Affiliate Marketing Explained
While Advertisers (companies selling goods or services) sit at one end of the affiliate marketing spectrum and Affiliates (publishers doing the advertising on their sites) at the other, there are often two additional parties that sit in between them to ensure that the channel is optimized. First, an affiliate Network such as Commission Junction, Linkshare or Google Affiliate Network is utilized to ‘host’ an affiliate program. The Network is an unbiased third party that enables the Advertiser to set-up shop by posting links and banners and providing a tracking and payment mechanism that Affiliates can use to monitor their efforts. When an Advertiser launches their program on a Network, they are announcing to prospective Affiliates that ‘we have an Affiliate program that you can apply for access to, you can grab your tracking links and monitor your progress here and you can expect to be compensated for all affiliate programs you belong to through the network.” In addition to a network, in the cases where an Advertiser does not choose to manage their program in-house, an Affiliate Marketing Agency such as Gen3 Marketing (in the case of Crocs) may be utilized to proactively manage the program. Where the Network provides the tactical platform required to run an affiliate program, an Affiliate Marketing Agency generally plays a more strategic role with regard to affiliate recruitment, affiliate optimization, promotional outreach, and ensuring affiliate compliance with program terms and conditions.
Why Engage in Affiliate Marketing?
The clear benefit of affiliate marketing over all other types of online marketing is that the Advertiser only pays for successful efforts (i.e. sales) and establishes a strong brand presence on the web with very low initial and on-going costs of marketing. While CPM advertising and PPC serve a vital role in many companies’ overall online marketing strategies, neither can generally touch the economics of affiliate marketing, where Advertisers only pay a commission when a sale is made, and the Advertiser is the one who sets its own commissions based on its margin structure and the competitive landscape.
To maximize your Affiliate Marketing opportunity, however, you cannot afford to make it someone’s part-time job or put it on auto-pilot. Even if you are selling the best products at the best prices anywhere, qualified traffic will not find you by accident. Only an actively managed Affiliate Marketing Program can generate the qualified traffic you need to deliver sustainable ROI.
How to Succeed in Affiliate Marketing
To succeed with an actively managed Affiliate Program, you need to know who your key Affiliates are, how to spur them into action, where to find more of them and how to keep the relationships strong. You need to forge solid relationships with major Affiliates in key verticals and know how to identify, reach and motivate new Affiliates to promote your brand.
Used properly, Affiliate Marketing can drive an incremental 10% – 20% in topline to an Advertiser’s business. Hopefully you now have a better understanding of the channel to get started!
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