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The Beginners Guide To Affiliate Marketing

by Natalie Temple

Mar 18, 2019

Technical SEO

What is affiliate marketing? And how could it help your business? When it comes to digital marketing affiliates are one of the lesser used, and understood, channels. Find out what affiliate marketing is and how it could benefit your brand in our simple guide, here: 

What Is Affiliate Marketing?

Affiliate marketing is an effective form of digital marketing where you (the retailer) pays commission to a publisher (the affiliate) for the traffic or sales that are earned from its referral. This can be in many different forms such as:

  • Discount Codes. Your affiliate could have their own discount code to share with followers. This can take many forms, such as influencers across social media or voucher code websites.
  • Bloggers and influencers driving traffic to your website.
  • Email marketing lists.
  • Placements & Adverts. Banners adverts, side bar adverts, headline adverts, newsletter placements and more. Dedicated affiliate websites or popular voucher hubs are good examples of this type of affiliate, which usually operates on a traffic-generated model.

Although affiliates can be managed manually, it’s most effective to do this through an affiliate platform, such as Affiliate Window.

Three Payment Models

There are three main types of payment models for affiliates, some of which may be more suitable for your business depending on your unique goals. These are:

  • Cost-Per-Acquisition (CPA). This is the most common affiliate marketing model. An affiliate is paid in commission every time they generate a sale. This is usually tracked either through a conversion tracking code or a unique discount code that the affiliate is given. If you choose the latter then make sure you refresh the codes regularly – voucher scraping websites can often pick up on the code after a while and you may end up paying commission needlessly. New codes on a regular basis also encourage your affiliates to continue promoting your product online. CPA is good for businesses who do not want to pay upfront – the brand only pays after a sale has been made.
  • Cost-Per-Lead (CPL).  Slightly harder to track, but more useful for B2B’s in particular, pay per lead compensates the affiliate when a desired action is taken by the referred user, such as a newsletter sign-up, enquiry or download of white paper.
  • Pay-Per-Click (PPC). The affiliate is paid on the volume of web traffic they drive to your site. When using this model it’s important to monitor the engagement and quality of the traffic driven, to ensure your investment is efficient. 

What Are The Benefits Of Affiliate Marketing

Affiliate marketing is an effective way to generate high amounts of brand awareness. Typically the channel has a high conversion rate, particularly when a discount is offered to the affiliate’s audience. If you’re using an affiliate with a large following, it can be an invaluable way to build brand credibility and trust. By incentivising affiliates with a commission reward, you’re encouraging them to put more effort into promoting your products. After all, the harder they work – the more they earn.

Is Affiliate Marketing Suitable For My Business?

Because of the huge discounts on your product required (you need to be prepared to pay for both the affiliate marketer’s commission and swallow the discount for the offer you give to the affiliate as a hook for their audience) affiliate marketing is not usually suitable for products with a very tight profit margin. Typically you could be looking at giving away up to 40%.

Affiliate marketing should not the only marketing channel you rely on. If your company has yet to run any digital marketing activity, then focus should be instead on other channels like SEO and PPC – affiliate marketing is most efficient when used to strengthen existing marketing campaigns.

What Key Metrics Should You Be Looking For?

Your affiliate platform’s dashboards and the results it drives can be confusing – but there are some key metrics that will help guide you as to the success. These key indicators include:

  • Return On Ad Spend (ROAS). How much revenue are you getting back from your investment?
  • Conversion Rate. What percentage sales are your affiliates driving?
  • Average Order Value. What is the value of the orders your affiliates are driving? Does it cover the commission and discount that the affiliate is promoting?
  • Traffic. How much traffic is being driven to the website by your affiliates?
  • Bounce Rate. How engaged is the traffic your affiliates are driving? If the bounce rate is high then it may suggest the traffic isn’t relevant.
  • New Vs. Existing Customers. How many new customers are your affiliate driving?

How Can An Agency Help With Affiliate Marketing?

Many brands find that managing an affiliate marketing campaign can be a time exhaustive task. There’s a huge amount of network management involved – from building relationships with affiliates, sourcing partnerships, validating commissions, approving publishers and more. An agency can also help identify the affiliates that will resonate with your target audience, and placements that will generate the most for your brand. They can negotiate with affiliates to get you the best placement opportunities possible for your budget.

Promotions and commission rates should be strategically managed and an agency can do this for you, creating a robust plan that will get you the best return on investment. Agencies will help you get maximum impact from your campaign, increasing conversions and traffic to site whilst lowering the cost of your sales. 

Using industry insights, an agency will be able to analyse your campaign activity and benchmark this against competitor performance – letting you understand what is working well and helping you spot future opportunities for improvement.

Get Help Planning Your Affiliate Marketing Campaign

If you want to learn more about affiliate marketing and get support implementing your campaign, get in touch with our team today. We can help you understand the opportunities to market your product or service to affiliates and the most efficient way in which to get a good return on investment. Contact us here now. 

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