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An Introduction to Affiliate Marketing_blog

Tips & Guides — 01 Jul 2022

An Introduction to Affiliate Marketing

An Introduction to Affiliate Marketing

As companies continue to move both their small businesses and large corporations further into the digital world, affiliate marketing channels have become increasingly popular. Not only more popular, but also more affordable – with digitization significantly reducing a company’s overhead costs.

While there’s still some contention about how complicated the platform migration process can be, the introduction of high-quality tools like ERP software inventory management systems and integrated content hubs, definitely makes it considerably easier.

So, what is affiliate marketing?

One of the most powerful and current marketing strategies, Affiliate Marketing, often referred to as performance marketing or partner marketing, uses affiliate links or Google Ads to drive traffic, and in turn, increases sales to a website or brand.

This form of advertising allows businesses to partner with third parties to promote their brand or product in exchange for a small but shared percentage of any completed sales made via their link.

As some companies may use affiliate marketing links simply to boost their site views, they don’t pay affiliates per sale but rather pay out a flat fee in exchange for the individual driving incoming site traffic.

This allows influencers and creators to promote products alongside other content they may be creating and is often seen on social media platforms – with links redirecting back to affiliated brands, often accompanied by a promotional discount code.

What are the two forms of affiliate marketing?

Affiliate marketing can take two forms, both of which are entirely viable and popular in their one right. The first is commonly referred to as “regular and sudden traffic” whereas the second, and relatively newer form is known as “vertical conversion.” To better understand how they differ, we’ve compared the two below.

    1.Regular and sudden traffic

The first form of performance marketing, “regular and sudden traffic” is the practice of linking your site to other brands and companies in hopes of increasing incoming traffic. While some brands tend to link their sites to gauge and measure the potential traffic changes and whether it’s a viable option to scale their company, others cultivate links in hopes of promoting and marketing their own services and products.

    2.Vertical conversion

Unlike regular and sudden traffic, vertical conversion partner marketing works by helping individuals link your site to their product pages or their sites. Instead of rewarding them for driving traffic to your site, individuals can collect a commission rate from any purchases or sales made by your company to a customer referred to you by them.

Unlike regular and sudden traffic, this form of performance marketing allows influencers the opportunity to work with a variety of different brands as opposed to limiting them to driving traffic to a single site.

A perfect example of this is Affise Reach, a platform dedicated to helping brands and agencies create meaningful and lucrative partnerships with trusted affiliates. By providing an opportunity to partner with one of the biggest affiliate networks worldwide, Affise expands your networking potential and allows companies to increase their vertical conversion rates.

What are the core components of an affiliate marketing program?

In addition to the two forms of affiliate marketing, there are also four core components to consider when setting up any performance marketing program. The vendor, the marketer, deal qualifiers, and revenue sharing – all of which are explained in further detail below with a few examples for extra clarity.

Vendor

The vendor, otherwise known as the product, brand, or company building out the affiliate marketing strategies, works to establish relationships and partner with marketers to increase profits.

Marketer

These marketers can be any individual working to sell the product or promote the brand alongside their own content. This is typically achieved by influencers, internet personalities, and bloggers through a series of posts promoting the product or service. This can also work on a referral basis.

For example, DialPad offers cash incentives of up to $1,000 to anyone who refers a friend and successfully encourages them to purchase a license. This benefits both parties as it generates leads for the business and provides a passive income for the affiliate, with affiliate marketing spending estimated to rise to $8.2 billion by 2022 meaning only one thing – companies will be adjusting their affiliate marketing budgets accordingly.

Affiliate marketing spending
Source(statista.com)

Deal qualifiers

Once a relationship has been established with a marketer, the affiliate vendor will then negotiate with the marketer regarding what qualifies as a successful deal to certify both parties are comfortable with the arrangement. This is called a deal qualifier.

While this may be straightforward for SaaS providers or mobile phone applications, unfortunately, when it comes to industries as vast as ecommerce, the guidelines change slightly. This is because customers can customize or cancel their online orders at any time and so the marketer risks the chance of getting either under or overpaid for their work.

That’s why deal qualifiers are important not just for businesses but also for the affiliate marketers themselves.

Revenue sharing

As discussed in the negotiations, the vendor is then expected to share their affiliate marketing revenue with those dependent on the agreed terms.

For instance, more niche companies may pay 30% of the product price whereas larger, more mainstream companies might pay 10%. So, typically agreed pay percentages can be anywhere between 5% to 30%, if not higher. While this isn’t even half of the product’s market share, the more affiliations an individual makes – the higher their passive income will be.

Which affiliate marketing program is right for you?

In order to successfully launch an affiliate program, you need to ensure the product or service meets customer needs in a way that’s engaging and scalable. Once you’ve got that down, the potential is limitless.

Because the format and structure of your affiliate program will vary depending on which program you decide on, it’s best to explore which affiliate program would work best for your business. We recommend partnering only with reputable sites and brands as it can significantly increase brand awareness and annual revenue.

Coupon site programs

With the economy taking a huge hit these past few years, coupon sites have grown increasingly popular. These affiliate sites are typically hosted with the sole intention of addressing the widespread consumer want for deals and discounts; posing both benefits and drawbacks you may want to consider before embarking on this journey.

These types of sites tend to have an already huge existing customer base and as customers navigate your brand, you’re likely to see a hike in incoming traffic to your website and in turn increase revenue.

However, with that in mind, you should also be aware that these sites will be able to capitalize on the organic rankings associated with your company and the search term “coupon code.” Because coupon sites have become increasingly prevalent, it’s important you choose the right site to avoid being linked to less-reputable options.

Comparison site programs

Similar to coupon site programs, comparison sites operate by introducing customers to products by comparing them to alternatives on the market; allowing consumers to see how a company performs in relation to competitors.

Whilst this may be beneficial to some companies, this could also be detrimental if the quality and performance of your product or brand is lower than that of the competition.

Review site programs

Review site affiliate programs work by hosting up to six reviews of your products or your brand as a whole; all uploaded onto a website dedicated to delivering the most relevant reviews. This not only cultivates a customer’s trust in your brand but also increases site traffic and therefore conversion rates because these review sites are trusted and authentic sources of information for thousands of people internationally.

Loyalty portals and programs

Loyalty portals are provided by large corporations and offer their members premium discounts and deals to other services for either a monthly or yearly subscription fee. These portals are widely used and have various iterations across the market, and most of them are massively popular; proving this program is an efficient way of generating more organic leads and improving conversion rates.

Incentive programs

Incentive programs are an incredible way to increase engagement with your business and brand – encouraging customers to perform specific actions for a virtual currency that can later be used to redeem offers and gifts. This is a brilliant way to motivate customers to make purchases and retain their loyalty by completing actions like inviting friends to join your company’s journey – all while incentivizing them every step of the way.

Content marketing programs

Capitalizing on everything from blogs and websites, content marketing programs are one of the best ways to link brands and products – especially for influencers and bloggers who already have that large social media following. The content they’re producing is usually already search engine optimized and so it’s a great way to drive organic customer acquisition.

Moreover, investing in an SEO-trained copywriter is a sure-fire way to appeal to online shoppers and subtly influence their purchase decisions. By combining customer analytics with Google trends, and search engine optimization, companies are able to pre-determine customer intent and streamline their services to guarantee a positive customer experience.

What are the benefits of affiliate marketing programs?

Not many SMEs have the marketing budget to raise brand awareness the way they’d ideally like, and that’s why one of the best advantages of affiliate marketing is how cost-effective it can be. By registering your business or product with an affiliate site, you’re able to generate more incoming traffic by partnering with already popular brands or influencers.

Affiliate marketing is also ideal for cross-channel marketing and reaching multiple different audience niches – potentially even prospective customers you wouldn’t have normally targeted. No marketing expertise is needed to join an affiliate marketing program. In fact, all it takes is a little know-how and a touch of practice.

This makes this specific marketing strategy both convenient and flexible, especially as you can run more than one campaign across various affiliate marketing platforms – therefore increasing the public awareness surrounding your brand.

Very similar to word-of-mouth marketing, affiliate marketing programs allow other people to market your product or brand for you – reducing the amount of manual marketing work you have to do yourself.

Are there any drawbacks to affiliate marketing programs?

If an affiliate marketing program or business makes false claims about your product or brand, it may tarnish your reputation and be incredibly detrimental to your business. Because affiliate marketing programs aren’t all created equal, it means that choosing the right one is crucial to finding success.

Unlike other marketing strategies, affiliate programs can take some time for the results to show – especially if you’re a new brand that not many people have heard about. It takes time for affiliate marketers to decide whether or not they want to promote your product; usually depending on the quality of the product.

When selecting the most appropriate affiliate program for your business, you have to consider the kind of affiliates you’re willing to partner with and what budget you’re willing to spend. This is because affiliate programs set their own prices and if you invest in the wrong one, you could damage your business’s reputation.

So are affiliate marketing programs right for my business?

While the eBay affiliate model is probably the most well-known, it’s not the only partnership marketing program out there.

When it comes to deciding on whether performance marketing is right for your business, there are a few benefits and drawbacks to consider before making your decision. One of the greatest benefits of this digital marketing strategy is the program’s ability to significantly increase incoming site traffic and both product and brand visibility.

This extensive exposure allows a wider demographic of people to engage with your brand and therefore generates a great deal of potential income.

However, more exposure can impact your company as negatively as it could do positively. An influx of customer acquisitions means you’ll likely need to increase your internal resources and customer support. As your company continues growing, so will your workload – especially if you’re running the affiliate marketing network yourself.

With that in mind, it’s important to recognize affiliate marketing networks can be used for just about anything as they’re an extremely cost-effective and efficient way of converting prospective leads to sales. For instance, a website might offer a product or service to consumers free of charge but only for a limited period of time – hoping to encourage them to purchase the product at the end of their trial.

This is an affiliation partnership often negotiated with the service provider and is a strategy known as the “pull to purchase” model. This technique has been demonstrated by leading and innovative companies for years now, with trusted corporations like DialPad using it to highlight features like their contact center integrations.

The free demo – as well as showcasing additional features such as free video chat – allows users to explore all of the features before they make the commitment to purchase. This not only ensures that they’re fully acquainted with the product but also more likely to convert.

Free Demo
Source(ringcentral.co.uk)

An introduction to affiliate marketing statistics

As previously mentioned, this particular marketing strategy has become immensely popular. As affiliate marketing statistics are readily available to consumers and companies alike – with data covering everything from content and email marketing to annual budgets.

According to a report completed by Affise, it’s believed that up to 94% of publishers are using multiple affiliate marketing networks, suggesting the massive scope of these strategies; evidenced by 80% of all brands having an affiliate marketing scheme, as reported by Rakuten.

The accessibility affiliate marketing schemes offer means that global affiliates can support and share brands even from a thousand miles away – all they really need is a smartphone or a device capable of creating digital media content.

In fact, recent affiliate marketing studies have shown that while Awin’s affiliate network has the most published links, it was also concluded that over 50% of all affiliate traffic comes from mobile devices.

But is the affiliate marketing industry really that big?

To gauge how big the industry is, all you have to do is look at the latest affiliate marketing stats to see how affiliate sales and affiliate traffic have positively impacted customer acquisition and retention.  For example, while Amazon affiliates were paid a total of 1-3% in commission rates in the year 2021, Amazon itself claimed to have generated $33.36 billion in revenue.

However, this isn’t surprising considering the introduction of Amazon Associates having simplified the digital marketing process by giving content creators the ability to easily plug and promote Amazon products in their videos, blogs, or across their social networks. The graph

below from Statista brings some interesting data to light.

Annual Net Income of Amazon
Source(statista.com)

So what’s next for your business?

Whether you’re a business or an individual looking at your first foray into a successful affiliate marketing partnership, there’s absolutely no reason you shouldn’t capitalize on the affiliate marketing trend – either as a beginner looking to try their hand at driving ecommerce sales or an ambitious expert looking to earn a higher passive income.

But always remember to do your research before committing to any affiliate marketing program – it’ll make all the difference.

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Grace Lau - Director of Growth Content, Dialpad

Written by

Grace Lau is the Director of Growth Content at Dialpad, an AI-powered cloud communication platform for better and easier team collaboration. She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content.

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