As a savvy marketer or business development professional, you are continually looking for new ways to grow your company's brand, digital partnerships, and sales. Chances are you’ve heard about the effects affiliate marketing has had on your industry and thought about starting an affiliate program, but don’t know where to start. We’re here to help. This post kicks off a three-part series where we’ll talk about how to successfully set up an affiliate marketing program, industry best practices, and a sneak-peek into Verb’s affiliate network.
What is Affiliate Marketing?
Every day, thousands of influencers and publishers benefit from a recurring revenue stream by partnering with brands through affiliate programs. Take a look at some of the most popular accounts on social media, and you probably won’t be surprised to see that a majority of their content is #sponsored. At Verb, we create tools that help people share their stories with the world, and some of our clients choose to do so in partnerships with influencers and other affiliates, so we’re no strangers to this business model.
In affiliate marketing, a person or organization promotes a brand through ads, blog posts, online shopping sites, or other content, and gets paid a commission or revenue share of the sales they influence. With an affiliate model, you can choose which outcomes you want to incentivize your partners to influence, and compensate them accordingly. For example, you can set up your commission structure to reward your partners for driving overall sales, leads, new customers, and more.
Also referred to as a publisher or partner, affiliates can span many different verticals, and these partnerships can often reach untapped markets and provide your company with valuable industry insights.
For example, let’s say you are a business-to-consumer company that sells guitars. Through your affiliate program, you might partner with:
The affiliate channel is an excellent way to extend your brand’s reach while remaining cost-effective. Affiliate partnerships can drive a return on investment of up to 12 times the advertising investment, according to a 2019 study from PwC and the Performance Marketing Association.
Affiliate marketing has been used with great success by many well-known companies like Amazon and Target, and this strategy has become increasingly common alongside the boom of social media.
The Value of Affiliate Marketing
In an increasingly complex advertising world where the marketing technology solutions are endless and new strategies are created every day, it may seem daunting to build a brand-new marketing model. So, we’ve outlined a few of the reasons why affiliate marketing is on the rise and a great way to grow your brand.
Many companies feel their biggest challenge is generating traffic and leads. One of the most significant benefits of an affiliate marketing program is that it is entirely performance-based, and you can set up your commission structure to reward the actions that will have the biggest impact on your business. You can think of your affiliates as third-party marketing consultants who are only paid if sales are successfully made.
Paying your affiliates on performance rather than posts or clicks ensures the program is a relatively low-risk marketing strategy. Your team won’t have to spend marketing budget to attract and nurture the leads that come from affiliates. There are some startup costs to build an affiliate program. However, those startup costs are relatively low compared to other advertising methods, so your business’s overall risk is low, and the potential rewards are high.
Finding and attracting the right target audience to your website can be difficult. By working with affiliates who understand your industry and already have an active audience with similar interests, you’ll receive high-quality leads that are the right fit for your product or service and warmed up to buy.
Staying relevant in regards to SEO can be challenging, and a topic that is one of the primary focuses of most companies marketing teams. Depending on the format of your partners’ tracking links, affiliate partnerships can significantly improve your SEO rankings through backlinks to your website via their blogs, social pages, and websites. Backlinks are helpful in improving your SEO rank and act as a vote of confidence from one site to another.
As the brand, you can handpick the affiliates you want to work with. When affiliates apply to be a part of your program, you have the opportunity to assess the sustainability and fit of the partnership and choose those who can be the best ambassadors for your company and have the biggest impact.
As we all know, consumers like to buy from brands they know and recognize, and will often spend more with brands they trust over unknown brands with a lower cost. Affiliate marketing allows brands big and small to grow their brand awareness by increasing their exposure to new markets and audiences that may not have previously heard of them.
If your brand’s products and services can be promoted and sold worldwide, affiliate marketing is a cost-effective way to test out new markets. By recruiting affiliate partners in the markets you want to enter, you can leverage their existing audience and local experience to test the market potential with very low-risk.
Not only do you and your affiliates receive many benefits from an affiliate marketing program, your potential customers will have a high-quality native selling experience from someone they trust. Affiliate marketing is a flexible approach to growing your brand that is cost-effective, easy to manage, and positively impacts your business.
The Affiliate Ecosystem
There are four main parties involved in affiliate marketing: the merchant, the network, the affiliate, and the consumer. The merchant is also sometimes known as the brand, the advertiser, or the seller. The merchant is the party who sells the product or service. The merchant can range from large corporations, like HubSpot, to single individuals who sell their personal brand’s products or courses. From entrepreneurs to small startups to large international corporations, anyone or company can build a successful affiliate marketing program.
The affiliate, sometimes also known as the publisher or partner, is a person or company that promotes one or more products and tries to attract potential customers of value to purchase the merchant's products or services. Affiliates act as a marketing partner to the brands they work with. They can range from social media influencers, bloggers, content sites, product review sites, shopping sites, mobile apps, app marketing platforms, mass media sites, loyalty, coupon, reward websites, and even other complementary brands to the merchant.
Affiliate networks act as intermediaries between affiliates and merchant affiliate programs. They allow publishers to easily find and participate in affiliate programs that would be of interest to their audience. They also enable merchants to reach a much larger audience of potential affiliates. Affiliate Networks often offer affiliate link tracking technology, reporting tools, payment processing, and access to an extensive database of potential affiliates. Affiliate Networks also simplify the affiliates’ process by allowing them to participate in multiple affiliate programs in one place. Some of the most popular affiliate networks include Awin, Share-a-sale, and Rakuten LinkShare.
The consumer is the person or company who purchased the product or software, when a consumer purchases the product or services, the merchant and the affiliate share the revenue.
Thank you for joining me to learn about affiliate partnerships and their growing role in the world of marketing. We’ll talk more about current trends in affiliate marketing, how to find the right partners, and how to successfully manage an affiliate marketing program in part two of this series, so be sure to check back in next week!