5 reasons why Affiliate Marketing Had Been So Popular Till Now?

affiliate marketing

Affiliate Marketing has been around for the past 40 years. But is it still worth it to invest in an affiliate marketing program? We say “Yes” and we have our reasons to believe so.

Traditionally, the Internet has allowed merchants to be able to advertise on certain spaces on the web. This could come in the form of banner ads within certain websites or email messages. It might also include investing in ads like buying space at the top of search inquiries for popular search engines like Google or Yahoo!.

The problem with buying space like this is that you, as a merchant, are required to pay a flat fee for something like a banner ad to be placed on a website. This poses a problem for one main reason. The biggest and most common problem is that your initial payment for advertising is a bit of a gamble, especially if the site that allows you to advertise is new to you. You might not know how much traffic the advertisement will produce at first.

5 reasons why Affiliate Marketing Had Been So Popular Till Now? 1 | Viralify Growth hacking and digital marketing agency

And let’s say it does not work out very well. The advertisement did not quite meet expectations and it resulted in very little traffic to the site and fewer actions taken by prospective clients. At this point, you’ve sunk more money into the advertisement than what you may have gained back. It is a win-lose situation because the website owner earned money and you, the merchant, lost money.

All hope is not lost.

With affiliate marketing, the exposure that you get stays intact just as it would for advertising through something like a banner ad. The difference, however, is that instead of paying the affiliate upfront, you only pay the affiliate once some kind of action has been taken, whether through a click or filling out an online form. You could think of this type of payment as a commission for the affiliate.

The Major Points for a Successful Affiliate Program

Affiliate marketing should be viewed as a marketing venture, and not exclusively as a technological venture. Granted, there are many creative and technological aspects to this particular type of marketing, but above all, it should be seen through a marketing lens.

So what does that means for you as a merchant? One of the bottom lines is that it is all about the customer. After all, the online customer is what drives your sales and spreads the word about your company and product, among other things. Every aspect of planning an affiliate program must keep these things in mind in addition to the needs and values of your affiliates and other new hires. Let us take a look at what the major points are for having a successful affiliate program.

  • Consider Your Customer’s Values – Since affiliate marketing allows targeted demographics, knowing your customers is essential to knowing how to implement a smart strategy. What do they value? What kind of content are they looking for? Do you have multiple demographics for your product/service? You will find customers through affiliates who share those values or at least don’t demonstrably argue against them.
  • Consider Your Affiliates’ Values – Affiliates are part of the marketing game as well, and they have a choice in who they will be an affiliate for. Put yourself in their shoes and ask yourself what they would expect out of you and your affiliate program. Does it benefit them? Is your product/service and content in line with their website? And very importantly, how well do you pay for your performance? In a 2011 survey by Affiliate Summit Affstat, 59% of respondents said that commission policies affect their decision to promote merchants and become affiliates for them.
  • Contracting with an Affiliate Consultant – Contracting this job out means looking for a person that has you and your company’s interests in mind. It is not a necessary hire, but it is absolutely beneficial and will make your marketing strategy that much easier. A good consultant helps you plan a strategy and a program, helping you beyond simply the technology aspect and emphasizing the marketing aspect as well.
  • Choosing an Affiliate Program’s Components – Not all programs fit every company’s needs. After deciding on the needs of your company, your customers, and your affiliates, choose program components that fit those needs and balance them all out. This can be a little tricky, but if you ultimately can’t figure out which needs to meet, remember that in a successful business, the customer’s needs will edge out the needs of the rest.
  • Graphic Design – You should have the stored graphics and text links that would go onto an affiliate site’s web pages. You should also plan a way to distribute the graphics easily to your affiliates. For example, you’ll need banner ads of different sizes ready to distribute to your affiliates so that they can easily add them to their own websites.
  • Tracking Duties – Upon implementation of an affiliate program, decide who will run an analyze reports of your affiliate marketing campaign. Though you could potentially use someone already within the company, it may be best to hire this job out to an affiliate solutions provider or affiliate consultant who understands how to read and interpret the results to help you improve the program.
  • Affiliate Agreement – When you and a new affiliate agree to work with each other, you must have an affiliate agreement written out laying out the rules and terms of your agreement. These rules are a contract and must be very precise in what is expected from both affiliate and merchant. Some of the things to include in one of these agreements is your compensation plan and the frequency of payment.You may also want to agree upon what content can be included on the site. For example, you might not want your product or service advertised on a website that displays pornography or that has inflammatory, derogatory or abusive language.
  • Training – Anyone involved with the affiliate marketing strategy of your company should be well informed and educated on the topic. The people within your organization should be educated because it will help them market the program to potential affiliates with confidence. It will also allow help you to get affiliates educated about your program much quicker.
  • Screen for Affiliates – With many of these properties in place, your next step is to go out and find affiliates to work with. Keep in mind, though, that you don’t want just any affiliate. You want affiliates who’s content and values are in line with your own and you want people who are willing to work with you.

After all, affiliate marketing is a referral based marketing strategy, and any increase in traffic means more money for the affiliate. In this way, it makes sense for an affiliate to promote their merchant; they have an incentive.

What is affiliate marketing?

Affiliate marketing is a type of marketing that relies on performance and you, as a merchant, only pay when your advertisement performs well. As far as affiliate marketing goes, there are certain kinds of models that are used to perform affiliate marketing.

In 1996, Amazon.com created one of the first affiliate programs on the web called Amazon Associates program. It was a program that allowed websites to become affiliates of the main Amazon.com website. The affiliate would place some kind of link on one of their web pages and allow users to connect to Amazon.com.

affiliate marketing

The point of the link was to entice users to visit Amazon.com for all their literary needs. This was very beneficial for Amazon’s affiliates because they received a commission every time one of their users was sent to Amazon.com.

How does affiliate marketing work?

Affiliate marketing between companies is a symbiotic relationship. It is a win-win situation for both affiliates and merchants, but what are these roles that websites take on? Let’s take a look at the roles of affiliates and merchants.

If you have a company and website, and you sell a product or service, you are a merchant. The merchants are the companies that sell a product and/or service, and they are the ones that pay affiliates for their marketing campaigns. Chances are that you are going to want to form relationships across the web with affiliates.

In other words, you are most likely the merchant if you are starting to form an Internet marketing strategy. When you form affiliate partnerships, that affiliate is going to make give you space on one or more of their web pages to place a link or even a banner advertisement.

The link will allow users to come to your site, yielding higher amounts of traffic. Of course, simply getting customers to visit your site is not enough.

Types of Affiliate Advertising Models

There are three types of affiliate advertising models that merchants and affiliates use when engaging in this type of strategy. Here is a list of them and brief descriptions of each.

  • Cost Per Mil (CPM) – Otherwise known as “Cost per 1000 impressions” (mil = 1000), this model works when a merchant pays a flat fee for every 1000 views or clicks its advertisement receives through an affiliate. This was especially popular at the start of the dot-com boom, but fell dramatically in use as a result of fraudulent increases in view statistics by many companies.
  • Cost Per Action (CPA) – Similar to the CPM model, it operates on the same principles. The difference, though, is that the amount a merchant pays to an affiliate is entirely dependent on the performance of the merchant’s advertisement. The factors of performance are the “actions,” which include things like users who click an ad, fill out a form, download software, or buy an item. Rather than having a set amount to pay for a specific number of users, you only pay when the advertisement perform well.
  • Cost Per Click (CPC) – Similar to the CPA model, and even more specific within the CPA model, is CPC. The model, like CPA, is dependent on performance, but the factors that determine how much a merchant pays to an affiliate include clicks. This may refer to the amount of times a banner advertisement is clicked, as its name suggests, or the amount of people who visit the URL that is advertised.

There are many benefits to getting into an affiliate partnership, whether you take on the role of merchant or affiliate. Keep in mind when thinking about these benefits the fact that the Internet has become a highly collaborative space, especially with social media taking such a dominant presence on the web today.

Five key benefits to affiliate marketing.

1. Partnerships and Collaboration

The relationship between affiliate and merchant is a symbiotic one. Both affiliate and merchant benefit from having an affiliate partnership with each other.

With affiliates, there is the fact that web hosting fees may be paid through the income earned from being an affiliate and some affiliates can actually earn a substantial income from the merchants they work with. This does not mean, however, that it is as simple as signing up for an affiliate program. The affiliate has an incentive to get traffic delivered to the merchant’s site. 

When done well, the affiliate also benefits by being credited with the sale or lead.Merchants have solved the Click and Bye process by crediting affiliates with sales made or leads produced.

This is actually one of the original problems that occurred and made affiliates question their role in affiliate partnerships. They might say to themselves “I am sending traffic to their site, but that means I am losing traffic.” This is called Click and Bye, which means an affiliate might lose a viewer to its bigger merchant via a textual link or banner.

Merchants, though, recognized this problem and came up with the solution to credit affiliates when a successful sale was made or a new customer signed up with their website or newsletter. As you can see, affiliates and merchants must constantly adapt to make affiliate marketing work for them.

The benefit for merchants through this relationship is that they get new traffic and potential customers they might not otherwise have access to by advertising on affiliate websites. Best of all, their advertising dollars are only spent when they successfully make a sale through an affiliate.

Of course, merchants must be wary of how they advertise. It takes much more than having affiliates to making affiliate marketing work. An affiliate marketing strategy is only working if the affiliate can successfully send new prospects your way. So, when you think about who you want your affiliate to be, this is one of the factors to consider.

Ask yourself this question. Is your website sending enough traffic for the amount you spend? Is your return on investment (ROI) in the black or red?

A merchant must be diligent in his approach to making an affiliate marketing strategy work. The affiliates have to deliver. This is another great benefit for merchants; they have a choice in who they want as their affiliates. A smart merchant will be able to gain an affiliate relationship with websites that are in line with their product or service.

2. Affiliates’ Site Content is Relevant

Let’s say that you, as a merchant, sell dog food through your company website. Your affiliate should be somehow in line with your product or service for an affiliate marketing strategy to work. That is to say, if you sell dog food, you should sell advertise dog food on sites that attract dog owners.

Affiliate marketing allows merchants to target specific demographics on the Internet.

If you think about it, this makes reasonable sense.

Think about this. Your dog food company might know a few websites that cater to dog owners and perhaps have forums and discussions about dogs, ranging in subjects from teaching them tricks to how to keep them healthy. This is a smart potential affiliate option because it means you can advertise to your demographic.

Smart affiliate marketing strategies involve continuing to think creatively about where your demographic is most likely to be so that you can have your advertisement present there as well.

In contrast, a bad marketing decision would be to form an affiliate partnership with a website that caters to cat owners. What interest would they have in dog food when they have cats to feed?

3. More Effective Use of Advertising Dollars

As we stated earlier when we described the difference between plain banner advertisements and affiliate advertising, we mentioned the fees and rates that you are required to pay. Every website is different in what amount they expect to be paid, but one thing is clear: performance based marketing allows you to waste less money in advertisement allocation.

Marketing is all about increasing ROI for prospective customers, and affiliate marketing is no exception. When you spend money on any kind of advertisement, you want to make sure that the amount you spend to get a new customer is worth the investment. Performance based marketing lessens the amount of money you spend and reduces the risk of having a bad ROI.

Let’s say that you have an affiliate for your dog food company. Each time you make a sale, you might pay a 5% commission. Since you are only paying when you made a sale, you are certain that you only make an investment when there has already been a return.

4. Easy Tracking

Like other types of Internet marketing strategies, such as email marketing and website creation, one of the greatest benefits to doing affiliate marketing is the fact that it can be tracked. Affiliate programs often allow you to see certain things like click-through rates or views of your site as a result of a customer having viewed an affiliate web page.

This is an important part of building an effective affiliate marketing strategy because it allows you to see which affiliates work and which do not. Additionally, it may also tell you how you are performing on the different affiliate websites with different marketing tools, such as through a banner ad or a link placement. This will help you spend your money more effectively by continuing to invest in the types of ads that seem to get the best results.

5. Exposure

Without a doubt, exposure is key to any component of a marketing strategy. By having affiliates, you can have your product or service held out for the online world to see. And by staying present on appropriate sites, your exposure will increase exponentially by staying in tune with the correct, targeted demographics.

Exposure also allows you to build an image and brand name. Building those allows you to leave a lasting impression on prospective customers so that they are more likely to come back and make a purchase. And because it leaves a lasting impression, that means it is likely to be spread to others through the Internet and even word of mouth.

Is affiliate marketing right for your business?

Affiliate marketing should be viewed as a marketing venture, and not exclusively as a technological venture. Granted, there are many creative and technological aspects to this particular type of marketing, but above all, it should be seen through a marketing lens.

There are a couple of components that a company should have to even consider going into affiliate marketing,that being:

  • You have a high enough profit margin that you can afford a commission for your affiliates
  • You offer an attractive product or service that other people will be motivated to promote because (a) you pay a good commission and (b) the product is relatively easy to sell
  • You are able to support the demand in your product that affiliates could bring in
  • You are able to support the additional customers that affiliates could bring in
  • You are able to support the affiliates themselves with training, advertising, and other promotional materials
  • You are willing to pay for a service (or software) to help you track your affiliate sales
  • You have the time to monitor your affiliate’s marketing efforts so that you know they are representing your company as you would want them to in their promotions

So what does that means for you as a merchant? One of the bottom lines is that it is all about the customer. After all, the online customer is what drives your sales and spreads the word about your company and product, among other things.

Every aspect of planning an affiliate program must keep these things in mind in addition to the needs and values of your affiliates and other new hires.If you feel you can meet these requirements, then affiliate marketing should fit your Internet marketing strategy needs.

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