Affiliate Marketing
Introduction
Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate's own marketing efforts. The industry has four core players: the merchant (also known as 'retailer' or 'brand'), the network (that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as 'the affiliate'), and the customer. The market has grown in complexity, resulting in the emergence of a secondary tier of players, including affiliate management agencies, super-affiliates, and specialized third-party vendors.
History
Affiliate marketing has its roots in the revenue sharing principles practiced in the mid 20th century. Revenue sharing—paying commission for referred business—predates affiliate marketing and the Internet. The translation of the revenue share principles to mainstream e-commerce happened in November 1994, almost four years after the origination of the World Wide Web.
Affiliate Marketing Models
Affiliate marketing is commonly confused with referral marketing, as both forms of marketing use third parties to drive sales to the retailer. However, both are distinct forms of marketing and the main difference between them is that affiliate marketing relies purely on financial motivations to drive sales while referral marketing relies on trust and personal relationships to drive sales.
Affiliate marketing is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies.
Pay per Sale
In a pay-per-sale type of affiliate marketing, the merchants pay the affiliate a certain fee whenever the visitor he has referred to the merchant’s site actually buys something from the merchant’s site. Affiliates are often paid on commission basis, although other merchants would opt to pay a fixed fee. But no matter what the basis of the fee is, it is generally higher than the fee paid to affiliates in a pay-per-click affiliate program.
Pay per Click
In a pay-per-click affiliate marketing program, the affiliate is paid a certain amount whenever a visitor clicks on the link to the merchant’s site. The affiliate is paid regardless of whether or not a sale is made. The fee paid for each click is generally lower than the fee paid for each sale in a pay-per-sale type of affiliate marketing.
Pay per Lead
A pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies and other companies who rely on leads for their company to grow. In this type of affiliate marketing, the affiliate is paid whenever the visitor he referred to the merchant’s site fills up an application form or any similar form related to the business of the company. Compensation for this type of affiliate marketing is based on a fixed fee whose rates approximate that of the fixed fee in the PPS type.
Affiliate Marketing Strategies
Affiliate marketing strategies can be categorized into two categories: those that are allowed by merchants (white hat), and those that are not (black hat). White hat strategies are generally seen as the long term, sustainable strategies that will bring long term growth to a website. Black hat strategies are those that are risky and are often seen as unethical. These strategies can lead to a website being penalized or banned from search engine results.
Search Engine Optimization (SEO)
SEO is one of the most popular affiliate marketing strategies due to its effectiveness and low cost. The goal of SEO is to get a website to rank in the top results of a search engine. The higher a website ranks, the more traffic it gets, which leads to more sales and revenue.
Email Marketing
Email marketing is another popular strategy for affiliate marketing. It involves sending promotional emails to a list of subscribers with the goal of driving traffic to a website or product. This strategy can be very effective if done correctly, but it can also lead to spam complaints if not handled properly.
Content Marketing
Content marketing is a strategy that involves creating and sharing valuable free content to attract and convert prospects into customers, and customers into repeat buyers. The type of content you share is closely related to what you sell; in other words, you’re educating people so that they know, like, and trust you enough to do business with you.