What is Affiliate Marketing?
Affiliate marketing is a type of Channel Marketing. Here the merchant/producer/brand works with an Affiliate (individual or company) who promotes one or more products and helps the brand reach new potential customers. The affiliate earns a commission if people end up buying the product.
Affiliate marketing can also be seen as an advertising model in which the brand pays third-party publishers when they bring traffic and generate leads for its products and services. The vast majority of the affiliate marketing, though, focuses on the actual sale of the product or service.
Affiliate marketing is one of the several Performance Marketing approaches, given the commission is typically payable only on a sale.
Affiliate programs are also known as Associate or revenue-sharing programs.
While revenues generated through an Affiliate program may not be substantial, affiliate marketing is popular because it is cost-effective and low risk.
In the internet era, Affiliate marketing has gained popularity after Amazon created an affiliate marketing program whereby websites that put links to the Amazon page for a reviewed or discussed product, receive advertising fees after a sale.
The primary and straightforward goal of affiliate marketing is to increase sales—a win-win solution for the merchant and the affiliate.
Affiliate Marketing vs Referral Marketing
As discussed earlier, Affiliate Marketing is a type of Performance Marketing. Other examples of that kind of marketing include Influencer Marketing, Referral Marketing.
Influencer Marketing and Affiliate Marketing differ based on the cost structure, measurement, FTC adherence.
Referral marketing and affiliate marketing differ on the source of referral – it is the current customers in the case of referral marketing while it is the third-party brand advocates for the latter.
How Does Affiliate Marketing Work?
Affiliate marketing has gained scale recently with new partnerships and new technology in the Marketing mix. Most affiliates used to operate as a website. Now, vloggers, podcasts, and mobile apps are new ways of driving significant traffic. As an example, mobile apps recommend other products to buyers within the app and earn a commission on those transactions. So, with Affiliate marketing, the producer can reach the customer by the customer’s preferred channel.
Seen through the lens of Performance Marketing, Affiliate Marketing is a combination of paid advertising and brand marketing but only paid out on producing the agreed-upon results. Affiliate marketing is more than two decades old yet is gaining more traction than ever - proof positive for its adaptability and versatility.
B2B affiliate marketing, when compared to a B2C situation, has more of a challenge in finding the right media partners that attract enough business buyers to warrant an investment. It does call for some hard work to solve this challenge.
Recruiting some micro-influencers to your affiliate program will help as most of them will have a very cohesive audience, and you also get the benefit of working with them without having to pay for them upfront.
As in any contract, there is a scope for legal conflicts, in Affiliate Marketing, that must be watched out for by both the brand and the affiliate. As an example, should the affiliate indulge in copyright infringement, the brand may be pulled into the mess. Ensuring a good solid contract is key to a sustained Affiliate Marketing.