So, if you are looking for a marketing method that is simple to track and monitor, that 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 you might have preconceived ideas that are 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 pose.
Q1. What is affiliate marketing?
Affiliate marketing involves offering your product or service to publishers (also known as affiliates) to promote on your behalf. In return, you pay a commission for every sale the publishers make. As a performance-based marketing method, you only pay for results.
Q2. How can affiliate marketing help my business?
Affiliate marketing helps your business by:
- Giving you access to professional marketers (the publishers)
- Exposing your products to new audiences through the promotional activities of your team of publishers
- Offering a cost-effective marketing method with a good ROI
- Saving time on marketing which you can spend on other aspects of your business
Q3. How much is the global affiliate industry worth?
In our recent Awin report, we reported that the global annual investment in the industry is more than £12 billion annually.
Q4. What is an affiliate programme?
An affiliate programme refers to the package you create for your product, which is then made available to potential publishers. The programme will generally include details of the product, the retail value of the product, commission levels and promotional materials. Many affiliate programmes are managed via an affiliate network like Awin, which acts as a platform to connect publishers and advertisers, but it is also possible to offer your programme directly.
Q5. How do affiliate networks make money?
Affiliate networks make money through fees charged to the merchants, also known as advertisers. These fees are agreed with each individual advertiser and are usually paid as a percentage of each sale made.
Q6. What's the difference between affiliate marketing and drop-shipping?
Drop-shipping allows you to run an online store without having to stock products. You advertise the products as if you owned them, but when someone makes an order you then create a duplicate order with the company at a reduced price. The distributor takes care of the post and packaging on your behalf.
As affiliate marketing is based on referrals, when a customer buys through the affiliate link the affiliate does not have to handle any money as the customer is taken directly to the merchant’s site to complete the purchase. The sale is tracked through cookies and a commission paid out to the referring affiliate.
The main difference is that affiliate marketing does not require the affiliate to fulfil the sales process or handle customer support. As a drop-shipper, you are still responsible for the sales procedure, even though you do not handle any inventory.
Q7. Can we use affiliate marketing for lead generation?
Normally affiliate marketing is used to generate sales. However, it can be used to create leads, by paying commission for every new subscriber created. Companies that offer a service rather than a product often opt for leads, as for them nurturing a lead is an important part of the sales funnel.
Remember also that every customer generated through affiliate marketing is a potential lead for further products. On top of this, Awin has a dedicated lead generation service that can be utilised for creating quality leads.
Q8. Are affiliate marketing and performance marketing the same thing?
Performance marketing is a method of marketing that encompasses different price structures, dependent on the performance of the ad. Examples include how many times the product is viewed or clicked, or how often a sale is made. It includes methods such as pay-per-click or display advertising.
Affiliate marketing is a form of performance marketing, as commissions are paid on performance, which is generally when a sale is made.
Q9. Is it possible to promote affiliate offers on mobile devices?
Smartphones are essentially computers in miniature, so can display the same websites and affiliate offers that a PC can. However, mobiles also have specific tools not so readily available on computers, and these can be used to good effect for publishers.
When setting up an ad, it can be optimised for mobile users, making it easy for this audience to access the offer. Publishers can also make good use of text and instant messaging promotions. As the mobile market is predicted to make up 80 percent of traffic in the future, publishers not only can promote on mobile devices, but they are missing a big trick if they are not.
Q10. What is a super affiliate?
A super affiliate is someone who has built a thriving and influential affiliate business and consistently drives 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.
Q11. Where do I find qualified publishers?
The best place to find qualified publishers is on reputable affiliate networks, like Awin, as they will have undergone a rigorous application process and compliance checks before joining the network. You can also advertise your programme on your website and invite publishers to sign up.
Q12. What is an affiliate disclosure statement?
An affiliate disclosure statement reveals 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.
Q13. How much commission should we pay publishers?
Commission rates are flexible and depend on various factors, including how well your website converts, and the industry standard for your type of product. However, the payment structure must be attractive enough to encourage publishers to join your programme, while also ensuring you make money on the product and leave some potential for increasing commissions for promotional placements.
Q14. We're worried about ad-blockers - are they an issue?
It’s natural for affiliate marketers to be concerned about ad-blockers, as they can affect who sees your advertising. However, the online marketing world is constantly evolving to the changes thrown at it, and this is no exception. There is more positive news, as Chrome’s new version ad blocker only blocks ads that don’t comply with the Better Ads Standards. This means poor quality publishers are being driven out, while reputable publishers continue to thrive.
Q15. How do we deal with non-compliance issues?
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.
Q16. What happens if a publisher isn't performing in terms of sales?
Nothing – as you only pay out when the publisher creates a sale there is no risk created by underperforming publishers. However, having a good network of publishers is important for success as if your team is small your sales may be low.
Q17. How do we track publisher sales activity?
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.
Q18. Is social media activity an important part of affiliate marketing?
Publishers promote their programmes through various means, including blogs, websites, email marketing, pay-per-click and social media posts. However, social media has a huge interactive audience, making this platform a good source of potential traffic.
Q19. Can we have an affiliate programme in multiple countries?
Affiliate programmes can be promoted in any country that has a need of your product, and that your affiliate network operates in. If your site exists in multiple language versions, its best to set up an affiliate programme per language where possible so publishers can direct their audiences to the most suitable version.
Q20. What are the advantages of this type of marketing?
Because affiliate marketing only pays out commissions on sales, there is minimal risk that promotions will not generate ROI. It also exposes your product to new audiences, while tapping into the different skills of your publishers. Budgets are easy to manage and maintain due to the visibility and transparency the channel offers.
Q21. What are the disadvantages of this type of marketing?
If you decide not to use an affiliate network, managing your affiliate programme can be time-consuming. You will also need to be much more aware of compliance issues if you go it alone. Additionally, It can be challenging to build a team of loyal publishers who promote your programme long term.
Q22. How much growth is predicted for the affiliate industry?
Data gathered in 2018 showed that affiliate marketing spend in the UK has increased by 15 percent while in the US it is predicted to grow by 62 percent from 2015 to 2020. A 10.1 percent annual growth on spend is expected to continue.
Q23. Is affiliate marketing still expanding?
With the expected growth on spending set to increase, affiliate marketing is certainly still expanding and growing. 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.
“Affiliate marketing makes sure that you get more conversions while influencer marketing helps you reach a wider target audience” AM Navigator.
Q24. On average, how soon could we see a return on our investment?
Although there is not a fixed answer to this, expect to see a return after a year. Compare this to most small businesses, when breaking even after three years is a positive result.
Q25. What's the future of affiliate marketing?
Affiliate marketing is here to stay, even though it is likely to evolve and adapt to the changes that e-commerce throws at it. For example, Awin predicts that tech tracking will be in the spotlight, leading to companies reviewing their current software. There’s also debate on the effect consolidation of some of the bigger affiliate marketing companies will have on the industry as a whole, as well as discussion on how International trade disagreements could have a less than positive impact on e-commerce growth across borders. However, the close relationships that 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.
If you’re still not sure whether this will work for you, take a look at the advertisers on Awin’s network who employ this method successfully. If they can do it, so can you.