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This is how affiliate marketing works!

Minutes well spent

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Why pass up an opportunity for more sales?

Affiliate marketing is a strategy that unfortunately receives too little attention from companies. This is a very powerful sales promotion measure - especially for small businesses or startups, an enormous reach can be achieved with little budget.

"Affiliate marketing generates one in seven euros in e-commerce." (Source: BVDM)

But how can you win over this channel now? In this blog post, you will learn more about the structure setup of affiliate marketing and at the same time ways to use this measure for you and your business.

Was ist Affiliate Marketing?

In online marketing, especially in the area of E-commerce is no longer imaginable without this channel. The basic principle of affiliate marketing is quickly explained.

There are three components that interact with each other:

  • User (consumer)
  • Publisher/Affiliate (Referrer)
  • Advertiser/ Merchant (referral recipient)

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The publisher recommends products or services and uses his reach to connect the user and the advertiser. In the best case, the customer finds a product that makes him happy, the advertiser (or merchant) increases his sales and the publisher earns a commission - a win-win situation for everyone.

Affiliate marketing is referral marketing.

Everyone is already familiar with the principle of affiliate marketing, just think of real estate agents, for example. The role of the real estate agent is that of the publisher, or affiliate - he establishes the connection between the user and the buyer, and the advertiser and the seller.

In the same way, the principle is not unknown in the digital world when you think of comparison portals. Affiliate programs are intended for cooperation between partners (partner programs) who want to address the same or similar target groups and thus increase their reach.

 

How does affiliate marketing work?

Meanwhile, it is a powerful marketing tool that should have a permanent place in any online marketing mix strategy. There are already different affiliate networks or affiliate services, which on the one hand serve as an intermediary between merchants with affiliates and on the other hand also enable billing by commission. Through so-called Affiliate links or banners, it is possible for the merchant to assign an affiliate partner to the customer. However, the billing models may differ, depending on the cooperation. 

Billing models

There are different types of compensation and these can be individually designed between the affiliate partners. I may now introduce you to the classic billing models:

  • Pay per Click
    If customers become aware of the product via a website of the partner (affiliate) and click on the affiliates link, then the publisher can already expect a commission.
  • Pay per click out
    Here, customers have to visit at least one more service page of the merchant before the affiliate can enjoy a commission.
  • Pay per Sale
    Here, a commission is only paid when customers who have reached the website via the affiliate link also buy something and thus increase the advertiser's sales.
  • Pay per view
    For companies that care about increasing online reach and branding, it's enough that potential customers have viewed the advertised product.
  • Pay per lead
    With this billing model, only after the contact information is entered by a user who comes through this link is considered a success for the publisher.
  • Lifetime - Commission
    In this, the affiliate has the advantage of being able to cut in every time the merchant sells a product to the customer who came through the affiliates websites link.

Affiliate Networks

With the help of platforms and its network, cooperation partners can easily and quickly find each other or be found. The networks not only act as an interface, but also create the affiliate links and billing.

The following networks already exist...

  • Digistore24
  • Adcell
  • Amazon Net Partner
  • 100partnerprograms.com
  • cj.com
  • chickbank.com

 

Affiliate marketing from the affiliate's point of view

There are different ways for affiliates to fulfill their part of the cooperation and earn money with it.

Possible channels for affiliate marketing:

  • Blog/ Websites
  • Social media
  • Newsletter/ Email Marketing
  • Personal recommendation

For the affiliate who wants to build an online business and earn money on the Internet, it is necessary to generate the reach and trust of the users. This is essential for success and only in this way he can achieve that the users follow the links and thus earn money per click or per sold product - depending on the agreement. 

Therefore, in the business model of many affiliates is SEO (search engine optimization) integrated and they deal with content marketing. In order to achieve the desired traffic and associated remuneration, some use SEA - Google ads, as an advertising medium for their own website.

Caution: If you are not skilled in SEA, this endeavor can quickly turn out to be costly.

Advantages for affiliates

  • Hardly any acquisition costs
  • No direct customer contact/ complaints
  • No responsibility for the supply chain
  • passive income

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Affiliate marketing from the merchant's point of view

For a successful affiliate marketing strategy, two factors are crucial for the merchant. On the one hand, it is important to have analytical data and interpret them correctly. On the other hand the "feel" for the people a necessary quality to plan and implement measures and actions together with action partners at an early stage with creativity, proactivity and ideas in order to make the product or service attractive for the end customer. Smart strategies and creativity are the greatest levers. 

Advantages for the merchant

  • Increasing reach & increased traffic
  • Low marketing costs/ low-cost strategy
  • increasing turnover
  • Brand positioning

 

Challenges in affiliate marketing

As with any area in marketing, there are challenges in affiliate marketing, but with proper preparation, they can be overcome.

Tracking

The monitoring of successes must always be tailored to the distribution channel, in order to be able to make stable statements. For example, the call center can be prepared for this or the technology sets the appropriate cookies. 

It is not always clear where the customer was actually acquired from. If a user has become aware of a product due to an article in a blog and then searches for it again days later, it often cannot be assigned. Affiliate marketing has clearly set the first step, but is not evaluated in this way. Because in the end it is "Last cookies counts". Here, accurate and clean tracking is of great importance. Not only so that affiliates get the money they are entitled to, but so that companies can to be able to evaluate the analytical data better and more clearly and, to be able to set appropriate measures.

Planability

The ability to plan is a challenge for both companies and affiliates.

A publisher is dependent on the fulfillment of the contract (for example, the click on a link), so that this gets his money from the companies. Even if he increases the traffic with SEO and Content Marketing can influence, he never has the guarantee and security as with an ordinary salary.

But planning is also an important aspect for companies - this sales channel cannot be simply and quickly "switched on and off".

Affiliate Fraud

Unfortunately, the Internet also offers a lot of room for criminal activities and fraud - this has put a serious damper on the image of affiliate marketing. But in the meantime, large affiliate networks work with complex programs to detect this fraud and stop it in time. 

Affiliate Marketing - The Conclusion

In summary, the power of affiliate marketing should not be underestimated. Both for companies affiliate marketing can be a successful advertising tool to bring your products or services to the masses, as well as for individuals who create / run their own website. For example, you can earn money through recommendations of the products or services in the newsletter (remuneration) or affiliates find a suitable place in your blog. 

Like everywhere else in life, affiliate marketing benefits from knowledge and creativity. With the right partner, affiliate marketing can be a win situation for everyone involved.

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