What does Affiliate Marketing mean?
Affiliate Marketing Meaning
Affiliate marketing is when an “advertiser”, normally a brand or company, offers a 3rd party “affiliate” a financial incentive to promote their products and services.
Some of the biggest e-commerce sites in the world run affiliate programs such as Amazon associates (https://affiliate-program.amazon.com).
Affiliates are either rewarded with a percentage of a sale or a fixed commission per sign up or new customer. Lifetime value rewards are also popular where the affiliate receives commission for the entire time that customer uses the advertisers products. In rare cases an advertiser will pay on a cost per click basis for each visitor the affiliate sends.
Advertisers provide affiliates with a tracking link as part of their affiliate offer. The affiliate will then use this link whenever they promote the offer. The link tracks that the affiliate sent the user/visitor to the site and the rewards are allocated accordingly.
Companies can leverage affiliate networks which are aggregators of affiliate offers to reach thousands of affiliates and employ a small army of promoters on a performance related pay basis. This provides a cost effective method to scale well performing products fast.
The largest affiliates will promote offers using performance marketing campaigns. This might be using banners, search ads or social media influencers.
Affiliates tend to live and die at the cutting edge of the performance marketing industry so they are up-to-date with the latest traffic sources, techniques and systems to run effective marketing campaigns.
Affiliates are often solo-entrepreneurs or work in small teams or with virtual assistants. The stereotypical image of a digital nomad working out of coffeeshops in Thailand is fitting although not always the case. Affiliate marketing is big business and as the industry evolves we are seeing more traditional companies competing at the highest levels.
Affiliate marketers have a reputation of pushing boundaries too far. Having traffic sources close down accounts and advertisers refuse payments are common complaints on affiliate marketing forums. Fraud is a huge issue in any form of digital advertising and advertisers need to be aware and take precautions against fake sign ups and sales.
Performance marketing is running marketing campaigns and optimising the results to continuously improve the performance of the campaign. A simple example of this is an A/B test where two banner ads could be used on the same campaign. Whichever ad gets the most clicks (click through rate) will be used and developed further.
There are a lot of aspects that go in to running a performance marketing campaign such as:
- The angle – a unique perspective or concept that the affiliate will use to promote the offer
- The creative – the ad creative that is used such as a banner ad, this can be broken down further to optimise the colour of a button or font used in a headline.
- The tracking – high volume tracking is a challenge in itself when dealing with millions of data points per minute load balancing and data storage becomes critical.
- The landing page – affiliates often use a jump page between their creative and the advertisers landing page. This can be used to collect data and improve conversion rates by pre-selling an offer.
- The offer – the affiliate has little control over the offer unless it is whitelabeled or they have a good relationship and high volume with the advertiser.
- The conversion – the conversion process will normally be a signup, install or sale this fires a pixel back to the the affiliate panel which records a commission.
Affiliate Marketing Evolving
Affiliate marketing is a fast paced industry where the game, players and competition changes rapidly. In the last few years we’ve seen the rise of push notification traffic, paid influencer posts, print on demand, drop shipping/servicing.
While the industry evolves there will always be pockets of profitable traffic that affiliates can find and convert into commissions. Advertisers will continue to scale their businesses leveraging affiliates and affiliate networks.