Affiliate marketing is a system that depends on the performance of its participants . A company compensates partners for sales generated by their specific marketing tactics. Generally, these partners refer sales to other partners and earn commissions on those sales.
According to Business Insider, it contributes 15% to global e-commerce revenue. marketing , analytics, and cookies have transformed affiliate marketing into a billion-dollar industry . There are several types of affiliate marketing. However, let's focus on the three most important: independent affiliate marketing, linked affiliate marketing, and involved affiliate marketing. We'll examine their advantages and disadvantages, and then how the concept works.
Understanding affiliate marketing
It was indeed Amazon that popularized this practice by creating a program. Within this program, websites and bloggers place links to a product's Amazon page. The goal is to collect advertising fees when a purchase is made. In this sense, it is essentially a pay-for-performance marketing program. In this process, the act of selling is outsourced through a vast network.
An e-commerce business looking to reach a wider audience of internet users and potential customers can hire an affiliate. An affiliate may own multiple websites or email marketing lists . A large network requires multiple websites and a substantial email list. The hired affiliate then communicates and promotes the products offered on the e-commerce to their network. To do this, they display banner ads, text ads, or links on their websites or send emails to their customers. To attract public attention to a service or product, businesses use advertising in the form of articles, videos, and images.
By clicking on the ads or links, visitors are redirected to the e-commerce site . If they purchase the product, the affiliate is paid the initially agreed commission, which can represent 5 to 10% of the sale price .
The goal of this model is to increase revenue and create a "win-win" relationship between the merchant and the affiliate. Indeed, thanks to its profitability, this system is becoming increasingly popular.
The different types of affiliate marketing
There are three main types of affiliate marketing
Independent affiliate marketing
This is an advertising model in which the affiliate has no connection to the product or service they are promoting. It requires no recognized skills or expertise in the field, carries no authority, and makes no claim to its use. It is the least committed form of affiliate marketing. The lack of attachment to the potential customer and the product relieves the affiliate of any obligation to recommend or advise.
Related affiliate marketing
As the name suggests, this involves the promotion of products or services by an affiliate who has some kind of relationship with the offer. Generally, the link is established between the affiliate's niche and the product or service. The affiliate is therefore usually a public figure or influencer who can impact public behavior. Their image makes them a reliable source for internet users, increasing the likelihood of clicks and traffic. However, the affiliate makes no representations or endorsements regarding the use of the product or service.
Involved affiliate marketing
This type of marketing establishes a deeper connection between the affiliate and the product or service they are promoting. The affiliate has already had positive experiences with the product or service and shares their feedback with others. The principle is the same as traditional word-of-mouth. Their experiences are the advertisements, and they serve as reliable sources of information. However, because they provide recommendations, their reputation can be damaged if problems arise from the offer.
Advantages and disadvantages of affiliate marketing
An attractive opportunity cost
Affiliate marketing can be particularly attractive for advertising agencies or marketing specialists. The company benefits from low-cost advertising and the creative marketing efforts of its affiliates, while the affiliate earns additional income and bonuses. Affiliate marketing generates significant profits because the cost is lower . The company only pays per click, and the rest of the work is done by the affiliate, who will use every possible means to maximize their commission.
Then, the advertising company sets the terms of an affiliate marketing program . Initially, businesses essentially paid the cost per click (traffic) for banner ads. With technological advancements, the focus shifted to commissions on actual sales or qualified leads . In the beginning, this sector was fertile ground for fraud , as clicks could be generated by software.
The situation has changed
Today, most affiliate programs have strict requirements regarding lead generation . Certain methods are also prohibited , such as installing adware or spyware that redirects all product search queries to an affiliate's page. Some programs even specify how a product or service must be presented in the content before an affiliate can be validated.
Therefore, to make an affiliate marketing program effective, a certain degree of foresight is necessary. The terms and conditions must be clearly stated , especially if the contract rewards traffic rather than sales. Even so, in the digital world, fraud is never impossible.
In short, to achieve significant results in affiliate marketing, participants must thoroughly understand this model , including its advantages and disadvantages. Companies seeking affiliates would be wise to carefully vet and qualify their partners. Overall, it's an effective and cost-efficient way to advertise products and services, increase brand awareness, and expand a customer base.
