Affiliate Marketing: How It Works, Benefits, Types, Tips, etc
Affiliate marketing is a marketing scheme in which companies work with partners (affiliates) to promote their products with affiliate marketing tactics.
That in this article, we will discuss thoroughly, starting from What is Affiliate Marketing, How Affiliate Marketing Works, the Benefits of Affiliate Marketing, the Types of Affiliate Marketing, and the Advantages and Disadvantages of Affiliate Marketing.
So, Let’s get started!
What is Affiliate Marketing?
Affiliate marketing or affiliate marketing is an advertising model in which a company works with affiliate partners (also called affiliates ) as third parties to market certain products to achieve various marketing goals.
The affiliate partner is usually paid on a commission scheme for every successful sale through him.
Some affiliate programs also provide commissions to affiliates for the results of increased website/app traffic, app downloads, free trials, user leads, or every click to a website. This is by the cooperation agreement and purpose between the company and the affiliated partners.
For companies, affiliate marketers are considered effective for the success of a marketing campaign. For affiliates, affiliate programs can provide a lot of income.
How Affiliate Marketing Works
Affiliate marketing is a strategy to promote a company’s products with a commission for each sale.
How Affiliate Marketing Works
- The company cooperates with affiliated partners. Initially, they made a contract and agreed to it.
- Affiliate partners promote the company’s products in many ways, including affiliate links, sponsored posts, and product recommendations displayed on websites, blogs, video content, advertising banners, YouTube content, or social media networks. (Instagram, Twitter, Facebook, Tiktok), and other digital media.
- Affiliate partners will get a commission from every audience, customer, or consumer who uses the product/service of the brand through the affiliate code.
- Commission rates vary depending on the company’s offer.
- Audiences will also get offers in the form of discounts or cash back when using the affiliate code.
Affiliate Marketing Workflow Summary
- Affiliate partners display advertisements or links for XYZ Stores on their websites, blogs or social networks.
- A customer clicks on that unique link ( an affiliate link designed by a brand that can automatically count traffic or click results, and calculate discounts for that customer).
- The customer makes a purchase at the XYZ Store.
- Affiliate networks record transactions.
- Purchase confirmed by XYZ Store.
- Affiliate partners are paid according to the calculation of the commission.
So, there are 3 parties involved in the affiliate marketing system, namely merchants/brands/ companies, affiliate partners, and customers. This affiliate program provides benefits for all parties.
Benefits of Affiliate Marketing
Online businesses hire the services of affiliate partners to reach a wider audience. Outline the advantages of affiliate marketing:
- Increase brand sales.
- Creating a win-win solution for both merchants and affiliate partners
- Allows brands to track leads and contribute to sales.
- Improve or better position the brand’s product.
- Generate traffic or generate leads to company products and services.
Check out more benefits of affiliate marketing below:
1. Affordable Promotion Fee
Affiliate marketing is a marketing strategy solution with a fairly low promotional cost. This is efficiently done by startup companies so that financial conditions remain healthy and promotional projects continue to run.
The reason is, that the company issues commissions to affiliate partners only when there is a purchase. Thus, it enables organizations to generate revenue from direct marketing efforts.
Companies can calculate fees and commission percentages or give discounts to stay profitable.
2. Improve Reputation
Affiliate partners also help the company improve its reputation or brand image. As long as the affiliate has a positive image with a strong follower base.
Brands can be increasingly recognized by a wider audience. Companies with a strong positive reputation can attract more active consumers. Of course, this will contribute to business growth.
3. Build Brand Awareness
Affiliate marketing is considered to be able to build effective brand awareness.
Basically, affiliate partners also introduce products/services to their audience. Starting from the advantages of the product to the identity of the product so that the audience is increasingly aware of its existence of the product.
In addition, affiliate partners will influence the brand image and direct the audience to use the products/services offered. Helping companies build good relationships between brands and customers.
4. High ROI Value
Do you know? Affiliate marketing is responsible for 16% of all eCommerce sales in the US.
Not only the promotion costs are cheap, but also have an impact on the company’s overall revenue.
ROI or Return on Investment is a value calculated from how much revenue an affiliate marketing campaign generates and how much money is spent.
Multiply revenue by profit margin (revenue minus expenses) and divide the result by campaign costs from affiliate marketing.
5. Increase Traffic
Affiliates will help brands increase website traffic or social media engagement. If the traffic is high, it means that the sales opportunity will also be higher.
6. Benefits for Affiliate Partners
Affiliate partners also benefit, including:
- Increase additional income streams.
- Forge valuable partnerships.
- Cultivate creativity to create content that will get a lot of traffic.
- Improve statistics and data for portfolios.
- Have flexible working hours.
- Increase profile and self-branding.
Types of Affiliate Marketing
There are three main types of affiliate marketing, namely:
1. Unattached Affiliate Marketing
Unrestricted affiliate marketing is an advertising model in which the affiliate has no relationship with the product/service they are promoting.
They don’t need to have any useful skills to make claims about the superiority or functionality of the products/services they offer in the affiliate scheme.
There is no relationship between the product and potential customers, so the affiliate does not really need to recommend the product.
2. Related Affiliate Marketing
There is a relationship or relationship between the products/services offered by the affiliate.
For example, she is a beauty vlogger who is also an affiliate of a beauty product. The niche, expertise, and influence of the beauty vlogger can result in increased traffic to sales of related beauty products.
However, this is an affiliate program where the affiliate does not have to make any claims about using the product or service.
3. Involved in Affiliate Marketing
Affiliate marketing which involves a deeper relationship between the affiliate and the product/service being promoted to an audience.
For example, the affiliate announced that he too was using the product and getting significant results.
Then, he recommends the product/service to the target audience. Audiences also make the affiliate a trusted source to participate in trying to use the product/service.
The reputation of the affiliate is at stake here too – for any problems that may arise as a result of offering the product because he has recommended it.
Tips for Running Affiliate Marketing for Brands
For brands, here are some tips for running an affiliate marketing program:
1. Define Product or Service
A company may have many products/services that it wants to sell.
However, the first step to running an affiliate marketing program is to only promote products/services that have the most value and unique selling products, are useful, and valuable to target customers.
Products that can answer customer problems will certainly be very in demand and evolve into an industry.
2. Choosing the Right Affiliate Strategy
The marketing strategy should be based on:
- Marketing campaign objectives.
- Market segmentation.
- Type of product/service.
- Affiliate type.
Affiliate marketing schemes can be run with several affiliate programs, including affiliates who help market products/services through social media, blogging, or even collaborating with content creators and influencers.
Set that strategy from the start, and choose 2-3 affiliate strategies to make it easier to evaluate the results.
3. Define the Platform
The first step is figuring out which platform the brand wants to build an audience on.
Every affiliate marketer has a different approach and platform.
- Niche topics and review sites. If you want to work with bloggers who have a special platform for product reviews according to your product niche.
- Digital content. Affiliate marketers can market their products/services through their social media.
- Course, event, or workshop.
4. Cooperation with Appropriate Affiliate Partners
When a company is brainstorming a product or exploring an affiliate platform, the most important criterion to keep in mind is that the product must align with the target audience or target audience that it is trying to build.
Therefore, choose an affiliate marketer that suits your business goals. In fact, it can resonate with the product’s vision and mission in the advertising content they create.
In turn, the affiliate marketer can be a representation of the brand.
5. Focus on Key Performance Indicators (KPI)
KPIs provide you with information about the effectiveness of individual campaigns. Typical KPI metrics for affiliate programs usually include information such as:
- Click-Through Rate (CTR). The number of users who clicked on the affiliate link and proceeded to the intended page.
- Conversion Rate. Percentage of affiliate traffic that converts into buying customers.
- Cost Per Click (CPC). How much does it cost on average for each click-through to the intended page?
This is the most accurate report data that gives a clear picture of affiliate campaign performance.
6. Be Patient While You Wait For Growth
Any effort to increase business growth requires patience and hard work. Likewise, affiliate marketing takes time and experimentation.
Make profit value the final indicator in assessing the success of an affiliate marketing campaign. Usually, profitability often comes after a lot of hard work, wise decisions, preparation, and maybe a little luck.
How to Become an Affiliate Marketer
A content creator, celebrity, blogger, vlogger, or influencer can be an affiliate marketer too.
Basically, affiliate marketing requires partners who already have a large online audience/ follower base–so that the uploaded advertising content can reach such a wide audience.
You can also become an affiliate marketer if you have certain skills that are relevant to the product/service that the brand wants to market.
For example, a professional mechanic who also campaigns for an oil product in an affiliate scheme. He can help the audience choose the best oil and recommend the sponsor’s products.
Of course, that person must also be active online on a platform because basically affiliate marketing is part of digital marketing or online marketing.
Tips to build an online base as an affiliate marketer
Some tips to become an affiliate marketer or build an online base :
- Decide which platform suits you.
- Decide what niche or content you want to discuss on social media.
- Strengthen your persona and self-branding, to attract the attention of the audience.
- Create interesting, informative, and quality content. At least one day one content.
- Do it consistently.
- Learn how the platform works, segment your audience, and improve your content.
- Explore your uniqueness or the value you offer as a content creator.
This will open up your opportunity to be able to work with brands as affiliate marketers, run a paid content promotion, and so on.
Platforms Commonly Used by Affiliate Marketers (Affiliations)
- Blogging (website)
- Pay per click (PPC)
Starting with a marketing platform you love helps you create high-quality content. This can result in a stronger, more engaged audience that you can turn into sales leads.
Advantages and Disadvantages of Affiliate Marketing
Previously, we discussed the general function of affiliate marketing to help brands market their products/services.
Check out more about the pros and cons of affiliate marketing below:
Advantages of Affiliate Marketing
- Easier to run. This is a digital marketing technique where brands don’t have to worry about the process of developing, supporting, or fulfilling an offering.
- Low risk. Brands do not need to incur large promotional costs or without an upfront investment.
- Easy to arrange. Affiliate partners can create campaigns for additional products while still working on other projects.
- Provide passive income for affiliate marketers. While you may have to invest some time in the beginning to generate traffic and sales, those affiliate links can continue to provide income.
Disadvantages of Affiliate Marketing
- It took quite a while. Whether you’re a brand or an affiliate, you may have to be patient to grow your audience and get sales.
- Commission based. Affiliate programs work on a commission basis, affiliates will be paid based on leads, clicks, or sales. So, an affiliate cannot rely on just this one source of income.
- Less creative controls. Affiliates must comply with the rules set by the company. If the company uses the services of 10 affiliates with the same concept, then you will compete by following the recommendations but also being creative.
- Branding problem. Yes, affiliate programs can indeed increase brand reputation. On the other hand, if the affiliate has a problem with the public, the product/service he promotes will also be negatively associated with the audience.
Affiliate Marketing Network Example
So, affiliate marketing is not a dirty type of marketing just because there are unscrupulous online gambling affiliates who use it wrong.
Various digital companies in the world have adopted affiliate marketing to help the success of their products/services.
The following is a list of the most popular affiliate marketing in the world:
1. Amazon Affiliate Marketing
Amazon’s affiliate program is called Amazon Associates – one of the largest affiliate marketing programs in the world.
Content creators, bloggers, influencers, and publishers help promote Amazon’s services or products sold by merchants there.
2. eBay Affiliate Marketing
eBay’s affiliate program is called eBay’s Partner Network. eBay partners usually get a commission on eBay merchant products.
Buzzfeed is a digital media company focused on publishing viral news content and entertainment stories, quizzes, and product reviews.
There is a segment called Buzzfeed Shopping where you can review different partner products and services. Audiences can read reviews and buy from affiliate links.