Are you looking for an effective way to sell your products and services and achieve effective brand exposure without incurring a huge cost?
If so, you’ve probably looked at a range of different options – one of which might be affiliate marketing.
It’s not a tactic that a lot of businesses use. In the right circumstances however, affiliate marketing can be an effective (and cost-effective) way of generating business and of selling a product or service.
But what exactly is affiliate marketing, anyway? How does it fit into your digital marketing strategy? What sorts of businesses does it work best for?
And most importantly of all, can you use it to generate more leads and sales?
Our SEO agency Melbourne answers all of these questions and more!
How does affiliate marketing work?
If you spend a lot of time on YouTube, you’ve probably seen promotions that run a little something like this:
- YouTube content creator offers a unique discount code for a third-party business, site or store
- You use the discount code to make a purchase
- The third-party gets a sale, while YouTube channel gets a small slice
That, in a nutshell, is how affiliate marketing works.
Essentially, you partner up with another business, website or third party – an affiliate. The affiliate markets on your behalf, bringing in leads for you in exchange for a small return.
This return normally takes the form of a small share of each sale that affiliate generates on your behalf, but really, that return can be anything from a lump sum, to a shout-out, to carrying their products in your store.
It could even be a promise to act as an affiliate in one of their affiliate marketing campaigns – it all depends on what you agree to!
The success of affiliate marketing depends on the relationship of every party involved in the process:
- The business or the seller
- The affiliate or the advertiser
- The customer
A good partnership between your business and the affiliate or the advertiser is crucial in getting the results that you want.
Specifically, it’s crucial that your affiliates are carefully chosen based on their ability to get results for you.
Say you run a wedding planning service – would you choose a hardware supplier as one of your affiliates? Of course not!
What business owners (sellers) get out of it
You get access to a lot of potential customers – simple as that!
Promotion is hard, and you might not have the time or connections to reach your customers. Affiliate marketing lets someone else do the work for you, saving you considerable time and effort.
Some businesses even run entire affiliate networks!
What’s in it for affiliates and advertisers?
Answer: it all depends on your agreement with the seller.
In most cases however, it’s a small cut out of any sale that the affiliate generates. This can take the form of a percentage of their total cart value, or a set value for each purchase.
Of course, these aren’t the only sorts of agreements – like we mentioned above, you might agree to something completely different with the seller.
The customer
Some affiliate marketing campaigns use discount codes and coupons. Not only do these serve as an incentive to use the affiliate, but they’re also an easy way of tracking just how many leads you’ve gotten from your affiliate (especially if each affiliate has a unique code).
Naturally, this is also good for the customer, as they get a discount out of it!
Benefits of affiliate marketing
It’s cost-effective
Like other digital marketing strategies, affiliate marketing is paid on a performance basis.
You only pay affiliates when they’re able to link you to your target market – you don’t have to pay them on a weekly or monthly basis.
Affiliates can get paid through:
- Pay-per-sale – affiliate gets a percentage of the sale price after consumer purchases a product
- Pay-per-lead – affiliate gets paid through the conversion of leads such as contact forms, sign-ups and subscriptions
- Pay-per-click – affiliate gets paid when they are able to redirect customers from their site to that of the business site increasing web traffic\
Whichever model you and your affiliates agree upon, the amount of money that leaves your pocket is defined by how well the affiliate performs, making it a low-risk and affordable option.
Speaking of which…
Low risk
Unlike any marketing strategy that requires you to sign-up for a period of time, affiliate marketing involves much less financial risk to you.
Business owners like you pay only when you receive results. You pay based on the performance, and you don’t have to rush to see the results for a period of time. If it underperforms, you aren’t left with huge expenses like other traditional methods.
Clear tracking
Just like other digital marketing web strategy, affiliate marketing is easy to track using common metrics such as:
- Click-through rate (CTR)
- Conversion rate
- Cost per lead
- Reversed sales rate
Our SEO agency in Melbourne uses a wealth of programs that track visitors to your site, as well as how they discovered your site. With some tweaking, these powerful tools can also be used to identify leads that have come from affiliates.
You’ll know exactly how well your affiliate marketing campaign is performing – something that can’t be said for most other marketing strategies.
Reach your audience
Sometimes, it can be hard to reach your customer – with the right affiliates however, you can get in touch directly with your intended customer!
Full disclosure: this only really works if you are very selective with which affiliates you choose to help promote your business.
Affiliate marketing is NOT a substitute for other digital marketing strategies
You don’t want to put all of your eggs in the one basket. While affiliate marketing can be a powerful tool to generate more leads and sales, it should NOT be used as the only digital marketing technique in your toolbox.
Digital marketing is a lot like the stock market – while you may have one or two super high-performing stocks, it pays to spread your risk out with a diverse portfolio.
If you ask us, your digital marketing strategy can’t just rely on affiliate marketing. Ideally, it’ll also include a healthy mix of…
Search engine optimisation
If you ask us, SEO is hands-down one of the most effective digital marketing strategies out there. With most people starting their product search on search engines like Google, it pays to turn your website into one of the first results they see!
Our SEO agency in Melbourne has noticed that SEO tends to generate the most consistent long-term results out of all our digital strategies, without the costs associated with other strategies.
In most cases, a consistent SEO campaign brings in the most stable amount of leads, though at the end of the day it all comes down to what you need – who knows, maybe it’s easier for you to reach your customers through affiliates.
Pay-per-click advertising
While SEO may be the most effective digital marketing strategy overall, it can take a while to get started. In the meantime, you need other strategies to pick up the slack while your SEO strategy starts to take effect.
That’s where PPC comes in.
This is a cost-effective way of quickly generating leads, and is an excellent choice for specific campaigns.
Display advertising
Billboards, posters, fliers – each of these are outbound techniques, designed to reach the widest number of people possible. While their reach is great, their conversion rates aren’t.
By contrast, digital display advertising combines the reach of outbound advertising with the targeting of digital marketing.
We use Google’s Display Advertising network for all our clients’ display advertising needs. This system uses sophisticated AI as well as search histories and user data to ensure that your ads are presented to internet users who are the most likely to respond.
Best of all, it’s paid for on a PPC basis, helping bring the total cost of your marketing spend down!
Social media
While we don’t do social media anymore, there’s no denying that it can be an effective way of helping you stay connected with your customer base and answer questions.
Just be sure not to rely completely on it – one of the reasons we don’t do social media anymore is because it’s a lot of work, and because we’ve noticed platforms (Facebook in particular) trending towards “pay-to-play” systems.
Affiliate marketing can be effective – however, you shouldn’t be relying solely on it
Contact iformat today!
Growing a business is hard – however, the right digital marketing strategy can work wonders.
If you ask us, the best way to get more leads and business is with a mix of different digital marketing strategies, tailored for your unique circumstances and business.
Affiliate marketing is one of them – however, it shouldn’t be the only one.
On top of affiliate marketing, our digital marketing agency might recommend strategies like search engine optimisation, PPC advertising and more – it all depends on your situation.
And once your strategy is in place, we’ll continue monitoring and adjusting it on the fly to make sure you’re still getting the results you want.