What is Affiliate Marketing? Everything you need to know!

Affiliate marketing is the process by which someone (an affiliate) earns money (commissions) everytime they promote a company’s product or services and drive a sale. Affiliates are only paid when a sale is made, similar to commission-only sales representatives.

What is affiliate marketing?

Affiliate marketing is a newer development under the digital marketing umbrella. Affiliate marketing provides individuals with unique URL IDs or promotional codes that reward influencers with commission when they bring in new customers or sales. These personal IDs are called affiliate links. The overall goal of affiliate influencer marketing can depend on brand to brand, but it generally drives traffic to websites or products and generates leads and acquisitions for businesses.

Affiliate marketing works by spreading the responsibilities of product marketing between all parties involved. This means it leverages the abilities of a variety of individuals for a more influential marketing strategy. There are three main parties involved in affiliate marketing: publishers, merchants and consumers. 

In online affiliate marketing, the publisher is the individual (or individuals) that promotes the product or service and receives a commission. These can be bloggers, website owners or influencers. They are typically called affiliates and can range from being a single person or a company. 

Merchants (also known as advertisers) are the companies that own the product, service or offer. The merchant will only pay an affiliate when there has been a transaction through their efforts. 

Consumers are the people who are buying the affiliate product or service through affiliates. 

There is an optional fourth party: affiliate networks. They are the marketplaces or affiliate marketing platforms in between affiliates and the merchants. An affiliate network would be Amazon; affiliates could work with a brand directly, but choose to earn commissions through the Amazon Affiliate Program.

Why use affiliate marketing?

Affiliate marketing offers brands and affiliates a cost-effective and mutually-beneficial channel to drive sales, generate conversations and earn money online. Affiliate marketing typically leverages smaller creators and influencers that have the ability to influence the purchasing decisions of their audiences. 

This strategy predominantly focuses on nano to micro influencers, which can mean that in order for the affiliate programs to be profitable, brands need to consider a long-term investment. Macro and other larger influencers can be leveraged for this strategy, however they are often significantly more expensive. To leverage macro influencers, a brand should have a pre-established relationship with the influencer. This will bring the cost and commission down, and seem more natural to the audience of the influencer.

Using affiliate marketing presents brands with the opportunity to develop numerous and strong relationships with influencers. By working with micro influencers, a brand will be able to develop a relationship as the influencer’s audience grows. In addition, this strategy means content creators and influencers are creating high-quality content for your brand that is hyper-relevant to their audiences. 

It has been proven that consumers generally trust reviews by influencers, so much so that eight out of ten have purchased a product based on an influencer review. By using affiliate marketing, your brand can tap into this trust. In addition, the influencer is more incentivized to promote your brand or product well so it earns a higher commission rate.

How to use affiliate marketing

Amazon has two very-well developed programs: Amazon Associates and Amazon Influencers. By combining these programs, Amazon has been able to create a top affiliate program. Working within or external to the platform, Amazon has enabled individuals all over the world to become affiliates and earn a passive income.

If working externally to the platform, Amazon Associates must create a profile, find products they want to share, and then earn up to 12% commission. 

Within the marketplace, Amazon Influencers can earn commission. Amazon Influencers can create their own storefronts that feature their favourite products; if an audience member makes a purchase through a storefront, the influencer earns commission.

Amazon’s affiliate marketing services are an example of the optional fourth party: networks. 

While brands and influencers can tap into the benefits of affiliate influencer marketing through a pre-existing platform, brands can create their own programs. 

Fast-fashion brand Boohoo has its own affiliate program. Boohoo offers an affiliate spot to anyone with a website or blog and offers commission on validated sales (excluding delivery charges and VAT) that affiliates drive to its site.

To entice affiliates into their program, they offer exclusive affiliate perks such as blogger shops, VIP schemes and increased commissions for those who perform the best.

FAQ’s

What is affiliate marketing?

Affiliate marketing is the process by which someone (an affiliate) earns money (commissions) everytime they promote a company’s product or services and drive a sale. Affiliates are only paid when a sale is made, similar to commission-only sales representatives.

Who are the Parties in Affiliate Marketing?

There are 4 key parties in affiliate marketing: the publisher, network, advertisers and consumers.

The publisher is the individual or individuals that promote the product or service and receive a commission. These can be bloggers, website owners or influencers. They are typically called affiliates and can range from being a single person or a company. 

Affiliate networks are optional. They are the marketplaces or middlemen between affiliates and the product or service owner. An affiliate network would be Amazon; affiliates could work with a brand directly, but choose to earn commissions through the Amazon Affiliate Program.

Advertisers (also known as merchants) are the companies that own the product, service or offer. The advertiser will only pay an affiliate when there has been a transaction through their efforts. 

Consumers are the people who are buying the affiliate product or service through affiliates. 

How does affiliate marketing work?

Affiliate marketing works by spreading the responsibilities of product marketing between all parties involved. This means it leverages the abilities of a variety of individuals for a more influential marketing strategy. The best affiliate program will use a balance of all skill sets to ensure an effective program. 

What is an example of affiliate marketing?

An example of affiliate marketing is when an influencer provides a personalised discount code, or is given a specific landing link it can use across social media (Instagram’s “Swipe Up” Story option, for example). 

What are the best affiliate marketing methods in 2021?

The best affiliate marketing method to use in 2021 is influencers as affiliates. Influencers already have a loyal and engaged following that trust their opinions. Trust is a key influential factor in purchasing. Influencers can not only increase sales, but lend their credibility to your brand, improving your overall brand presence.

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