Affiliate marketing can best be described as a kind of performance-based marketing in which a business rewards its marketing affiliates for every visitor or customer brought to its website as a result of the affiliate’s marketing efforts. In other words, a company will provide an affiliate with commission in exchange for promoting its products or services. The affiliate might, for example, post an ad leading to the company’s website on his or her blog. For every visitor that ends up on the company’s website via that ad, the affiliate gets paid a set amount. This means that businesses only pay for results, giving affiliate marketing an unusually high ROI.
The Benefits of Affiliate Marketing
Affiliate marketing is becoming increasingly popular. It can often be a cost-effective means of marketing for businesses because it is constructed on a cost-per-an-action basis. This means businesses only pay for results, helping them to keep overhead costs low while leveraging promotional channels to bring in conversions and sales. Moreover, in addition to helping to keep costs down, affiliate marketing is actually an excellent way for businesses to reach new audiences. For example, a hotel might cultivate affiliate partnerships with car rental firms, airlines, or travel insurance providers to reach new audiences who may have similar needs and interests. This can do wonders for brand exposure and visibility, helping you to get your brand’s name and products and services out in front of new people.
The Challenges of Affiliate Marketing
While affiliate marketing does have a number of key benefits, it also presents challenges. It is critical to note that affiliate marketing is in not an easy or quick way to rack up revenue. Put simply, it isn’t a get rich quick scheme and shouldn’t be treated as such. “Affiliate marketing takes time and effort to build and make money,” Steve Olenski warned in Forbes. “An affiliate marketing program is a lot of work, and in most situations, there's a lot of competition, so you're not going to be bringing in money immediately. Business owners and entrepreneurs suppose that all you need do is set up a site and choose an affiliate to associate with and then just let it run its course.”
What You Need to Know to Succeed
Successful affiliate marketing programs can have significant commercial benefits for your business, driving profit and conversion. In fact, it isn’t uncommon for a successful affiliate marketing program to generate somewhere between 10 and 30 percent of a business’ total sales, which is pretty significant. So, how can you successfully leverage affiliate marketing for your business? Be sure to keep the following strategies in mind.
Make sure you invest in getting your program up and running
Don’t just hand things over to an affiliate and expect to see instantaneous results. Instead, you need to focus on making sure that you’re actually putting the time, funds, and effort into establishing your affiliate programs and that you are tracking results so that you have an understanding of what works and what doesn’t. This means you need to invest in the right infrastructure to ensure that you are able to track sales and commissions.
“It’s going to cost you money to set up your affiliate marketing management systems and test what works and what doesn’t,” Aj Agrawal explained in Forbes. “Advertising is never guaranteed to make a return. You need to constantly test what you’re doing to make sure it’s actually making a return.”
You will also need to ensure that your team has the capacity to manage each affiliate account, including making sure each affiliate agreement is up to date and making sure none of your affiliates are misrepresenting you online. When necessary, your team will also need to put time and energy into finding new affiliates.
The larger your affiliate marketing program, the more investment and time required. If you only have a few affiliates, it may be possible to do in-house, depending on the size of your team. But if you’re keeping track of dozens of affiliates, you may run into some logistical obstacles simply because of capacity constraints. In this kind of situation, you might want to consider outsourcing to an agency or to an affiliate network.
Focus on quality, not quantity
When launching an affiliate marketing program, some marketers make the mistake of assuming that the more affiliates they have, the better. The truth is that to ensure you effectively leverage affiliate marketing for your business, you need to focus on cultivating relationships with affiliates that are relevant to your target audience and their wants and needs. If your business sells kitchen appliances, it makes much more sense to establish an affiliate relationship with a home store or furniture store than it does to establish an affiliate program with a luxury hotel line. Don’t say yes to every affiliate that comes your way – make sure that each affiliate is somehow relevant and will enhance your marketing efforts. Otherwise, you are just throwing away precious marketing dollars.
“The best way to think about affiliate marketing is quality over quantity,” Olenski said. “There are a lot of small websites that will promote your product, but the key is finding a small number of partners that will deliver conversions. For example, an equity management services firm has over 20,000 affiliates in its system, but only about 25 affiliates generate 85 percent of revenue. The real deliverables will be dependent on locating the right affiliates, big or small, which drive results.”
Using Affiliate Marketing to Build Your Business
The bottom line is that affiliate marketing can be an excellent marketing strategy to employ in today’s hyper-competitive world of marketing, giving you an extra competitive edge when it comes to driving traffic to your site, converting leads, and increasing sales. But the key is to put a good affiliate marketing strategy in place and carefully identify affiliates with whom you want to cultivate relationships. The more time and effort you put into developing an affiliate program, the better the results you will see.
Contact 10twelve to learn more about using affiliate marketing to leverage your business.