Affiliate Marketing: The Social Media Connection

By Neil Glassman Comment

The affiliate marketing opportunities for entrepreneurial individuals to monetize their blogs and websites continue to expand. Many have gone from supplementing their incomes to earning substantial rewards.

But success may allude those who fail to grasp affiliate marketing’s increasingly competitive landscape and growing reliance on social media.

I’m attending Affiliate Marketing West 2011 and confess only a passing knowledge of affiliate marketing upon arriving. After a full day of workshops yesterday, I came away with the impression that, while the techniques of affiliate marketing are built on a foundation of recently accessible Internet technologies, the core principles are little changed from antecedent sales and marketing platforms.

The affiliate marketing model is rather straightforward. Ads for merchants (brands) with tangible products and services appear on publishers’ websites and blogs. When customers click ads and make purchases, the merchant pays the publisher a commission. In some cases, such as when not-for-profits openly promote use of affiliate links to companies such as Amazon to raise money, customers are aware of the relationship. For the most part, customers are not aware whether publishers are being compensated just for advertising “real estate” or getting a piece of the action.

Affiliate networks consolidate offers from multiple merchants, deliver the ads to publishers and transact the commission. The growth of these networks can be attributed to their ability to target large numbers of ads across large numbers of sites and assure publishers they will get the money they’re due. Agencies that specialize in outsourced program management (OPM) are increasingly present, helping merchants effectively affiliate market more directly with publishers.

The financial costs of entry for publishers can be quite low – it’s cheap to build and host a website. The hard part is the “sweat equity” – creating the content, search engine and other strategies that will drive traffic sufficient to generate purchases through affiliate links. A significant industry has emerged offering services, tools and advice on how to successfully affiliate market. Those providers are generally affiliate marketing merchants themselves, fueling the industry’s growth through the spread of the “secrets” behind the rags-to-riches tales.

While coupon, shopping-comparison and purchase-loyalty sites are likely transactional affiliate marketing “pure plays,” product review, expert advise and other sites that monetize through affiliate marketing rely on reputation for success. Publishers need credibility that is interrelated with that of their sites’ advertisers. Neither wants to be associated with a party that will hurt reputation and both are seeking reputation-enhancers.

Brands and publishers can reinforce their images using Facebook’s “Like” button and other social media tools that raise the comfort level of visitors by showing them their friends’ “approval” of the publisher, advertiser or both. Building a network of friends – and then harnessing those friends’ networks – requires that publishers and brands nurture their social media presence to lessen transaction friction.

Online purchasing is exploding, but that does not assure that affiliate marketing will keep pace nor that the increasing number of publishers relying on affiliate marketing will not result in a fiercer competitive environment. Publishers and brands that raise their trust levels and word-of-mouth networks through social media very well may have the upper hand.