Affiliate marketing is a system that depends on the performance of its actors . A company pays partners for sales created by their own marketing tactics. In general, these partners entrust the sale to other partners, and earn commissions from the latter's sales.
According to Business Insider, it contributes 15% of global e-commerce revenue. Digital marketing, analytics, and cookies have made affiliate marketing a billion-dollar industry . There are several types of affiliate marketing. However, let's highlight the three most important ones: independent affiliate marketing, linked affiliate marketing and involved affiliate marketing. We will see what the advantages and disadvantages are, then how the concept works.
Understanding Affiliate Marketing
It was in fact Amazon which popularized this practice by creating a program. As part of this, 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 sale is outsourced through a vast network.
An e-retailer wishing to reach a broader base of Internet users and buyers can hire an affiliate. An affiliate may own multiple websites or email marketing lists . A large network requires having multiple websites and a long email list. The engaged affiliate then communicates and promotes the products offered on the e-commerce platform to their network. To do this, it displays advertising banners, text ads or links on its websites or sends emails to its customers. In order to attract public attention to a service or product, companies use advertisements in the form of articles, videos and images.
Visitors, by clicking on the ads or links, are redirected to the e-tailer's online sales site. If they purchase the product, the affiliate is paid the originally agreed commission, which can be 5-10% of the sale price .
The objective of this model is to increase turnover and make the relationship between the merchant and the affiliate “win-win”. Indeed, thanks to its profitability, this system is becoming more and more popular today.
The different types of affiliate marketing
There are three main types of affiliate marketing: independent affiliate marketing, linked affiliate marketing, and involved 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 does not require known subject matter skills or expertise, is not authoritative, and makes no claims for its use. This is the least involved form of affiliate marketing. The absence of attachment to the potential customer and the product exempts the affiliate from the duty of recommendation or advice.
Related Affiliate Marketing
As the name suggests, this involves the promotion of products or services by an affiliate with some type of relationship with the offer. Typically, the connection is made between the affiliate's niche and the product or service. The affiliate is therefore generally a public figure or an influencer, who is capable of having an impact on public behavior. Its image makes it a reliable source for Internet users, and increases the probability of clicks and traffic. However, Affiliate makes no representations regarding 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 feelings 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. Additionally, because they provide recommendations, their reputation may be compromised if there are issues arising from the offering.
Advantages and Disadvantages of Affiliate Marketing
An attractive opportunity cost
Affiliate marketing can be of particular interest to an advertising company or marketer. The company benefits from low-cost advertising and creative marketing efforts from its affiliates. And the affiliate benefits from additional income and bonuses. Affiliate marketing brings significant profit because the cost is lower . The company only pays per click, and the rest of the work is done by the affiliate. The latter will use all possible means to maximize his commission.
Then, the advertising company sets the terms of an affiliate marketing program . In the beginning, businesses essentially paid cost per click (traffic) for banner ads. As technology has evolved, the focus has been on commissions on actual sales or qualified leads. At first, this industry was a breeding ground for fraud , because clicks could be generated by software.
The situation has changed
Today, most affiliate programs have strict requirements on how to generate leads . Certain methods are also prohibited , such as installing adware or spyware that redirects all search queries for a product to an affiliate's page. Some programs go so far as to specify how a product or service must be discussed in content before an affiliate link can be validated.
Therefore, in order to make an affiliate marketing program effective, one must have a certain sense of foresight. Terms and conditions should be clearly stated , especially if the contract pays for traffic rather than sales. Despite this, in the digital world, fraud is never impossible.
In short, to have convincing results in affiliate marketing, players will need to understand this model , and of course its advantages and disadvantages. Businesses looking for affiliates will benefit from properly vetting and qualifying their partners. Overall, it is an effective and inexpensive way to advertise products and services, increase brand awareness, and expand a consumer base.
