What is Affiliate Marketing
When you Google this phrase, you’re going to get a variety of different definitions that vary greatly depending on the industry of the website you’re visiting. Some blogs will tell you that affiliate marketing is simply putting ads on other brands’ websites. Others will describe a version of affiliate marketing that sounds suspiciously like influencer marketing.
I would argue that affiliate marketing isn’t defined by the type of content being placed on specific websites. Rather, the pay structure is what differentiates affiliate marketing from other types of personality-based marketing.
While the price of influencer marketing campaigns is largely driven by the influencer’s size and relationship with their audience, affiliate marketers are paid based strictly on their performance.
Good performance could be anything from driving traffic, making conversions, pushing downloads, or any other KPI that makes sense for your business. The KPI you choose will determine how much your affiliates get paid—i.e. driving sales would be worth more than driving traffic to your website.
Avenues for Affiliate Marketing
As we previously mentioned, there are a variety of different avenues you can choose to venture into if you want to run an affiliate marketing campaign. We’ll discuss some of the more traditional forms of affiliate marketing like placing ads on affiliates’ websites as well as some of the emerging trends we’ve seen within the industry.
This form of affiliate marketing has been around since the dawn of the internet, and there’s a good reason it has stuck around as long as it has. The concept is simple. You create banner ads for your products and run them on other brands’ websites.
You have a lot of options when advertising your products on other websites. You can choose to partner with affiliates who serve a similar interest group or niche as your company, or you can advertise on unrelated websites.
Generally speaking, it’s best to work with affiliates that appeal to the same audience but provide a product or service that differs from your own. For instance, if your brand sells video game-related merchandise, then a brand that sells gaming computers or other gaming equipment and accessories could be a good affiliate marketing partner.
Bloggers can make for great affiliate marketing partners. An established blog will have a highly engaged audience that trusts their expertise and judgment about a particular topic. If you’re a company that focuses on travel-inspired apparel, working with travel bloggers with large audiences, like Matthew Kepnes of the blog Nomadic Matt, would be an ideal partnership.
Bloggers serve as a middle ground of sorts between websites and content creators because they can utilize both types of content. You can place banner ads on their website, but some bloggers also create video blogs where they can advertise your products on a more personal level.
If you’re looking for a partner with a more personal relationship with customers than any old website, but aren’t sure if your audience is well-served on a dedicated video platform like YouTube, bloggers might be the most logical choice for your company.
Content creators are a largely overlooked group of affiliate marketers who have immense potential. Again, what differentiates content creators who do affiliate marketing from those who do influencer marketing is the pay structure.
While platforms like Instagram and TikTok can certainly work for affiliate marketing, it’s more common to find content creators who are familiar with this type of marketing on YouTube. Content creators are usually given a short script, or write their own script, and record it into a mini-ad that fits seamlessly into their video.
You may be wondering what makes partnering with a content creator for affiliate marketing a better choice than simply buying ad space on the platform. There are two key reasons that make affiliate marketing the better choice.
- The first is that Youtube ads are often seen as intrusive and annoying. People are typically eager to skip an ad as soon as the option appears. If the ad can’t be skipped, then viewers will simply tune out.
- The second is that there is a sense of trust built between content creators and their audience. If you enjoy the content that a person makes, you’re more willing to listen to their 60-second spiel on how you can help their channel by purchasing a product.
Nord VPN is a great example of how a company can utilize this channel. They work with content creators specializing in everything from video games and animation to legal and political commentators. Their bit is simple. Content creators tell their viewers all the benefits of using Nord VPN, and they get a cut of the sale from any viewer who signs up using their link.
Benefits of Affiliate Marketing
With so many different types of marketing campaigns at your fingertips, it’s valid to wonder what makes affiliate marketing a worthwhile investment for your business. While there are a multitude of benefits your brand stands to gain from affiliate marketing, there are three that deserve the most attention.
Low Risk (Cost)
The low cost of affiliate marketing makes it one of the least risky marketing strategies to implement. Unlike other marketing strategies where you are either paying specifically for content or ad placements, during an affiliate marketing campaign you are specifically paying for results.
So if you partner with an affiliate and the partnership doesn’t yield any measurable results, you can rest easy knowing you didn’t waste your entire marketing budget on a failed affiliate.
And while you can choose from any number of success metrics to pay affiliates for, the safest option is to pay for conversions. Nord VPN uses this model, and they have one of the most competitive compensation structures in the business. Affiliates can earn up to 100% of their conversions for each new customer they bring to the business depending on the length of the membership their viewers purchase.
The company gains a long-time customer relationship that will bring in value for years to come, and the affiliate gets paid for facilitating said relationship. All with little to no upfront cost
Expanding Your Audience
Expanding your audience is one of the immediate benefits that you’ll gain by working with affiliate marketers. While this is good for any company that is looking to grow, it’s especially important for small businesses that are still trying to cultivate their main customer base.
For a nominal fee on each conversion, you’re putting your product in front of an expansive group of potential customers who otherwise wouldn’t know about your business.
Of course, the quality of the audience you gain is important. The more established a content creator, blog, or website is—and the more trust the affiliate has built with their audience—the more likely you are to gain customers.
You Retain Control
In contrast to similar marketing strategies, like influencer marketing, affiliate marketing gives brands an amount of control that is unprecedented in the current marketing landscape.
In other marketing channels, your company is at the mercy of a plethora of variables it has little to no control over. You have zero control over the cost of paid advertising on platforms like Facebook and Instagram. You have zero control over the types of influencers who are willing to work with you, and they retain control over prices.
In affiliate marketing, you not only get to choose who you work with, but how much you’re willing to pay them. You retain ultimate control over your digital strategy and can dictate the terms and conditions that affiliates need to follow to stay in good standing within your program.
If you want to keep control of your marketing efforts, affiliate marketing is the way to go.
Potential Drawbacks of Affiliate Marketing
Trusting an Outsider
This should go without saying, but in order for affiliate marketing to work you have to place some level of trust in the affiliates you’re working with. This is true of any type of marketing that involves working with independent contractors to promote your brand.
Nevertheless, there are clear, defined steps you can take to make sure your company doesn’t get burned by trusting creators. The two most important steps you need to follow are to make sure you choose the right affiliates for your program and make sure your program is air-tight and can’t be exploited. We’ll go more in-depth on both of those steps later in the article.
Can Be Time Consuming
As with any well-thought-out marketing campaign, there is a significant time commitment required to create an affiliate marketing program. You’ll need to design a rewarding program that affiliates are excited to be a part of, vet possible affiliates who apply to work with your brand, and create all the tangible assets—like landing pages and scripts—needed to get the program off the ground.
Working with a third-party agency that understands the intricacies of affiliate marketing can help reduce the strain that affiliate marketing can put on your internal teams. That way, your team can continue working towards strategic business goals instead of managing an affiliate program.
Another serious challenge you’ll need to navigate through when creating an affiliate marketing program is cannibalization. If your affiliate marketing program functions by giving out coupons or other deals, you wind up harming the attribution metrics of your other marketing channels.
Email marketing is a prime example of where cannibalization can occur. If you routinely send out highly engaging content through your emails but don’t frequently offer coupons or deals, promoting deals and discounts through affiliates could hurt your email marketing efforts in the long run.
It’s a fairly common practice to look for discounts when shopping online. If a customer clicks through to your website from an email but didn’t receive a discount in that email, they will likely go looking for affiliate deals. If your affiliates require them to give their email address, you’re not only paying for a sale that would have been freely gained through your email marketing, but you’re ruining your email attribution.
The best way to combat this is by routinely offering the same deals across all your marketing channels. This reduces the likelihood that a customer leaves your in-house marketing content to purchase through an affiliate link. This in turn means you have to pay affiliate fees for sales you should have acquired organically.
Steps to Starting an Affiliate Marketing Program
Starting an affiliate marketing program can seem like a daunting task. But it doesn’t have to be. With the right guidance, you can circumvent the major drawbacks of affiliate marketing while reaping the program’s benefits. We’ve outlined three key steps to creating a program that will positively impact your company’s bottom line.
Choosing the Right Avenue(s) for Your Program
As we explained at the beginning of the article. Three are three different forms of affiliate marketing you can choose between. Each has its own advantages and disadvantages that you should consider. Affiliate websites and blogs have been around the longest, and can be useful for reaching customers spending time on websites that have a similar target audience as your brand.
Utilizing content creators is the newest form of affiliate marketing available and has become a prominent tool on video-streaming platforms like YouTube. If you can find a content creator that entertains a similar audience as your own, then the partnership can be very beneficial. These types of affiliates typically require more work on the creator’s part and drive a higher affiliate fee, but gaining access to a loyal customer base is well worth the investment.
Choosing the Right Affiliates
As we previously discussed, you’ll want to choose affiliate partners that make sense for your business. At a minimum, that means their audience is the same as your target audience, but your vetting process shouldn’t stop there.
The affiliates you work with will become a direct representative of your brand. So it’s imperative you ensure that they align with your brand’s values and mission. If they don’t you could wind up harming your reputation among your existing customer base.
You should also look at their brand’s history to make sure there are no skeletons in their closet. If they get rocked by a scandal for previous actions, you could wind up doing damage control for your reputation.
It would also be prudent to keep an eye on affiliates you work with to make sure they don’t inadvertently hurt your brand’s reputation. If this sounds time-consuming, an agency that knows its way around the affiliate marketing landscape can help ease that burden.
Make Your Contracts Air-Tight
This is arguably the most important step when setting up your affiliate marketing program. To protect your bottom line and your brand, you need to make sure your partnership contracts are air-tight.
There needs to be a clear expectation of what KPIs earn an affiliate their fees, the standards of practice that affiliates need to follow to stay in good standing, and the term of the affiliate partnership among other standard legal agreements.
If your contracts have loopholes that prohibit affiliates from using bots to drive traffic or do not specify that the partnership can be terminated if affiliates conduct themselves in an unbecoming manner, it can lead to serious consequences for your brand if an affiliate goes rogue.
Start Building Your Affiliate Marketing Program Today
If you’re ready to start building your affiliate marketing program, Fidelitas can help you get your new campaign off the ground. Our team is highly experienced in building the landing pages and email flows you’ll need to start gaining affiliate applications for your program.
Contact us today to learn how we can help you build the tangible assets you need for a successful affiliate marketing program.