What Is Affiliate Marketing?

The marketing world is notorious for its buzzwords, acronyms and trending topics. However, many of the “must-know” terms and best practices are already outdated by the time you finally catch on. If your organization doesn’t already have a partnership program, affiliate marketing may be one of those terms for you. You’ve heard it over the years, but since it’s outside the scope of your day-to-day, you assumed it would have its time in the spotlight and slowly disappear. In 2021, it’s increasingly clear that affiliate marketing is here to stay. So, here’s your opportunity to get up to speed and take advantage of what the concept offers. Let’s start with the basics—what is affiliate marketing? The basics Affiliate marketing is a subset of partnership marketing that companies use to reach and convert prospective customers. Companies partner with affiliates, who then do the work of marketing the company’s product or service. They’ll use tools like banner ads, newsletters and educational blog posts to convince their audience to make a purchase. Affiliate marketing is performance-based, meaning that brands don’t pay until their desired action occurs (typically a completed sale, although some brands prefer alternatives like form submissions or app downloads). Affiliates are incentivized to bring in as many customers as possible to earn commission, and brands benefit from the increased revenue and low acquisition costs. Major players With that basic description in mind, let’s take a closer look at the key players in a standard affiliate marketing setup. ● Affiliates: Affiliates market the brand’s product or service in an attempt to make a sale (or generate a qualified lead) to earn commission. Affiliates can be individual people (solopreneurs), or they may also be companies. They’ll often have a built-in audience that aligns with a particular niche, making it easier to attract new customers. ● Brands: Brands sell the products that affiliates market to their audiences. In most cases, brands will have their own marketing departments that focus on other tactics outside of the partnership space. ● Agencies: Agencies, like All Inclusive Marketing, help brands set-up, launch and/or optimize their affiliate marketing programs. Whether that means finding top affiliates, building a measurement strategy or managing affiliate relationships over time, affiliate marketing agencies exist to make the affiliate channel more profitable and effortless for brands. ● Networks: Networks connect brands to affiliates and track the traffic and transactions between them. They act as a repository for available affiliates, making it easier for brands to find and select affiliates who align with their goals. They can also act as the escrow account, paying affiliates directly from the network rather than sending individual wire transfers or checks—which can be extremely time consuming. How affiliate marketing benefits brands Because brands only pay affiliates when their desired action is accomplished, the process is very low risk. Unlike other marketing channels that require heavy investment up-front, affiliate marketing will only cost you if it’s working—and the additional revenue you’re bringing in will pay for the cost of the affiliate. Moreover, affiliate marketing is one of the channels with the clearest ROI. The numbers are simple, and the data is easy to collect with the tools and platforms on the market today. Not only will brands understand how affiliate marketing is performing as a channel, but they’ll also have transparency into which specific affiliates are driving results—and which aren’t. It’s common for brands to cut the low performers from their roster and focus resources on the best performing partners to maximize effectiveness. Finally, affiliate marketing also helps brands reach customers who might not engage with their marketing efforts otherwise. The more niche a brand’s product is, the more likely affiliate marketing will be transformative for its overall success. By finding an affiliate whose audience is already engaged with the niche, brands tap into a network of prospective customers who have a preexisting relationship with the affiliate. What to consider before getting started If you’re convinced that affiliate marketing is essential to a brand’s success, you’re in good company. Before you get started, you have two key decisions to make about what you want from the program. As with any new marketing program launch, it’s important to get clear on the goals before you get started. Your goals will also help you structure your payment terms. If you want to bring in new revenue, it makes sense to pay out affiliates when they drive sales. If you want to increase the size of your network, you may pay out for other actions like newsletter sign-ups. Just make sure to understand what you want out of the program before you get too far into planning. Next, decide whether you’re going to work with an agency or not. If so, bring them the goals and considerations you’ve decided on and entrust them to build out the program from there. You can also lean on these agencies to help align goals and expectations based on their expertise. As an alternative, you may opt to choose an affiliate network or tracking program to support your efforts. Either way, make sure you do your research first to make sure whomever you pick is the right choice for you and your business. As you can see, affiliate marketing is a powerful tool for brands to leverage within a holistic marketing strategy. Use the information above to build out a program of your own, or take comfort in the fact that you have another marketing buzzword under your belt. In either case, you’re better off! How Sales Associates Use Their Digital Independence to Drive Sales