- Written by Kimberleigh Gardener on
If you are looking for a marketing method that is simple to track and monitor, and also gives a good ROI, then affiliate marketing should be in your toolbox.
If you are looking for a marketing method that is simple to track and monitor, and also gives a good ROI, then affiliate marketing should be in your toolbox.
However, if you are new to the concept, you may not understand how it works, or maybe you have some preconceived ideas putting you off from progressing. To help you distinguish myth from fact, and get a better appreciation of how affiliate marketing could work for you, we’ve answered some of the most common questions marketing managers ask.
Affiliate marketing is a performance-based marketing channel in which a publisher (also known as an affiliate) is awarded for sales they generate for an advertiser. Publishers promote a product or service through their digital networks, such as their website or social media account, for their audience.
Advertisers, sometimes referred to as merchants or brands, are the people or businesses who want to reach a new audience of potential customers. They engage with publishers to do so and track their progress, rewarding them for their sales performance.
First and foremost, affiliate marketing can help your business by exposing your products or services to an entirely new audience or demographic. By utilising the audience or networks of a publisher your business is reaching people you weren’t able to find alone.
Publishers are often professional marketers, they know their audience and what works with them, so you don’t have to. Through a well-tracked affiliate marketing campaign, you’ll have access to their knowledge and be able to track with real-time data what works for your business.
With Awin’s tracking and data tools, you’re given a full range of insights. As you’re in full control of which type of payment structure you reward your publishers with, you’ll always have the most cost-effective ROI for you and your business. For example, you can pay per click (CPC), pay per sale (CPA) or pay on influence for assisting sales.
Let’s face it, when you aren’t an expert, marketing efforts can seem arduous or complicated. With affiliate marketing, you can allow publishers to take care of that aspect of your business to allow you to focus on what you do best.
In our recent Awin report, we reported that the global annual investment in the industry is more than £12 billion annually.
As an advertiser, you create an affiliate programme that is made available to potential publishers who you hope to work with to generate sales and brand awareness. The programme will generally include details of your brand and product, the retail value of the product, your chosen commission levels and payment system and promotional materials.
The programme is then tracked over a course of time to determine which publishers are making sales for an advertiser. Commissions are then paid at the agreed-upon rate, according to the type of payment model you’re using. Many affiliate programmes are managed via an affiliate network like Awin, which acts as both an intermediary to connect publishers and advertisers and a convenient data tracking platform.
Affiliate networks make money through the fees charged to the advertisers to utilise their networks of publishers and data tracking capabilities. These fees are agreed with each advertiser and can sometimes be structured to be paid as a percentage of each sale made, similar to the commissions paid to publishers for making sales.
As affiliate marketing is based on referrals, when a customer buys through an affiliate link the publisher does not have to handle any money as the customer is taken directly to the merchant’s site to complete the purchase. The publisher is simply making a recommendation to their audience to make a purchase. These click-throughs are tracked through cookies and the publisher is paid an agreed-upon commission if their recommendation results in a conversion, which is commonly by making a sale, but could also be filling out an application form as is the case with lead generation activity.
Drop-shipping allows an individual to run an online store without having to stock products. A drop shipper advertises the products as if they are a business that owns them, but when someone makes an order they create a duplicate order with a stockist for a reduced price and have the product delivered to the customer. The distributor takes care of the post and packaging on their behalf so they hold no physical stock.
The main difference is that affiliate marketing does not require the affiliate to fulfil the sales process, run the business website, employ any additional services or handle customer support. As a drop-shipper, you are still responsible for the sales procedure and functioning as a business, you simply do not handle any inventory.
Yes. Though not the primary function of affiliate marketing, which is to generate direct sales, using this technique to create leads is still possible. Companies that offer a service rather than a product often use affiliate marketing to create leads which they can then nurture as part of their sales funnel and wider marketing efforts. In this way a lead is warmer than using more standard marketing techniques, as the trust is already established with the publisher.
Also remember, every customer generated through affiliate marketing is a potential lead for further products. Awin has a dedicated lead generation service that can be utilised for creating quality leads.
Affiliate marketing is a type of performance marketing and therefore sits under its wider umbrella. Affiliate marketing commissions are paid on performance, which is generally when a sale is made.
Performance marketing is a method of marketing encompassing different price structures, depending on the performance of a type of advertisement. Examples include how many times the product is viewed or clicked, or how often a sale is made. Methods such as email marketing, influencer marketing and search marketing are all methods of performance marketing too.
Yes, in fact, it’s something that should be a focus in affiliate marketing. Smartphones are essentially miniature computers, so as long as a website has been optimised for mobile, it can display affiliate offers in the same way a PC can. Mobile devices also have specific tools, apps and programs not so readily available on computers, and can be well utilised by publishers.
When setting up an ad, there are many ways it can be optimised for mobile users, making it easy for this audience to access the offer. How people consume advertising and content differently on their mobile device to a computer is definitely something a publisher should consider when marketing to their audience. It also allows them to be far more connected to their audience with quicker and more direct response times to questions and queries.
As the mobile market is predicted to make up 80% of traffic in the future, publishers not only can promote on mobile devices, but they are missing a large portion of potential opportunities if they are not . Many publishers are starting to prioritise advertisers who have app tracking implemented on their affiliate programmes as they try to capitalise on the $120 billion spent in-app by consumers in 2020. Therefore, adopting a mobile-first strategy is becoming a necessary part of the affiliate channel.
As the name suggests, a super affiliate is someone who has built a thriving and influential affiliate business. They consistently drive a large majority of the sales from any programme they promote, compared to other affiliate partners involved in the programme. They make a large income from affiliate marketing, which is usually in the range of 5 or 6 figures.
This comes from building trust with their audiences and promoting products and services that align with whatever their personal brand is.
The best place to find qualified publishers is through reputable affiliate networks. Awin is one of the world’s largest affiliate networks and we ensure our publishers have undergone a rigorous application process and compliance checks before joining the network. We remove those who are found to not be using reputable techniques.
You can also advertise your programme on your website and through your established networks, inviting publishers to sign up. Existing customers also act as great affiliates as they already believe in your product and could advocate for it.
An affiliate disclosure statement explains to the reader that there may be affiliate links on the website, for which a commission may be paid to the publisher if these links are clicked and a sale is made. This is to show honesty and transparency to the audience. On some platforms or social media networks, or in certain regions these are mandatory to display. It is up to the publisher to understand these requirements and adhere to the individual outlined rules.
To help publishers remain compliant with various regulators in the UK and US, Awin launched adMission, the industry’s first ad disclosure technology, which makes disclosing affiliate links easier than ever before.
With affiliate marketing, commission rates are completely flexible and dependent on various factors. Some advertisers choose to set rates for the entire programme, others may choose to create independent rates for high performing publishers or super affiliates.
Rates can also be determined by how well a publisher’s or advertiser’s website converts, and the industry standard for that type of product. However, the payment structure must be attractive enough to encourage publishers to join the programme, while also ensuring the advertiser is getting a good ROI to make money on the product.
Though there is a large variance, affiliate rates often sit somewhere between 5% and 30% of the sale price of the product.
Awin’s commission manager tool allows advertisers to easily set and manage rates on their affiliate programme and gives publishers a clear timeline of previous, current and future commission rates.
As digital privacy concerns have increased over the past few years we have seen a rise in the prominence of ad blockers and cookie tracking. It’s natural for affiliate marketers to be concerned about ad-blockers, as they can affect who sees your advertising and may therefore diminish your efforts. However, just as the digital world develops new issues and questions, the online marketing world is constantly evolving to the changes thrown at it. Ad blockers are no exception.
Ad blockers are simply software often placed on browsers and therefore act differently depending on which browser the audience member is using. For example, Chrome’s new version of adblocker only blocks ads that don’t comply with the Better Ads Standards. This means poor quality publishers are being driven out, while reputable publishers can continue to thrive.
Awin also offered publishers Bounceless Tracking within our Tracking Optimisation Plugin. This sends potential customers to an advertiser’s site without the use of redirects, avoiding the restrictions of ad blockers.
The easiest way to deal with unscrupulous behaviour is to sign up to an affiliate network and publish your programme on the network’s platform. Networks are skilled at compliance monitoring, which helps to prevent potential issues arising. Learn more about compliance in affiliate marketing and Awin’s compliance team.
That’s up to the advertiser. No action needs to be taken as advertisers only payout when the publisher creates a sale; therefore, there is no risk created by underperforming publishers. However, having a good network of performing publishers is important. If an advertiser is underperforming it’s always worth reaching out to see if there is anything extra they may need to increase their sales.
Through Awin every publisher has a unique publisher ID, which is used in tracking cookies to record which publisher generates what sales. This activity can then be viewed within the affiliate network dashboard.
Tracking publisher sales and accurate data can be extremely complex without using an established affiliate network.
Publishers promote their programmes through various means and certainly don’t have to stick to one option. These can include blogs, websites, email marketing, paid search and social media posts. However, social media now has a huge and extremely interactive audience, making this platform a good source of potential traffic.
Social media platforms are also assisting those they deem as ‘influencers’ to connect their audience with purchasing possibilities, such as the ability to shop within apps. This is another great advantage for publishers to utilise social media to reduce the barriers to making a final sale.
Absolutely. Affiliate programmes can be promoted in any country that has a need for your product, and your affiliate network operates in. If your site exists in multiple language versions, it’s best to set up an affiliate programme in each language, where possible, so publishers can direct their audiences to the most suitable version.
Affiliate marketing exposes your product to new audiences while tapping into the different skills of your publishers meaning you don’t have to become a marketing expert who knows it all. Since affiliate marketing only pays out commissions on sales, there is minimal risk of promotions not being able to generate ROI. Budgets are easy to manage and maintain due to the visibility and transparency the channel offers.
There are so many advantages to affiliate marketing, particularly in uncertain times.
If you decide not to use an affiliate network, managing your affiliate programme can be time-consuming. You’ll need to be able to track affiliate data to accurately pay your publishers. It will also be extremely difficult to pay publishers on influence, not simply on final sales.
You will also need to be more aware of compliance issues surrounding affiliate marketing if you go it alone, which can vary from region to region.
Additionally, it can be challenging to build a team of loyal publishers who promote your programme long term.
Although there has been incredible growth and change over the last five years in affiliate marketing, the unprecedented events of 2020 have drastically changed anything anyone could have predicted. Online sales have reportedly soared in unexpected areas though the exact data figures have not yet been confirmed. At least a 10.1% annual growth on spend is expected to continue.
With spend expected to increase, affiliate marketing is certainly still expanding and developing. The IAB’s recent report reveals that in 2020 digital marketers saw an increase of up to 50% in affiliate ad spend, highlighting the rapid growth of the industry. Further, affiliate marketing and influencer marketing have been ‘ruling the world of marketing’ and this potent combination looks set to continue on its growth curve. By utilising both methods in tangent, expect to see affiliate marketing go from strength to strength.
Although there is no set answer to this, affiliate marketing is not always a quick fix. Finding the right affiliates and drawing them into your programme takes time. Figuring out the right payment structures and commissions for both your business and the publisher will take some navigating. With your first campaigns expected to see a return after a year, this is a great time frame compared to most small businesses who might only break even after three years.
Though what’s to come is uncertain, affiliate marketing is definitely here to stay. In a recent PI LIVE keynote, Awin’s CEO, Adam Ross explores the four main factors leading to the rapid 10% growth of the channel in 2020 and how it's giving big tech a run for its money. As with many scenarios right now, affiliate marketing is likely to evolve and adapt to the changes that e-commerce and the world outside it throws at it.
There’s also a debate on the effect consolidation of some of the bigger affiliate marketing companies will have on the industry as a whole, as well as a discussion on how International trade disagreements could have a negative impact on e-commerce growth across borders. However, the close relationships publishers have with their consumers will likely stand the industry in good stead, as many marketers look to move to the ‘Direct to Consumers’ model.
Our Awin Report 2021 touches on last year’s performance and predicts the trends happening this year, from app tracking to outsourcing innovation in the affiliate channel.
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