Affiliate marketing is an important digital marketing channel to boost reach and sales. There are several appealing aspects to it, especially the direct CPA% financial model that it involves.
It follows the standard digital marketing format of ‘Content, Click, Convert’. You create an account with an ‘affiliate company’ and enter into a relationship with the company and their ‘publishers’ who drive traffic to your site.
Affiliate companies
To operate affiliate marketing you have to be signed up to an affiliate company. There are many of these affiliate companies in the market that have reach in different demographics. In the UK, AWIN, Tradedoubler and Webgains are three large companies operating in the affiliate space that are integrated with IRP technology.
Affiliate companies will differ by market reach and strength in different geographic regions. The affiliate landscape looks different in Europe, USA and the Rest of the World.
Why is affiliate marketing attractive?
One of the most attractive aspects of the affiliate marketing channel is the financial model that it involves. It is perhaps the most appealing of any paid channel. Affiliate marketing generally operates a fixed CPA% for ecommerce sites that you can set yourself. This means that you know definitively what percentage margin of your sale you are going to give away to the affiliate. This offers control and consistency and is a distinct advantage over CPC (cost per click) models.
The overall cost structure for affiliate marketing is:
- A one-off set-up fee to the affiliate company;
- A monthly charge by the affiliate company;
- A percentage of all your sales generated by the affiliate channel. Part of this goes to the affiliate and part goes to the affiliate company.
The first two charges may be negotiable if you are bringing a substantial amount of business to the affiliate company.
How does affiliate marketing work in principle?
Once you have signed up and created an account with an affiliate company, you need to set up affiliate marketing tracking capability. This is as simple as following the instructions to add the affiliate company’s third-party script to your IRP website.
Once the script is in the IRP site, you can begin to operate the affiliate channel because the affiliate company can now track all of the sales that have been sent by their affiliates related to your website.
The affiliate company has two sides:
- The sellers (you) — companies that want traffic to their website.
- The publishers — companies that drive traffic to your site and make money from any sales that occur.
Having a good relationship with publishers is key to success. They are all listed in the affiliate’s control panel so you can communicate with them to ensure that you are providing what they need to advertise your website effectively.
How do you manage affiliate marketing to maximise returns?
While affiliate marketing has a strong and attractive direct CPA% model that shares success on sales only, you still have to carry out a significant amount of strategic work to maximise the channel.
There are thousands of publishers in AWIN and they are going to spend their time advertising companies that they believe will maximise their return. This means that whilst the percentage commission that you are offering affiliates is important, they are also interested in ensuring that you get sales so that any traffic that they send you has a chance of converting into revenue. Therefore you must have a converting website to bring monetary success to everyone involved.
It is also important to build a relationship with key affiliates. They will require updated content that you should supply them. They may also require specific feeds that should be constructed if they can supply traffic. This process of managing and building a relationship is vital for maximising the affiliate channel. It requires strategic thinking and a proactive approach.
Conclusion
- The affiliate channel has a number of core strengths that make it attractive. It is CPA%-based and so you share success with the affiliate company and their publishers.
- Affiliate marketing follows the standard digital marketing format of ‘Content, Click, Convert’.
- Although it takes time and effort to manage affiliate marketing, it offers a straightforward channel to get access to companies that then send your website targeted traffic.
- However, while the work of sending traffic is with the affiliate’s publishers, it is important to understand that you have to work hard to build a strong relationship with the publishers to ensure that they choose your company to advertise.
- This means that you need to develop good commercial thinking and sustained relationship-building qualities to maximise the opportunity.
- It is also a market that has innovations happening. So it is important to keep up with every technical advance that allows an advantage over your competition.
- Finally, as with all digital marketing, it is an area where someone with proven affiliate marketing skills will produce much better results than those who take an amateur approach.
