Affiliate marketing has played a significant role in the expansion of many successful brands. It is undoubtedly one of the most powerful online marketing strategies available to you.
In this article, we’ll break down exactly what affiliate programs are, how they work, and how they can benefit both your business and your affiliates.
After reading this post, you will have a comprehensive understanding of affiliate marketing and create a successful program for your business.
What Is Affiliate Marketing?
Affiliate marketing is also known as performance-based marketing because you only pay the publisher, promoter, or influencer when actual results are achieved (i.e., an actual sale).
As a company, affiliate marketing gives you the opportunity to:
- Lower the perceived risk of the consumer, as they are only paying for results.
- Expand your reach and increase sales from less loyal customers.
- Improve brand affinity by rewarding consumers for spreading your message.
- Differentiate your products with promotional offers.
- Reach new markets by promoting foreign brands.
- Significantly reduce marketing costs, as you are only paying publishers when actual results are achieved.
How Affiliate Marketing Works
Let’s say a blogger who is an affiliate marketer decides to sign up under your program and promote your product.
Once someone clicks on their special affiliate link, which contains a unique identifier that tracks back to that person via a cookie, the sale is recorded as coming through that publisher or promoter (the affiliate).
You then pay them a commission fee at a previously agreed-upon rate.
This process is known as “conversion tracking,” It allows you to pay the affiliate only when a sale is made.
In addition, affiliate marketers can increase their earnings by promoting multi-product discount deals. For instance, if an affiliate marketer has highly relevant content that caters to people interested in more than one type of product or service, they could sign up with multiple companies to promote just those products.
This would be particularly advantageous for someone blogging about hosting plans on different types of hosting services.
They could then link to all the different hosts on the same page, which would give them higher conversion rates while also allowing them to earn commissions from all of the hosts they mention on their site.
Affiliate Marketing vs. Traditional Marketing
When it comes down to it, affiliate marketers are responsible for promoting products and services, while traditional marketers promote their brands. So what’s the difference?
Affiliate marketing is advantageous because it allows you to focus on results rather than paying to target your audience.
You can lower costs by rewarding affiliates only when actual sales are made, encouraging publishers to engage in high-quality promotional tactics.
Traditional marketing requires you to pay for advertising that isn’t directly tied back to sales. This means you may have less control over the exact type of promotion used by your publisher or promoter (affiliate).
Traditional marketers also pay to get in front of their target audience whether or not they convert into customers during that session or at all. While an affiliate marketer only gets paid when someone uses that specific affiliate’s promo code or link.
In addition, traditional marketers have to invest time and money into creating awareness about their brand for a single sale. In contrast, an affiliate marketer only needs to focus on a single product.
Affiliate Marketing System
If you’re serious about launching affiliate marketing, there are a few things you should consider before proceeding. It’s not enough to get an agreement in place and start signing up affiliates.
You need to create a system that works for everyone involved.
Here is a list of affiliate management systems to explore:
ShareASale: ShareASale is one of the largest affiliate networks, with around 7,000 merchants across 12 verticals. It is typically used by large businesses that are looking to grow their affiliate marketing base.
LeadDyno: LeadDyno is a cloud-based affiliate management system that allows you to manage your affiliates from one central location, as well as provide custom tracking links and banners.
AWIN: AWIN is an online network with over 25,000 active affiliates who promote more than 3,000 merchant brands worldwide. It can be used for any business looking to expand its reach and increase revenue through affiliate marketing.
Commission Junction: Closely related to ShareASale, CJ specializes in helping larger companies find new ways to market themselves online.
Impact Radius: Impact Radius is an affiliate network and marketing platform that offers easy-to-understand tools for merchants, affiliates, and publishers. They provide a customizable affiliate program as well as advanced publisher management features.
Rakuten: Rakuten is a Japanese buying service that offers more than 50,000 merchants in 10 different countries.
Paddle: Paddle is a global affiliate platform specializing in providing merchants tools to manage their campaigns.
MaxBounty: MaxBounty is a network founded in 2004 and has been credited with launching the market for performance-based online advertising. They work specifically with digital product marketers, helping them find affiliates interested in promoting their products and services.
Partnerstack: From a single dashboard, you may control all of your Affiliate contacts and progress.
Refersion: Refersion is a self-serve platform for merchants and affiliates to track, manage and optimize their affiliate marketing campaigns.
Affiliate Marketing Agreement
Once you’ve found the right affiliate marketing platform, it’s time to develop your agreement or contract with your affiliates.
Your goal here is to create a document that will protect both you and your affiliates if there are any future issues.
Here is a list of questions to keep in mind:
- What do I need from my affiliates?
- Do they have permission to use my logo?
- Can they link directly back to my site?
- How do we handle unapproved promotions and bonuses?
- When should we meet again (in person/by phone)?
- What if something goes wrong – who initiates contact first?
Transparency is critical when working with affiliates, so be sure everyone understands the rules and expectations before getting started.
Creating an affiliate agreement can be tricky, so we recommend putting together a template before negotiating with potential publishers and promoters.
One of the most common mistakes merchants make when creating affiliate agreements is writing too much, which confuses both parties. After all, an agreement is meant to clarify expectations and avoid any future disagreements.
Publishers and promoters need to know what’s expected of them when promoting products or services.
By sharing the terms upfront, you’ll find it easier to get new affiliates on board and ensure no misunderstandings happen later on.
To ensure you don’t miss anything, it’s a good idea to consult with an attorney when building an affiliate agreement.
After all, this is meant to protect both parties – even if the relationship only lasts for a short time.
By getting started early and asking questions along the way, you’ll find that creating a beneficial affiliate agreement is not only possible but easy as well!
The affiliate network you choose to partner with for systems should be able to guide you here as well.
Once you choose a commission rate, be sure to include it in the agreement. Being upfront about how much an affiliate can earn is always best.
If you have different commission rates depending on the specific type of traffic being sent or whether or not a sale has been made, list those as well. Again, the publisher needs to be aware of what’s expected of them from the get-go.
You’ll also want to create an initial payment threshold that will need to be met before receiving their first payment from your program.
This means if someone signs up as an affiliate today but doesn’t send enough traffic for 30 days, there’s a chance they could miss out on some potential earnings.
The Affiliate System you partner with should handle your payouts once you get set up.
Collateral is your affiliate’s bread and butter. They need to know precisely how to communicate with their audience, promote themselves, and generate traffic around your company.
Your goal here is to create a variety of marketing materials, including banners, text ads, widgets, review sheets/wording guides, social media posts, press releases – anything they’ll be able to use when promoting your products or services online.
We recommend creating templates for every piece of collateral you hand off to affiliates so there are no misunderstandings regarding color schemes or formatting.
This will make it easier for all parties involved when it comes time to update the content later on down the road.
Affiliate Marketing Tracking & Tools
Different affiliate platforms use different tracking techniques, so you’ll need to ask your affiliates how they typically measure success.
The most common method – and the one we recommend – is through a unique affiliate ID. This means every time someone clicks on an affiliate link or promotion, it will be logged in to their publisher account as a referral.
This makes it easy for both parties when reporting commissions since each publisher’s sales can be tracked back to them directly.
Another popular method is to just track sales that come directly from an affiliate URL (i.e., if someone goes to your site via an affiliate link but doesn’t make a purchase).
This way any potential issues over purchases made by other buyers who used the same link can be easily solved (i.e., sharing affiliate links with others, etc.).
So when they opt-in to your program, they’ll be asked to provide their unique URL/affiliate link which you can then add to your blog or website for them.
You should also send a confirmation email that shows the date of sign-up and includes a list of marketing materials they’re allowed to use in regards to promoting your business online.
Payment Schedule & Commission Reporting
While commission reporting won’t come into play until payment time rolls around, it’s helpful if you have some rough numbers from the get-go so affiliates know what kind of earnings they can expect from your program.
A good rule of thumb is 20% commissions on any sales within 60 days, although you can always adjust this number upward or downward depending on the industry.
The other thing to consider here is how often people will be paid – monthly, quarterly, annually?
Some affiliate programs pay commissions in lump sums using PayPal while others like to spread them out over time to avoid issues with budgeting and spending. The choice is completely up to you.
Targeting Your Affiliates
Once you have built your affiliate program, it will be easier for you to start signing up affiliates even if they already have established relationships with other companies within their industry.
In addition, commission fees might seem more attractive than the commission rates offered by competitors. This will help increase the number of publishers joining your affiliate program.
You can look for potential affiliates by checking out who’s advertising with your competitors or other affiliate programs, then reach out and request that they become part of your network.
Affiliate marketing is a valuable way to expand the reach of your program, but it requires work on both ends to make sure everyone benefits.
To create a successful program, you need an idea of what products you want to be featured by affiliates, how commissions are handled, and which means of communication are best suited for managing all involved parties.
Creating content will take time, but finding great affiliates isn’t as difficult as it might seem once you have developed strong relationships within industry circles. You just need to know where to look and what to offer to see your affiliate program flourish.
Affiliate Management Schedule
Before a publisher becomes an affiliate, you have to prepare a schedule of their management.
You can decide on how often publishers will be contacted and how you want to contact them. It is also important that the commissions are paid on time so payment plans should be included in the publishing contract.
Publishers will appreciate any information they receive from your business because it helps them promote your product/service more effectively which means better online sales for your business as well as higher earnings.
The first step you need to take is to define what kind of marketing materials affiliates are allowed to use if they choose to promote your brands/products or services within their own website content, newsletters, etc.
This way you ensure that everyone is on the same page from the get-go.
You can write a contract that lays out what kinds of materials affiliates are allowed to use, who owns them, and how often they will be paid.
Affiliate marketing is a successful way for businesses to increase revenue and expand their reach, but it can be difficult to manage without the right tools at hand.
When creating an affiliate program, consider the following:
- Make sure you have a strong idea of what products or services you want affiliates to promote before reaching out.
- Find potential affiliates by looking for those advertising with competitors or other well-known programs, then contact them via email or phone calls.
- Create a bulletproof commission structure that will not only attract potential affiliates but incentivize publishers to stay on board for longer periods of time as well.
- Promote content that affiliates should be promoting in order to maximize exposure.
- Make sure you have a detailed affiliate management schedule in place that includes responses to any promotion requests or inquiries from affiliates.
AOV products are “Always” online. These are usually low-priced items that people buy regularly.
AOV campaigns are “Always” Online Value campaigns. This is where all emails include links to relevant lowest price, always available items.
There are several ways you can find affiliates for your program including searching through affiliate networks or websites and reaching out directly to established players in the industry if they seem like a good fit for your business model.
Bloggers, Youtubers, Social Media Influencers, Brand Advocates, Email Lists, People promoting your competition.
Affiliate programs allow companies to expand their reach and give current customers more opportunities to purchase additional products or services while giving existing customers an incentive to stay loyal and refer others.
Many have different models for this, but try to find a healthy balance between the product value and what you’re willing to pay your affiliates. For instance, if you know that commission for one affiliate is around 30% of the purchase price, then do some quick math on how much more you can afford to pay them or look for another offer that’s closer in value. While commissions are always negotiable the range of 5% to 30% is a great place to start.
There are two options when it comes to inactive publishers: either remove them from your network entirely (and refuse to pay out any commissions) or continue paying them even though they don’t perform any tasks at all. Some businesses vary in how they handle these types of affiliates but no matter which method choose, make sure it’s in writing so nobody is left confused when the time comes to enforce it.
The publisher is the person who promotes or advertises your products.
There are many different types of affiliate marketing programs, including but not limited to: e-commerce, content/media, PPC campaigns, content network campaigns, social media campaigns, and more.
The cost of an affiliate program can vary depending on the size and needs of your business. These costs include but are not limited to: cost payouts, marketing costs, and implementation costs.
A virtual product is an intangible item that has no physical material value. Some examples include services, software, digital downloads, or membership access.
Virtual products work great as payouts because they do not have a set price and can be charged based on what the market will bear. Also since there’s usually no shipping or fulfillment involved this makes it easier for affiliates to sell your affiliate link.
A product feed is a document containing all the information needed for affiliates to promote certain products or services. Within these feeds, retailers should include things like: Images and videos URLs Images and videos Text, price, and other relevant data Copywriters can use this information to create compelling copy around various affiliate offers so it’s also beneficial for consumers.
There’s no set answer because this depends on many different factors. The longer you wait, the more data you’ll have to make an informed decision about how much traffic is converting into sales which will help you determine fair affiliate payouts. It can be anywhere from a few days up to a few months depending on your business model.
An affiliate network makes managing your online marketing easier by providing support for various programs including tracking, reporting, integration, and more so you can focus on other areas of your business.
There are so many affiliate networks because they each have their own strengths and weaknesses depending on the needs of your business, so it’s good to partner with different networks depending on what you’re trying to accomplish.
Lori Ballen is a real estate agent in Las Vegas. She’s a digital marketing specialist, speaker, and marketing coach and loves to share her “Ballen Method” to generate website traffic and leads online. Lori’s specialties are SEO content writing (ranking on the search engines), social media strategies, and affiliate marketing. Need a website? Contact Lori’s brothers Jeff and Paul Helvin at Ballen Brands.