- Written by Erica Grabijas on
Marketing your business effectively involves constantly monitoring, tweaking and testing to see what works.
Marketing your business effectively involves constantly monitoring, tweaking and testing to see what works.
If you are looking for a marketing method that is simple to track and monitor and also gives a good ROI, affiliate marketing is the solution for 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.
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.
How can affiliate marketing help my business?
Affiliate marketing helps your business by:
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 $13 billion annually.
What is an affiliate program?
An affiliate program refers to the package you create for your product, which is then made available to potential publishers. The program will generally include details of the product, the retail value of the product, commission levels and promotional materials. Many affiliate programs 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 program directly.
How do affiliate networks make money?
Affiliate networks make money through fees charged to the merchants, also known as advertisers. These fees are agreed to with each individual advertiser and are usually paid as a percentage of each sale made.
What's the difference between affiliate marketing and dropshipping?
Dropshipping 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 affiliate marketing does not require the affiliate to fulfil the sales process or handle customer support. As a dropshipper, you are still responsible for the sales procedure, even though you do not handle any inventory.
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 utilized for creating quality leads.
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 like 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.
Is it possible to promote affiliate offers on mobile devices?
Smartphones are essentially computers in miniature, so they 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 optimized 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% of traffic in the future, publishers not only can promote on mobile devices but they are missing a big trick if they are not.
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 program they promote, compared to other affiliate partners involved in the program. They make a large income from affiliate marketing, which is usually in the range of five or six figures.
Where do I find qualified publishers?
The best place to find qualified affiliate publishers is on reputable networks like Awin, as they will have undergone a rigorous application process and compliance checks before joining the network. You can also advertise your program on your website and invite publishers to sign up.
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. For more guidance on the disclosure statements needed in the US, please click here.
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 program, while also ensuring you make money on the product and leave some potential for increasing commissions for promotional placements.
We're worried about ad-blockers. are they an issue?
It’s natural for affiliate marketers to be concerned about ad-blockers - especially in our current ITP / GDPR world - 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.
How do we deal with non-compliance issues?
The easiest way to deal with unscrupulous behavior is to sign up to an affiliate network and publish your program 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.
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.
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.
Is social media activity an important part of affiliate marketing?
Publishers promote their programs 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.
Can we have an affiliate program in multiple countries?
Affiliate programs 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 program per language where possible so publishers can direct their audiences to the most suitable version.
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. If you use an affiliate network, managing your program is straightforward, including dealing with returns and customer service.
What are the disadvantages of this type of marketing?
If you decide not to use an affiliate network, managing your affiliate program 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 program long term.
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% while in the US it is predicted to grow by 62% from 2015 to 2020. A 10% annual growth on spend is expected to continue.
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 utilizing 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
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 one year. Compare this to most small businesses, when breaking even after three years is a positive result.
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.
© 2020, AWIN Inc. All rights reserved. AWIN Inc. is part of Axel Springer Group. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner.