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What is an Affiliate Program? How it Works & Why You Need One
What is an Affiliate Program? How it Works & Why You Need One
Imagine a marketing strategy that’s cost-effective, low-risk, and successful at getting more eyes on your products. This kind of marketing does actually exist.
We’re talking about performance (or partner) marketing — one of the easiest ways to promote your product across different marketing channels. Whether you’re into dropshipping, SaaS, or B2B, it’s a great marketing method that taps into a new audience and builds brand awareness.
What is Performance Marketing?
Performance marketing is a type of online marketing that involves a third party (affiliate marketers) promoting a company’s physical products or services online through strategic affiliate links. This type of marketing is often considered as a sub-component of digital marketing.
Two main parties of performance marketing are merchants looking to promote their products or services and affiliates — bloggers or everyday marketers, who promote company’s links for commissions. Often, intermediaries — affiliate networks — bridge the gap between merchants and affiliates.
Interested in trying out performance marketing for your business? Your first step is to find and set up a successful affiliate program. Read on to find out more, and how affiliate programs can help your online business flourish.
What is an Affiliate Program?
Pretty similar to the definition we’ve already covered, an affiliate marketing program is basically the whole setup that gets affiliate marketing into action.
Relationships are formed between the merchant and the third-party affiliates. In return for a slice of commission, the affiliates will promote the merchant’s products or services on their site through strategically placed affiliate links.
Parties Involved in an Affiliate Program
Now you’re probably wondering, how does affiliate marketing work? Below, we’ve gone over the three key players and how they each contribute to the program.
Also known as the merchant, seller of goods, or marketer, the brand is the entity actively seeking out advertising and promotion for its products and services.
The owner of the brand forms a partnership with affiliates, paying them to promote their product across the affiliate’s web pages, blogs, and social media channels. The brand’s ultimate goal is to increase revenue and site visibility.
Examples of a brand might include:
An SaaS company looking to add more subscribers to its software package or online webinar;
A retailer looking to sell a new pair of shoes;
An ecommerce store aiming to sell more themed mugs.
The affiliate, also known as the publisher or partner, is the entity looking to solve the brand’s problems by promoting its products across their marketing channels — in return for a slice of commission once a customer makes a purchase.
The ultimate goal of an affiliate is to drive as much traffic to the brand’s site as possible, bumping up their revenue so they can earn a high paying commission. Affiliates often use tools like blogging and content creation to promote the merchant’s products, though links can also be included on existing websites and social channels.
The main point is affiliates generally tend to have a good online presence on platforms that put them in front of a crowd. This crowd is one of the main reasons brands come to affiliates, so that they can get their product in front of a large group of people and potentially convert them into paying customers.
The consumer is the entity being marketed to. They’re the ones that affiliates and brands are targeting to increase revenue and drive site traffic — they’re you and me! We’re the ones that brands are hoping will click through to a site, and buy the products and services promoted by the affiliate.
Running an affiliate program is a stellar marketing strategy because not only is it cost-effective, it’s super low-risk. Payouts only happen once an affiliate link leads to a customer making a desired action, so you’ll only ever pay if you actually get results.
Not to be confused with a pay-per-click model, affiliate programs are a form of pay-per-action advertising. After all, affiliates only get paid once customers make a purchase.
Still not convinced? Below, we’ve included some of the top benefits of building an affiliate program.
Benefits of Building an Affiliate Program
Building an affiliate program into your marketing strategy is an easy way of boosting your traffic and revenue. We’ve taken a deep dive into what you can expect from affiliate programs, and how they can benefit your business.
Low-risk and Cost-effective
The great thing about an affiliate program is that it’s low-risk and low-cost. Giving affiliates a slice of commission isn’t going to break the bank, and you’ll only ever pay if you get results. That means you only hand out commission once a customer has made a purchase via an affiliate link or code, and this gives you a safety net to work from.
The fact that affiliate programs are performance-based not only provides you with a bit of safety, it also gives affiliates an incentive to work even harder and promote your product or services as much as possible.
Partner marketing can also help you earn some passive income — leaving things in the hands of a trained affiliate can lead to affiliate sales overnight without you needing to lift a finger. As a cost-effective alternative to the more traditional marketing methods, affiliate programs can help you save money writing up pointless ads that won’t always get you the coverage you need anyway.
No Need for an Online Presence to Get Results
One of the biggest worries for startups and small business owners is their online presence. How can they successfully execute a marketing campaign with little to no presence online?
One solution can lie in performance marketing. There are a wide range of established affiliates available for every kind of product market, so there’s something for every business.
Choosing an affiliate that already has a loyal fan base is a great step, but choosing one with a fan base that’s interested in your niche is even better. This will make it easier to break into your product category and tap into a market of potential customers, regardless of your current online presence.
Builds Credibility and Trust in Your Brand
It’s one thing to big up your own product, but getting a popular affiliate to review and give your product the green-light really goes a long way in building trust and credibility in your brand.
It’s easy for you to talk about how great your product is, but customers are more likely to trust a separate source, and this is exactly what an affiliate program provides.
When affiliates rave about your product, not only are they making it relevant, they’re making potential customers see the worth in your company’s products and services. This is effective, particularly if a potential customer is a fan of the affiliate you’re partnering with. This is also a great way of landing a few referrals from a customer base that’s already interested in what you have to offer (that is, if you pick an affiliate with a similar niche and target audience as your own).
Boosts Your SEO and Drives Traffic to Your Content
Affiliate programs don’t just increase the likelihood of customer purchases, they can also help boost your SEO (search engine optimization). This is thanks to affiliate links — the text links that affiliates use on their website and landing pages about YOUR product. This is a form of backlinking; something which Google loves.
The more affiliate links you have, the better the backlinking strategy you have, which all leads to you ranking higher on Google. It also drives more traffic to your site, helping you hit your content goals and get even more views.
Maybe you have an email marketing goal you want to hit? Maybe you want to get more subscribers signed up to your email list for your newsletter? A successful affiliate program can do just that, driving leads to your site and giving newcomers insight into what you’re all about.
A cost-effective and low-risk alternative to other traditional marketing methods, affiliate programs are great at bumping up your revenue. In fact, performance marketing accounts for over 16% of all ecommerce orders, and that’s just in the USA and Canada!
All it takes is one purchase to keep a customer coming back, because once they’ve experienced your product or service first-hand, they’ll have built some trust in you. Not only does this bump up sales, but improves your customer retention, resulting in less churn and more a stable and consistent customer base.
Unattached affiliate programs might be the most basic of the three, but they’re also the most risky. Involving PPC (pay-per-click) campaigns, you’ll basically be getting an affiliate to promote your products on Google Adwords and Facebook.
Just as the name suggests, unattached affiliate programs don’t focus on building deep relationships with end users, they’re more focused on increasing revenue and visibility.
You don’t even have to have a good online presence, and that’s what makes these kinds of programs so popular.
The downside is pretty obvious, though; you’re putting your products or services in front of an audience that you know nothing about. You’re not actually targeting a specific group, you’re just taking a gamble. While it can pay off, it’s risky, and you lose wasting money on an ad that won’t get any impressions.
Slightly more targeted than the unattached method, related affiliate programs involve promoting your brand’s product or services on well-known affiliates’ digital channels (think social media, website, and blog).
These affiliates will often have a similar niche and target audience to your own, so unlike unattached affiliate programs, you won’t be going in blind.
That’s the reason it’s called “related”, but that doesn’t have to mean your brand or product is personally related to the affiliate.
You can get an affiliate to market your product, but that doesn’t mean they actually have or ever will use your product. They’re essentially just getting your ad out in front of their crowd so they can make a few extra bucks. While there’s nothing wrong with this (and there are a few affiliates who are probably genuine), it’s not guaranteed.
This affiliate program is actually less of a risk to you (the brand) and more of a risk to the affiliate. Why, you ask? Well, your company itself might be a reputable brand with great products, but there’s always going to be a few…less than savoury companies out there. The ones who are happy to sell sub-par products if it means raking in the cash.
These companies will happily use this performance marketing tactic to get their goods in front of a large crowd, because they know that the partner’s audience probably already trusts the affiliate.
This makes it easier to persuade the affiliate’s target audience to purchase the product because, “hey, X really liked it. He always recommends great things. I can trust him.” It might seem good, but if the affiliate’s target audience starts making noise about how bad the product is (and how lousy it was for the affiliate to promote it to them in the first place), it’s going to tarnish the affiliate’s reputation alongside putting all their partners’ reputation at risk too.
At the end of the day, there’s nothing wrong with related affiliate programs. They work well as long as both the affiliate and the brand are transparent and honest.
An involved affiliate program is when an affiliate promotes your products or services and actually uses those products or services themselves, too.
These are the affiliates who have an actual interest in what you’re selling, and are happy to spread the good word about it, on the basis that they know it’s great and that their target audience would benefit from it too.
They care more about the value of the product they’re promoting and less about the money it can drive. This kind of partner marketing is usually very personal and done within the affiliate’s own blogs and webpages rather than a distant banner or small ad.
Affiliates that choose to market your product via this route usually care a lot about their audience, and only want to recommend products that are genuine.
Common Program Payment Arrangements
The commission structure of each payment arrangement varies, so we’ve run through some common options below.
In purchased-based (cost-per-sale) arrangements, brands pay affiliates a slice of commission once a customer has actually made a purpose. No purchase = no commission, so it’s a risk-free arrangement for all merchants.
A popular example of a purchase-based arrangement can be found on Amazon. Every time someone clicks through and makes a purchase on Amazon via an Amazon Associate’s (the name given to Amazon affiliates) site, they get a commission from Amazon.
In a traffic-based (cost-per-click) arrangement, brands pay the affiliate every time users click on their link through to the brand’s website.
Unlike purchase-based arrangements, it doesn’t matter if an affiliate doesn’t get a customer to purchase anything. As long as your site traffic has increased because of the link they’ve created, you have to pay them.
Customer Acquisition-based (Cost-per-lead)
In a customer acquisition-based (cost-per-lead) arrangement, the basics are pretty similar to that of a traffic arrangement. The focus isn’t on customers purchasing something, it’s on the number of leads that an affiliate brings you.
This could be something as simple as getting a few extra users to sign up to a newsletter or your email list. If an affiliate increases these leads, you have to pay them.
The first step towards building an affiliate program is sourcing your affiliate partners. It’s important you choose people who will promote your product and services well, driving sales and boosting traffic.
Before making a decision, it’s best to check out how your chosen affiliate has promoted products. Ask about the kind of returns they got? How much were they able to boost revenue and site visibility? You want to try to pick a high-quality affiliate, so do a bit of research to gain some valuable insights into who you’re looking at.
Affise Reach is a great place to start if you’re looking to source and build relationships with trusted affiliates. A platform where brands and agencies partner up will put you in contact with the best affiliates, giving you access to a broad network across multiple verticals, and the ability to easily source and manage relationships.
There’s also a wide range of other recruitment channels out there, so keep your eyes peeled. Some of the top affiliate recruitment channels include.
Your Customer Base
One of the easiest ways to source affiliates is by looking at your own customer base. If you’ve got a base of happy, satisfied customers that already rave about your product, take it a step further with an affiliate program.
A simple example of a marketing tactic that a customer affiliate could employ is writing up a product review, listing all the benefits of your products or services, and how it’s better than others on the market. That could be on a review site or your own product page.
Potential customers are more likely to be swayed by “real” people, leading to higher conversion rates and revenue. Your customer affiliate program might even have a domino effect, leading to even more consumers signing up as partners.
If you go down this route you’ll only want your most satisfied customers promoting your products. Send out a few NPS (net promoter score) surveys to figure out which of your customers are fans of your products, and reach out to them on social media or email about your affiliate program.
The great thing about sourcing affiliates from your customer base is that you don’t always have to pay them directly with money. You can simply give them free products and trials in return for promoting your products.
If you’ve already got a large following, use it as a USP for your customer affiliate program, alluding to the fact that affiliates might get more followers and social media visibility as a result.
Reaching out to influencers is another popular method for sourcing affiliates — it means getting your product in front of potentially huge followings. It can be a little tricker to source them, however, as you’ll need to stand out from the sea of other brands trying to approach them.
Try to pick influencers with a similar niche and audience to your own. Even better, try choosing influencers who already have an interest in your brand — this might just be enough of an incentive for them to promote your products or services.
With this route, you’ll either have to give them a slice of the commission or sign them up to free products and trials (once again, this depends on their popularity and following).
A common commission method includes giving out codes and coupons to the influencer so they can share them with their community. While this can drive traffic and revenue, be sure that the influencer doesn’t overuse and overshare your code. If so, you risk losing more money than you’re putting in.
Your best bet is to get the influencer to only share codes in newsletters or special membership pages; this way, only a select few get a discount on your products. To gain more control over your codes and coupons and measure their performance effectively, consider trying the Affise Promo Code Tracking solution. It helps you create easy-to-remember promo codes, set limits for using them, and track the results of promo code campaigns.
It doesn’t matter whether you’re an industry leader in your market or a smaller business, it’s always useful to gain insights about your competitors and how they’re running their affiliate programs.
You might find there’s a few successful methods they’re using that you can implement. You could even reach out to their affiliates, presenting a compelling argument about why your affiliate program is better. It’s only wise to reach out to competitor affiliates if you know they’re great at what they do, though, so do a bit of research first.
Affiliate Landing Page
Though not a direct recruitment method, optimizing your affiliate website and landing page is a helpful way of driving more traffic to your site and getting more affiliates to check out your offering.
This means making sure you’ve got quality content and are fully optimized for SEO, using a variety of keywords and backlinks to target your ideal affiliate partners.
Whenever you reach out to potential affiliates across your channels, be sure to link to your affiliate landing page. Make sure this page is full of all the necessary information about your program, what you’re looking for, and how affiliates can benefit and sign up.
This is also a great place to add a CTA, leading affiliates to the next stage of the recruitment process.
Paid ads are a super easy way to promote your product or services, but you’ll have to tailor your strategy if you want to be successful. As we’ve gone over before, paid ads on platforms like Google Adwords and Facebook Ads are all a form of PPC and CPC advertising.
This doesn’t make them “bad”, but if you’re not careful, you risk putting your ad out in front of customers who aren’t even in your niche (and subsequently won’t buy your product).
Your best strategy with paid ads is to tailor your approach. Try to place ads in areas that your target audience visits a lot, and use specific keywords to reach them.
When going down this route, it’s important that you constantly analyze your ROI and how much return you’re getting from your ad. If you keep getting a consistently low ROI, it might be time to try another marketing strategy.
Once again, this isn’t exactly a recruitment method, but it’s always a good idea to check in with your current affiliates and see how they’re working with your program. It’s also a good way of filtering out any inactive affiliates and focusing your time and resources on those who are actually delivering results.
Consider setting up a few contests and prizes for your affiliate circle from time-to-time to incentivize them to work harder.
It’s important to remember that your successful affiliates probably aren’t working for your brand alone. They might be stretching their time and resources across multiple brands, so remind them of why your brand is different to all the others. This might help them stick around longer, or choose your brand over the four others that they’re currently working with.
Marketing Conferences and Events
Attending marketing conferences and events will help you network and find even more partners and other useful people, like affiliate managers, to work with. It’s also a good way of nurturing existing relationships and keeping partners interested in your brand and affiliate program.
Affiliate Program Directories
An easy way of getting your foot into the affiliate world is by signing up with an affiliate program directory.
It’s important you choose a trusted and recognized directory with proven results of bringing in more affiliates and driving revenue, as there’s bound to be a few that aren’t as genuine as they let on.
A successful affiliate program will bring together brands and affiliates in one, single platform, giving access to different marketing tools and affiliate opportunities — and Affise Reach does exactly that.
Bringing together the best of brands and affiliates, Affise Reach is a network that makes partnerships easier between marketers and merchants. With access to a 500+ strong brand and affiliate network community, Reach makes it easy for everyone to accelerate their growth and revenue quickly.
Tips for Creating and Managing an Affiliate Program
Thinking of starting an affiliate program from scratch? We’ve included a step-by-step tutorial on what it takes to create and manage an affiliate program, and the best strategies for maximizing your success.
1. Choose an Affiliate Platform
Your sensible first step towards creating an affiliate program is choosing a platform for it.
You can do it yourself from scratch, but it will eat up a lot of your time and resources. Just think about it — you’ll have to manage and operate everything. From sourcing and establishing affiliate relationships, managing offers, and setting up analytical reports to optimizing campaigns, there’s a lot of work that you’ll need to take on if you’re going it alone.
Your best bet is to find an affiliate management platform to partner up with, particularly one that gives you access to a large existing network of potential partners. Before making your decision, ensure that your chosen management program has:
An easy user interface;
Various tools, plug-ins, and integrations (CPAPI is a great integration platform that enables businesses to automatically transfer key data and offers into their systems).
Affiliate management programmes.
In case you hadn’t guessed, Affise can offer you all of that, and more.
2. Choose a Payment Structure
The next step is figuring out your commissions and payment structure; how and when will you be paying your affiliates? You’ll want to choose a payout structure that attracts and incentivizes affiliates to join, so think carefully about the kind of partner you’re targeting.
The most popular payment method by far is pay-per-sale (or purchase-based payment). Every time an affiliate gets a customer to make a purchase via link or marketing effort, you pay them a percentage of the sold affiliate product. There’s no hard or fast rule about commission rates but keep it fair! And remember, high commissions mean lower profit margins.
Another option for affiliate commissions is to use the pay-per-lead method (acquisition-based payment). This means paying the affiliate each time a new lead signs up to your newsletter or free trial.
You could also opt for the pay-per-click method as we’ve outlined previously, but it’s starting to become more and more outdated. It’s best to pick between the pay-per-lead or pay-per-sale method if you want to keep affiliates interested — you could even do a mix of the two!
If you’ve got a lot of affiliates on your hands and are struggling to handle all the commissions, consider bringing in a CPA (certified public accountant). They can handle transactions for you, freeing up time for you to focus on more pressing business matters.
3. Draft Up an Affiliate Program Policy and Rules
A crucial component of any affiliate program, setting up a defined policy and related rules will ensure that there’s a binding agreement between you and your partners.
This will make sure no boundaries are crossed, and that affiliates aren’t using any shady promotion methods, and are only marketing the way you have instructed. Not only will it help stop disputes and problems from occurring, but it also gives affiliates a guideline to work from.
When drafting up your affiliate program policy and rules, make sure you address the following:
When and how payouts are made;
Which marketing channels and methods are used (and which are restricted);
Chosen keywords for campaigns.
4. Source Affiliates
The lifeblood of all affiliate programs, it all starts with finding your partners. How are you going to recruit affiliates to your program, and what will you use as an incentive?
As we’ve gone over previously, there’s a wide range of recruitment channels available to pick up new affiliates — you’ve just got to figure out which best suits your business model. A quick recap of the recruitment methods include:
Reaching out to customers;
Seeking competitor affiliates;
Marketing conferences and events;
Affiliate management directories.
Partnering up with an affiliate management directory or platform is an easy and risk-free way of getting more affiliates onboard.
Affise is one of the few affiliate management platforms that offers brands tracking and analyzing tools, as well as a network of 500+ brands. Take control of your brand with less effort and sign up to Affise today, to see for yourself what we can do for your business.
5. Offer Marketing Collateral to Your Affiliates
Once you’ve got an army of affiliates, it’s time to prep them with lots of useful marketing collateral!
This means providing a place that affiliates can easily access online that’s full of marketing and promotion methods and materials. This could be anything from marketing rules and brand voice info, to examples of the kinds of promotion you’re after (banner ads, CTAs, promotional emails).
As we’ve mentioned previously, the right tech is crucial to running a successful affiliate program. There are two types of tech you can rely on to supercharge your affiliate program.
Performance Marketing Platforms
Performance marketing platforms are like one-stop shops for everything you need to set up, run, and manage an affiliate program. And Affise is a great example.
An innovative partnership marketing platform, Affise brings together affiliates and brands in one, single location — providing merchants with the opportunity to source and manage partners, with the option of automating partner relations. Affise is ideal for businesses looking for an all-in-one affiliate program.
There are a few other common performance marketing platforms on the market, including the eBay Partner Network, Shareasale, and ClickBank.
Business Intelligence (BI) Tools
The whole purpose of a BI tool is to help you easily locate, store, and retrieve data for business intelligence. This is especially important if you’re a brand working with affiliates, as you’ll want to track your ROI and how much your affiliate’s efforts are paying off.
Affise BI provides brands with the tools they need to make evidence-based decisions regarding their performance marketing. We’ll provide your business with everything it needs to manage and control its data.
It’s clear that performance marketing isn’t going anywhere. Running an affiliate program is a popular method for promoting products and an easy way of getting your brand noticed.
To launch an affiliate program smoothly and automate managing it effectively, the proper affiliate marketing platform will come in handy. Get started with performance marketing with Affise — a full-stack technology to run an affiliate marketing program, find and manage publishers, improve performance campaigns efficiency, and measure partner marketing outcomes.
Try Affise today! Submit for a free trial and check out all platform’s functionality by yourself!
Affise is a partner marketing platform for brands, advertisers and agencies to scale via all possible performance marketing channels. Synergy of technology and our long standing experience lets you expand your partnerships, automate every step of the campaign lifecycle and make data-driven decisions.