on the viewer’s browsing history (like Google AdSense), then the marketer’s audience will be curious about their endorsement of the product. They will likely know that a payment is being received for hosting the ad, but if they trust the host, they will usually trust the ad. This is more likely to be effective when you select your affiliates based on their relevance to your market.
Apart from increasing traffic, leads and sales directly through your marketers – affiliate marketing can help optimise your search engine rankings. One of the factors considered by Google’s ranking algorithm is backlinks – the number of times other websites have linked to you. This is especially effective when the referring websites are considered trusted sources of information, something to consider when establishing your selection process to choose affiliates. The higher ranked you are on Google, the more traffic you get – and ideally a good percentage of that traffic will convert to sales.
Is it Right For your Business?
Affiliate marketing won’t work for all businesses. Your first step in researching whether it’s a suitable tactic for you, is to check out whether other companies in your market or niche are doing it. Check out your competitors on Google, and you should not only find out whether they are employing this marketing technique – but their strategy, and the payment they offer. This gives you an opportunity to make your affiliate program even more attractive should you choose to go ahead with one.
You also want to consider your profit margins. How much can you feasibly offer an affiliate who sends a sale your way? Once again, you will need to research your market to see what is being offered by your competitors and establish whether you can match or beat it. Another important factor is the price of your product or service – they need to be worth a decent amount in order to offer commission that makes it worth an affiliate marketer’s time.
Can you afford to hire someone to manage your affiliate program, or do you have the time and knowledge to run it yourself? Remember that it will involve website performance analytics, keeping an eye on the tactics your affiliates use, as well as their reputation and the quality of their content. If you are a small business or entrepreneur, you are likely better off engaging an Affiliate Network – but this also involves costs.
Things to Consider
So you’ve decided to set up an affiliate marketing program! There are a few things you should consider before you go ahead. Firstly, remember that your affiliates represent your brand, much like a traditional sales force. This is especially true when you are using them in a role similar to an ambassador, creating content about your company’s products or services. We recommend selecting your affiliates carefully, or at least monitoring their reputation and the methods they use to promote you. The issues here can be obvious – you don’t want your products advertised on a website run by a neo-Nazi – but they can be subtle too. For example, perhaps a beauty blogger you’ve chosen as an affiliate to promote your company’s new lipstick has recently been accused of fraud. They are no longer going to be considered a trusted source of information, and your brand could be tainted as a result of being associated with them. You also don’t want to be tied to a website that uses dodgy promotional tactics like spam emails, because this gives potential clients the impression that you support or employ them yourself.
Another thing to remember is that it is very important that your affiliates stick to advertising regulations in your country or state. You need to be careful that they aren’t being misleading or outright lying about what you offer. Not only could this damage your reputation if they are caught or your product/service doesn’t meet expectations, but there could be legal implications too. Check out the relevant trade commission for regulations pertinent to advertising, and be sure to provide guidelines to your affiliates to help them avoid getting you into trouble.
It is important to ensure that your affiliates are not directly competing with you, for example by driving up bidding when purchasing Pay-Per-Click advertisements. If you choose to allow them to use the same channels, ensure that the advertisements direct to their landing page rather than yours, otherwise you will be competing for ad space and placement. This is an issue because if their ads take precedent over yours, you pay for the sales they generate that you could have been generating yourself. They should also be restricted from competing with you for search engine keywords for the same reason.
Finally, the vast majority of affiliates use honest methods – but as with anything, when there’s money to be made, the fraudsters come out of the woodwork. These dishonest marketers use a variety of methods to make it seem like they’re generating more sales than they are, taking your money without delivering results. Here are a few ways in which they accomplish this:
- Cookie stuffing: This method makes it look like a visitor has clicked links they haven’t by dropping multiple cookies, tricking your tracking system and allowing them to receive credit for any purchase by that user despite not having prompted the sale – they can even use this to steal sales from other affiliates.
- Forced clicks: Affiliate link loads immediately when anyone visits their website or blog, and they receive payment for any sales from that customer despite not promoting you.
- Banner ad fraud: The affiliate can load a banner ad that has nothing to do with your website with cookies, receiving money for any sales without ever having promoted you.
You need to have an experienced individual closely monitoring your analytics to watch for this kind of fraudulent behaviour, which is why we recommend using an affiliate network if you’re not sure what you’re looking for and can’t afford to hire a manager who does. The right affiliate network depends on your market and the size of your business, but here are a few who have great results:
2Excel’s Affiliate Program
Interested in becoming an affiliate marketer yourself? Are you an influencer in a web services niche? 2Excel are establishing an affiliate marketing program ourselves, and looking for people to get on board. If you’ve got a blog or a website, and are interested in either running a 2Excel advertisement or creating content that links back to us, we are offering 10% for each sale you send our way. Contact us today!