Affiliate programs can be a great idea to increase your traffic and revenue through a multitude of sources. Affiliate marketing has been around for over 15 years and it really has just started as a way to compensate referrers who are sending business through to various types of websites. It actually started in the adult space, but it quickly grew into the mainstream space, and has evolved with various networks and tracking platforms into a huge industry. So what should you do as a merchant or advertiser looking to launch into affiliate marketing? You should launch on a major network. If you are a merchant or a website owner and you are selling products or generating leads, you should first launch on one of the major networks (CJ, Linkshare, or Shareasale) if not more than one. Here are some important concepts and strategies to maximize and run a successful affiliate program.
Way back in the 90’s, a technological revolution happened in the form of the World Wide Web; and with any new technology or media, companies quickly realised they had a new opportunity to market their products and services to consumers via the millions of websites they visit every day.With the emergence of search engines in the mid-1990’s, the internet ballooned into a massive e-commerce and information machine. Website owners were creating valuable content and providing benefits to their visitors, and these website owners wanted to be compensated for their hard work. Early forms of online advertising like CPM or fixed placement started seeing competition from emerging, more accountable forms of online advertising, like affiliate marketing. So, what is affiliate marketing?
Affiliate marketing is a way of making money by referring people to purchase items online. More and more companies are starting to use this form of marketing to reward affiliates for generating website visitors to their business. Affiliates are only paid when sales are completed so it’s an extremely cost-effective tool. PC World, for example, pay a 5% commission for every visitor an affiliate recommends who makes a purchase. While it’s a small commission, the affiliate is able to benefit from PC World’s brand awareness which can often result in sales being generated on a regular basis. Commissions range from as low as 1% with established retailers, right up to 75% on some digital products. The health and beauty market is one of the most affiliate heavy, with average commissions around 30%.
How it works…
1) Affiliate is assigned a tracking URL: This is to track which affiliates are driving your traffic.
2) Affiliate markets your company: Affiliates can promote your company through several different ways: paid traffic (like AdWords), a YouTube video of the product and link to it with the affiliate ID, email blast, blog post, reviewing products, etc. The possibilities are endless. When you sign up affiliates, you should also limit how they can promote it.
3) Customers or leads are acquired: This is when the visitor purchases the product or signs up.
4) Affiliate receives a commission: When the affiliate drives you a customer or lead, you pay them out.
Advantages of Affiliate Marketing
There are a number of advantages to use affiliate marketing, especially for start-ups:
- Pay only for results.
- Can be more cost effective: No other marketing form more effective than this.
- Affiliates may be better at creating copy and reaching segments: Why would someone sign up to be an affiliate and spend time and money if they think they won’t be able to drive you customers?
- You know your cost per acquisition: This will help you determine if you’re actually losing or making money.
- You almost never lose money: Sometimes affiliates are a bit shady and unethical, and you’d want to drive them out as soon as possible.
Drawbacks of Affiliate Marketing
There are also drawbacks:
- You don’t control the message: You want to be careful of this, because you don’t want them to lie or poorly represent your brand. They’re just looking to make money, so they aren’t seeing if they are driving good or bad leads.
- Lead quality may not be as good: Chances are, the quality of the people are going to be as good as the ones going directly to your website.
- If mismanaged your traffic may come from an unreputable source. This could make your brand look bad.
Buzz Words
Terms, acronyms and buzzwords are a huge part of the technology industry, and we encounter a huge amount on a daily basis. But “cookies” are what we, in affiliate marketing, deal with the most.
A cookie is a technology that works with web browsers to store information like user preferences, login or registration information, and shopping cart contents. Have you ever opted-in to have a website “remember” your password and username for one of your online accounts? That’s a cookie. Ever notice while searching the web for “travel deals” and you suddenly start seeing travel display banners on other websites? Those ads are appearing for you because you’ve been cookied (it’s okay, you won’t get hurt).
In affiliate marketing, one task that cookies manage is to remember the link or ad the visitor to a website clicks on. Cookies can also store the date and time of the click, they can even be used to remember what kind of websites or content you like most. There are many different types of web cookies and uses, but the kind of cookie affiliate marketing relies on is called a first-party cookie.
When a user visits a publisher’s website and clicks an advertiser’s creative ad, the visitor’s browser receives the CJ tracking cookie that identifies the advertiser, the publisher, the specific creative and commission amount. This data is stored within the link information in what are called “parameters” and can include even more anonymous data used for attribution.