Tips & Guides — 21 Jun 2021
10 Questions to Ask Yourself Before Starting Affiliate Marketing
More than 80% of brands have affiliate programs; the affiliate marketing industry is expected to reach 8.2 billion in the U.S. by 2022. The merchants like this type of marketing because it’s cost-effective, low-risk, and easily manageable. No wonder a large chunk of businesses are considering affiliate marketing to promote their products and generate leads.
However, affiliate marketing is not the master key for all companies and industries. To find out if this marketing strategy will work for you, you need to ask yourself ten questions:
Let’s get into detail to learn how answers to these questions will help you with your marketing strategy.
The age-old adage “One man’s trash is another man’s treasure” applies to digital marketing too well. Thus, affiliate marketing may work magic for some industries and be worthless for others. Among the market categories that benefit from running affiliate programs the most are eCommerce, finance and banking, tourism, and online services. The infographic below represents the worth of targeted actions and the turnover growth in percentages.
Generally, affiliate marketers are most eager to promote digital and physical products as well as SaaS solutions for the B2C sector. However, B2B products and services, subscription-based businesses, startups, and others may derive benefit from launching affiliate marketing programs as well. They can win over customers with correctly chosen affiliate partners and carefully crafted marketing campaigns.
Yet, local merchants and small business owners should approach affiliate marketing thoughtfully, as they may struggle with finding successful affiliates in their area. The same goes for businesses working in highly specialized niches and industries.
Distribution is the thing you need to think through in advance when working with physical affiliate products. A successful affiliate marketing program can enrich your online business with tons of leads and new customers. Still, all efforts to attract them will fall flat if you fail to deliver your goods.
Limited delivery area is not the obstacle to affiliate marketing. Knowing your capabilities will let you choose new affiliates and target prospects according to your location. Thus, you won’t waste your budgets on irrelevant leads. With affiliate marketing management platforms like Affise, you can allow your affiliate partners to drive traffic only from specific regions.
Local retailers or small business owners who see the strong demand for their goods abroad may benefit from affiliate marketing. Working through affiliate partners is perfect for promoting products on regional markets. This is because those publishers have a reputation and know the local audience. To deliver your goods to a new region, you may enlist the help of third-party services, such as Fulfillment by Amazon. They will arrange storing, packing, and shipping for your affiliate products.
Affiliate marketing is a great strategy to make a quick buck and improve your sales, revenue, profit margins, etc. But is your company ready for these changes? Don’t rush to answer; evaluate your business scalability at first. Quite often, companies find themselves swamped and unprepared for the pressure.
The first thing you should consider is if you can meet the increased demand for your products. Be sure you have enough resources to enlarge your business output or can hire an additional workforce quickly.
Another point to consider is if your sales team is able to process all the incoming leads to nudge them down the sales funnel. No one has the resources to work with the limitless amount of deals simultaneously.
However, the department which will be stretched thin the most is the customer support service. An increased customer base means an increased number of service requests, especially if you offer a complex affiliate product that requires training. Moreover, not everyone will be happy with your goods or services. Therefore, it’s good to think upfront about how you will deal with negative feedback.
Finally, new affiliates themself may need customer support as well. There should be someone who can lead them through your affiliate marketing program terms and conditions, help with affiliate management software, and tackle issues with commission rates and payouts.
Like any other type of online marketing, affiliate marketing may be more efficient for some purposes than for others. For instance, you don’t want to overlook this marketing channel if you aim for higher brand awareness or lead generation. But if you aspire to become an influencer in your industry or improve CLV, other marketing tactics may deliver better results.
However, your marketing goals will define how you approach your affiliate marketing campaigns. For example, 79% of merchants use affiliate marketing to increase their customer loyalty and engagement with the brand.
Affiliate marketing is a low-cost and efficient way to improve your business results, but it drives certain risks. Namely, by employing this tactic, you’re outsourcing your content marketing to third parties — your affiliate partners. Unexperienced or dishonest affiliates may represent your brand poorly or lie about affiliate products. Such behavior may result in poor-quality leads or even repel towards your brand.
On the other hand, there are lots of affiliates who aim to make money online and want to provide value both to your brand and their audience. The problem is, their vision of marketing tactics and messaging may not match with yours.
In both cases, you have to lose control over your marketing messages. Mind the risks such a step can bear and decide if you’re ready for it. Try to come up with some safety regulations. For instance, you may need to create precise guidelines to help you keep your affiliate messaging on-brand.
If you struggle to convert the traffic from your current marketing activities, chances are you’ll trifle away your marketing budget on launching an affiliate program. The leads you may get from this channel will simply seep away instead of converting into paying customers.
To figure out if your conversion rates are any good, try to benchmark them. Check out the list of average conversion rates by a niche in eCommerce below. Apart from this, conversion may fluctuate across different countries, devices, traffic sources, and so on.
Your conversion rates may turn out to be lower than the average though you do your best. However, you still have a slim chance to boost them by optimizing your product and landing pages.
Try to reapproach your website’s design or make the copy more compelling. For example, you may add customer testimonials and product reviews, change calls to action, images, and other elements of your landing pages to find what converts better. A/B test each alteration separately to get reliable results.
Another point to consider is your terms and conditions, such as checkout process, delivery, refund policy, etc. You may have the best-in-class landing page, but visitors won’t convert if they are not happy with your conditions.
Affiliate marketing’s claim to fame is the possibility to pay only for achieved results. It’s a great way to improve your business outcomes without breaking the bank. However, launching an affiliate program may not be a good option if your business doesn’t generate enough revenue and profit.
Affiliate marketing implies a revenue-sharing model, which means that you share a part of your revenue with your affiliate partners. The more profit you generate, the higher commission rates you can set. Competitive commission rates, in turn, help you attract the best affiliates and eventually generate bigger profits.
On the other hand, if your company flounders with generating 10% of net profit, affiliate marketing wouldn’t save it. If the indicator is lower, you may need to improve it before getting the ball rolling.
To find the reason why your business is not profitable, assess three underlying factors:
Reapproaching one or several of the factors listed above may improve your financial results more drastically when an affiliate program. The latter probably wouldn’t affect your retention rate or CLV dramatically but will drive additional expenses.
Merchants often stick to gut feeling instead of making data-driven decisions and using all the opportunities online marketing provides. Moreover, they sometimes rush to try new traffic channels, when optimizing the current ones could lead to better outcomes.
To find if affiliate marketing would be a suitable option for you, observe your competitors’ marketing strategies. Examine those who not only operate in the same niche but also can compare with your business in size, revenue, and performance. If they prefer to drive traffic from social media or search engines, the same strategies may work for you as well.
Try to optimize the marketing channels you already use. For example, many businesses may benefit from SEO, social media marketing, blogging, or email marketing. If you find some of the channels too difficult to generate traffic from, change your tactics. You may employ social media listening tools or analyze your competitors’ activities to find what your potential customers want.
Affiliate marketing has its pitfalls inexperienced merchants could suffer from. You can bypass them successfully with the right tools and skills at hand, but you need to be forewarned to be forearmed.
One of the most significant perils you may encounter is affiliate marketing fraud. Fraudulent activities account for 9% of traffic across all verticals. The worst part is that you may fall victim without knowing it. Fraudulent tactics may be so subtle and sophisticated that advertisers can’t see them with the bare eye.
Luckily, it’s possible to prevent and combat affiliate marketing fraud with proper technologies at hand. Foк example, the fraud prevention tools at Affise allow to eliminate fraudulent activities at the start, prevent fraud on a click level, hinder false conversions, and more.
Affiliate marketing requires investments and maintenance. You can not launch an affiliate program and wait for it to bring results on its own. First of all, you’ll need to find high-quality affiliate partners and build relationships with them. It’s a good idea to hire an affiliate marketing manager to handle this activity.
However, to manage affiliate marketing, you’ll need an affiliate marketing platform. It helps find suitable affiliates, combat fraud, automate routine tasks, track performance, and more. Another option is to join an affiliate network — an intermediary between advertisers and publishers.
The decision whether to join a network or run an affiliate marketing program in-house is up to you. To choose the perfect option, read our comprehensive guide on affiliate program management. Whatever you decide to do, you still need to put effort into affiliate marketing and dedicate time and budgets to it.
To test the waters and see if affiliate marketing and SaaS platforms are suitable for you, you can take advantage of the free trial period Affise offers. Request a 30-day trial with complete onboarding and make an informed decision.
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