Mar 07

What is affiliate marketing and why is it so useful?

Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. In effect you find a product you think looks like a good prospect, promote it to consumers and earn a piece of the profit for each sale that you facilitate.

At its heart, there are two sides to an affiliate marketing arrangement that you need to know about: The Merchant and The Affiliate. Well, The Customer is pretty crucial too, but what they get up to is probably pretty obvious!

While the first two titles kind of sound like individuals, both of these roles can be filled by anything from a single entrepreneur to a massive multinational. Similarly, the money involved can be anything from a few hundred pounds a month to tens of millions.

The Merchant:

Also, the Creator or the Brand. This side of the Affiliate marketing equation is pretty simple. They are the guys with a product to sell who need a little help getting it in front of an audience. Whether The Merchant is a single entrepreneur or Fortune 500 behemoth, they all have a common goal: exposure and sales for their product. In order to get these, they sign up to profit sharing schemes with marketing professionals – the Affiliate – who think their product has potential and fits their knowledge base.

The commission expected from sales can vary wildly across product and industry. Digital products, for example, can easily be around the 50% mark as there are no costs to replicate them. Keep this factor in mind if you decide to get involved in affiliate marketing as a Merchant. Make sure to do some research into acceptable rates for your niche. You don’t want to drive away potential Affiliates nor lose out on profits from overly generous offers!

The Affiliate:

Alternatively known as the Publisher, these guys have the marketing know how and muscle to get the Merchant’s product on people’s radar.

Once they’ve partnered up with a Merchant, the Affiliate spends their own time and money on promoting the product. They then receive a commission on any purchases they are responsible for. Previously this meant they had to be the last site visited before purchase but more accurate tracking methods developed recently mean several Affiliates can now split the commission from a sale they were all involved in.

There are a variety of ways they can go about promoting the product. If they’ve got a good following on social media they might post about the product there, assuming their audience has significant overlap of interest.

However, these entrepreneurs can and do employ a whole gamut of advertising activities beyond social. And for those of you wondering if this is just influencer marketing by another name – this is the key difference between the two. Affiliates might, for instance, start up a full blown ad campaign (both online and off). They might write upbeat content marketing and review pieces for their blog. They could even build whole websites specifically to promote the products they are associated with.

Whatever they go in for, their end game is to convince as many potential customers as possible that the goods and services they are affiliated with are worth the price tag.

So why is it so useful?

Affiliate marketing allows both sides to outsource the part of the business they don’t care for:

The Merchant is able to kick the cost and time sink of promoting the product over to somebody else while the Affiliate is able to get to work on the marketing they know so well without the troublesome step of actually developing a product.

It’s important to note however this is not a “plug and play” turnkey solution. If you want your affiliate marketing venture to succeed it takes some effort. From the Merchant end, you’ll need to provide your affiliates with in-depth training and support with your product. Affiliates, on the other hand, will need to develop and refine excellent marketing skills if they want to see growth in their portfolios. If you want some help with that, why not check back through our blog for some excellent tips and tricks for digital marketing expertise?