Affiliate marketing is performance-based marketing where a business gives commission to one or more affiliates in
exchange for each visitor or customer brought about by the affiliate’s own marketing efforts. The industry has three core
players:
- The Advertiser (also known as ‘retailer’ or ‘brand’) can be a company selling a product or service. The advertiser is ready to pay other people to help him sell and promote his business.
- The Publisher (also known as “affiliate”) is an individual or company that promotes an advertiser’s product or service in exchange for a commission. Advertisers agree to work with a publisher by providing the publisher with creative – like links, banner or text ads or even unique phone numbers – that the publisher includes to their website.
- The Customer or end-user is the last player that completes the affiliate relationship triangle is the consumer or customer. He is the one who actually sees the ad and then makes an action (either by clicking a link or by submitting their information via a form) that takes them from the publisher’s website to the advertiser’s to complete the action, which we call a conversion.
The market has grown in complexity to warrant a secondary tier of players, including affiliate management agencies,
super-affiliates and specialized third party vendors.
Affiliate marketing has become a popular marketing strategy because it offers a WIN-WIN situation for both the affiliate
and the merchant. Affiliate marketing has numerous benefits that the merchant will get using marketing strategy:
- Low Upfront Costs – Starting an affiliate program does not require a large marketing budget upfront. Other types of promotional marketing such as billboards, email ads, or even pay-per-click advertising require a certain amount allocated in order to start. With affiliate marketing, all that is needed is a website and the software to run an affiliate program. For the affiliate, it enables him to be in business without having to have his own product—a real saving both in terms of investment and time in putting up his own company.
- No Sales Associates Needed – With affiliate marketing, there is no need for sales people because the affiliates in the program are its sales associates! These affiliates help to promote the products and/or services for the business without having an upfront salary. For the affiliate, he does not have to work full-time for anyone company thus giving him the freedom to earn extra from somewhere else.
- Pay-for-Performance – Payment is only made when a sale or lead received. There is no need to pay for non-performing employees. Affiliate marketing helps reduce overall marketing costs because payment is made only for quality performance.
- Free Website Traffic – The affiliates will use their links as well as any marketing tools such as banners, text links, or text ads to promote the merchant’s website and services. This results in free inbound traffic on the merchat’s site.
- Better Search Engine Rankings – Many search engines gauge their keyword rankings based on inbound links to a website. With affiliate marketing, affiliates will have already placed their affiliate links on their web pages that point into the merchant’s site, ultimately making the latter’s site more popular on the search engines.
- Flexibility – Affiliate marketing allows great flexibility in paying the affiliates. They can be paid for certain actions undertaken, such as when they refer a customer that buys from you, or fills out a lead form, or downloads one of the merchant’s products. It can be used in several ways to generate the most revenue for the business.
- Automation – Because affiliate marketing is normally setup via computers and the Internet, many of the affiliate management tasks can be quickly automated, helping to free up time to focus on other aspects of the business. Tasks such as commission management, affiliate tracking and reporting, are all automated when with affiliate marketing.
With all these benefits and advantages both for the merchant and the affiliate, it is no wonder that affiliate marketing
has gained so much popularity in the business world today.
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