What is affiliate marketing, how does it work and how to choose an affiliate network?
Many of you have heard about Affiliate Marketing, but not everyone understands what it is. Before coming to the definition itself, it should be clarified that Affiliate Marketing doesn’t require any investments and prior knowledge in marketing. Moreover, it can become one of the sources of passive income. Are you interested in financial freedom? Let’s dive into the topic.
Affiliate Marketing is a present-day advertising model for making a profit by promoting other companies’ products online.
Let’s consider an example that you’re definitely familiar with. Have you ever noticed how your adorable YouTube blogger advertises his favorite product or service? He usually refers to “the link below in the description” where you can find the characteristics and a web-site of the product he offers to you. You click it and buy a product. Well done! Right now you helped your lovely blogger to earn a commission being an affiliate. As you can guess, this easy-peasy marketing technique is Affiliate Marketing itself.
The definition is clear and our next step is to identify how you can make a profit using Affiliate Marketing. For this, we first need to analyze key players in this model and how they earn money.
The advertiser can be a vendor, retailer or product creator. In other words, it’s a person or a company that sells its products/services with the help of affiliates. Affiliates get their commission after promoting the advertiser’s products.
Yes, a good example of the affiliate is our YouTube blogger. However, it can be anyone from an individual to a huge enterprise. To get a commission, an affiliate needs to attract his/her audience to the particular product of company A and convince them to buy it.
With the help of consumers, affiliate marketing generates profit for both the advertiser and the affiliate. Sometimes an affiliate makes customers aware of the affiliate collaboration between him and an advertiser. But it’s up to the affiliate whether to tell about his partnership to his audience.
In other words, it’s a bridge between the advertiser and the affiliate. Affiliate networks provide both parties with the management of an affiliate program. It also includes the platforms where the advertiser can find preferable affiliates and vice versa. Affiliate networks usually help brands with tracking, reporting, and payment affairs.
Software as a Service (SaaS) platforms
The main difference between SaaS platform and an Affiliate network is that the former is only in charge of tracking, reporting, and payment to affiliates. It doesn’t provide full management services and doesn’t unite the creator and the publisher in a specified platform.
HOW DOES AFFILIATE MARKETING WORK?
• An affiliate joins an affiliate program offered by a company, chooses products to advertise and starts promoting them.
• Promotion is carried out by sharing a link via social media channels (Instagram, Facebook, YouTube, Twitter, etc.) or a website.
• A customer clicks on ad and cookie is stored on his browser. This cookie allows affiliate networks and SaaS platforms to track the progress from clicking on ad till purchase.
• A customer is redirected to the advertiser’s landing page and after purchasing networks automatically provide the affiliate with the commission.
Affiliate Marketing is a performance-based type of marketing, meaning that an affiliate will be paid according to his performance.
Here are four most common performance-based types of Affiliate Marketing:
Cost Per Action (CPA)
On of the most common affiliate models, where a commision is paid after customer’s specific action. The action can be anything from registration or form submission to making a purchase.
Pay Per Click (PPC)
An affiliate gets his money from every click on a link. So in this payment model a purchase itself isn’t taken into account. Even though consumers don’t buy a product, the affiliate is paid his commission for a number of clicks.
Pay Per Lead (PPL)
Lead is a prospective customer, who’s interested in the products published on the website. A customer becomes lead if he leaves his personal information, such as e-mail, phone number and so on, because this will allow the advertiser to promote his products directly to the customer.
Pay Per Sale (PPS)
The commission is paid by the advertiser as an agreed percentage of sales generated by making an affiliate advertisement. It’s not hard to guess that this is the most desirable process for the creator and the least favorable for publishers.
HOW TO CHOOSE AN AFFILIATE NETWORK
When you’ve already got acquainted with the principles of Affiliate Marketing, it’s time to choose the most suitable Affiliate Network. But the obvious question arises: which criteria do you need to consider to make the right decision? Let’s figure it out.
• What you’re targeting (as a merchant) or what you’d like to promote (as an affiliate)
What’s your target audience? What products do you sell or advertise? Ask yourself, define your niche (e.g. beauty, sport, clothing, health, gadgets, etc.) and it’ll become much easier to find the right affiliate network. There’re dozens of affiliate networks that specify their service in certain niches.
• Find networks where your acquaintances make large profits
Yes, it’s a good way to find an appropriate affiliate network. Why? If they make big bucks, you can do it too, right? Don’t try to avoid competition, instead analyze how other members act there and apply best practices.
• Types of tracking solution
One of the most important aspects while considering an effective affiliate network is to define what type of tracking solution your affiliate program requires. Does an affiliate network use advanced technologies that will analyze new and returning customers? Will you pay per click, lead or sale and is an affiliate network able to track the type you prefer?
• How much money you’re ready to pay
Depending on Affiliate Network, you’ll have to pay a certain amount of fee. You decide what suits you best: flat monthly minimum fee or percentage from every transaction(sale). You also need to look at the duration of your contract with an affiliate network. Sometimes it goes month by month, while in other cases — for a year or longer.
• Define the quality of a network
Don’t look at the number of publishers. Instead, learn how an affiliate network chooses its affiliates for collaboration. Does it evaluate them somehow in order to define their suitability for this particular network? Are they relevant to the preferred niche of the network?
• Want to go globally and expand your business?
If yes, you should be very careful while selecting an Affiliate Network which supports global expansion. Even though there’re lots of candidates who offer international programs, very few of them can tackle the challenges you’ll meet. For example, there’re be definitely some difficulties due to cultural changes and a network with good expertise must address them properly and know how to deal with a particular industry.
• Check background information and evaluate its image
Learn an affiliate network’s website and find out their achievements and annual reports. Ask someone who uses this network or simply read feedbacks from different sources.
• Is the network transparent and supportive?
A network with high credibility won’t let you be unaware of origination of traffic and publisher you’re dealing with. That’s why a network should be open to dialogue and answer your questions swiftly at any time.
• How does it cope with fraudsters?
Clarify with your affiliate network what actions they take to prevent fraud. Determine how thoroughly they examine prospective affiliates.
If fraud issues are your own responsibility, make sure you have a detailed plan of action to reduce risks.
Hopefully, our guide to the basics of Affiliate Marketing was helpful and you know what you should do next.