What is Affiliate Marketing?
Affiliate marketing is an advertising model that works especially well online. It allows advertisers, also known as merchants, to sell their products and services through affiliates, or publishers. Basically, affiliate marketing gives a business a virtual sales force of online salesman, while giving affiliates a way to make money online without producing their own products or services.
In return for promoting an advertiser’s products, affiliates receive a commission based on sales. A basic example of affiliate marketing:
An Internet visitor searches for books online. The user comes across an affiliate’s blog, say, AffiliateBookBlog123.com. The visitor sees the books offered on the site, chooses one they are interested in and clicks “Buy Now.” The visitor then gets sent to Amazon.com, where the purchase can be completed. This would be how an Amazon affiliate makes money with their blog.
The main advantage of affiliate marketing is that everything is based on specific actions. Advertisers only pay when they receive sales, and affiliates only get paid when they generate sales (or leads, or whatever the action may be). This is an excellent way for advertisers to keep a perfectly trackable marketing budget and a great way for affiliates to see where they are actually making money.
The Industry
Affiliate marketing is, at its core, not a new concept. Companies, especially in the retail industry, have long paid commissions to salespeople to promote products and earn more money based on performance. Car sales are the most obvious example.
Online affiliate marketing has been around for more than a decade, and to this day the industry continues to change and adapt as online users shift the way they surf and shop online. Affiliates and advertisers now have affiliate networks that handle most of the affiliate marketing tasks, making it easy for both sides to run efficient, easily-managed affiliate marketing campaigns.
The Players
There are three main players in affiliate marketing, though there are also consulting and management companies that cover different areas of affiliate management. For simplicity we’ll only cover the three main players.
The Advertiser
The business looking to make more sales online is the advertiser. Advertisers can promote services, products, anything that consumers are willing to purchase. There are affiliate advertisers in almost every business field, everything from home improvement (Home Depot) to online shopping (Zappos.com).
Advertisers typically sign up with an affiliate network, provide information about what they want to sell and the affiliate network sets up campaigns, or offers, that are easy for the affiliate to implement into their blog, website or email marketing efforts.
The end goal of the advertiser is to increase their reach and sales online. Affiliate marketing is often the best, most-effective way to do this, and that’s why affiliate marketing continues to grow at an exponential rate, especially in regard to the number of large companies using affiliate marketing today.
The Affiliate
The affiliate is the engine of affiliate marketing. Without quality affiliates to promote an advertiser’s offers, advertisers don’t make money and affiliate networks don’t attract big advertisers. The importance of the affiliate can’t be emphasized enough.
Affiliates typically have websites, blogs or other online presences (email newsletter) that allow them to access a targeted group of users easily and effectively. The best affiliates are often those who are seen as trusted, respected or authoritative in their industry.
An online marketing guru who runs a successful marketing blog, for example, has highly targeted base of visitors, and affiliate marketing would work well if the site owner wanted to promote an online marketing course or similar product.
The Affiliate Network
The affiliate network is the meeting platform for advertisers and affiliates. Tracking sales, payments and other complex actions is difficult, and most times, advertisers and affiliates don’t have the time or resources to handle this tracking on their own.
This is where affiliate networks come in. They provide a much-needed, convenient third-party platform that saves affiliates and advertisers time and effort by streamlining the affiliate marketing process. Affiliate networks make money by charging percentage fees to advertisers, while they also may run their own in-house affiliate offers, this way leveraging their affiliates.
The goal of an affiliate network is to make affiliate marketing as easy and profitable as possible for advertisers and affiliates. Networks understand that they need to have success on both sides of the equation, so they cater to affiliates by offering high payouts and profitable campaigns; they cater to advertisers by outlining just how easy it is generate more sales/customers with affiliate marketing.
The Advertising Channels
If affiliates are the engine of affiliate marketing, then customers are the gasoline that keeps the engine running. Finding customers online is the end goal of both affiliates and advertisers, and there are many ways that affiliates attract customers. Here is a brief rundown of some of the more common ways affiliates advertise and attract potential customers.
Organic Search
When a website owner uses search engine optimization (SEO) techniques to attract visitors, they are relying on organic search traffic. This refers to websites that show up when a search is made on a search engine – usually on Google, Bing or Yahoo. Getting organic search traffic takes time and hard work, but is a long-term solution that is cost-effective for affiliates that are focused on building a strong traffic base.
Paid Search Traffic
For affiliate who want quicker results in the search engines, they can use pay per click (PPC) advertising to put ads on search engines. When someone searches, they receive organic results (the main search results) as well as sponsored results, which are ads located around the organic results. These ads allow affiliates to pay to be seen by visitors. This method is often expensive and difficult to perfect, but it can result in a steady amount of traffic in a relatively short amount of time.
Email Marketing
Some affiliates send mass emails to a list of email subscribers. The subscribers may be those interested in receiving a newsletter or service related to something they are interested in. For example, a personal finance email newsletter attracts those interested in finance, so the email owner may include finance affiliate offers to find potential customers. Email marketing has its pros and cons, but is not effective with every kind of affiliate offer.
Social Media Traffic
Although social media is still in its infancy, it can be a great way for affiliates to generate traffic. As with email marketing, social media marketing only works with some products. If you are an affiliate for payday loans, for example, social media might not be your best option because many people don’t want to socially share the fact that they need or want payday loans.
On the other hand, an affiliate offer for a mobile phone game may do well because its something that people would possibly share with friends and family. In this case, social media traffic may result in sales and earnings through social networks.
Offline Marketing
Although the majority of affiliate marketing takes place online, affiliates sometimes use offline marketing tactics to target potential customers. This may include taking out a newspaper ad promoting a website, or handing out flyers to local businesses. Although it may take time and proper testing to ensure its success, offline marketing can be an effective channel.
More Affiliate Marketing Resources
If you want to learn more about affiliate marketing, visit the resources below. Affiliate marketing is an excellent way to earn money online if you have a blog or website, and you can get started today with Blue Global Media. Learn more about becoming an affiliate or an advertiser now.
Affiliate Marketing at Wikipedia
Affiliate Marketing Article at Huffington Post
Intro to Affiliate Marketing Video from Affiliate Summit
Affiliate Marketing: The Performance Marketing Association (PMA)
