What is Affiliate Marketing?

Affiliate Marketing is a way of marketing a product or service where another business or person promotes for a company and is rewarded with a commission or bounty for driving sales. There are many types of affiliates in affiliate marketing, so let’s review a few types and determine if affiliate marketing is right for your business.

Affiliate Marketing Explained

In affiliate marketing, it takes two to tango. At a bare minimum, affiliate marketing requires a seller and an affiliate. The seller needs goods or services and the affiliate needs a relevant audience to promote the seller’s goods or services.  The seller, or advertiser, offers an affiliate a commission, or bounty, for any sales the affiliate is responsible for driving. In a two-way relationship, the seller would need a way to track the affiliates traffic and conversions internally. For every sale, the affiliate is responsible for driving, the seller would pay out the agreed upon commission.

In comes the Affiliate Network

Affiliate Networks were born from the need to have a third-party tracking solution for affiliate marketing. The networks keep the advertiser honest and give a close to real-time picture of how an affiliate is performing. There are many Affiliate Networks, all with their own unique set of tools and benefits. Check out our list of Best Affiliate Networks for more info. For now, just know that Affiliate Networks are reliable third-party tracking platforms that often have a marketplace of advertisers/seller’s who are looking for affiliates to promote their brand.

How does tracking work?

Tracking is complicated. In its simplest form, tracking happens with a custom affiliate link tied to each affiliate. Any user that clicks that link and makes a purchase is tracked and the sale attributed to the affiliate. Another tracking method is with vanity coupon codes. In this instance, an affiliate is given a unique coupon code and anyone who redeems that code, the sale is attributed to that affiliate.

There are much more complicated scenarios involving mobile apps, postbacks, pixels, and more. We’ll discuss those in upcoming blogs.

How do affiliates promote a brand?

Affiliates promote a brand on their respective channels. Their success depends on their reach and how they can promote. In most cases, an affiliate will be given a compelling offer for their users. This should be something stronger than what’s available direct from the brand. This offer, or discount, maybe be in the form of a coupon code or cashback to the user.

How do affiliates get paid?

As previously mentioned, affiliates promote brands with the intention of driving customers and sales. Depending on how the affiliate program is tracked and what network it is tracked on, depends on how an affiliate gets paid. Lock Terms of the program dictate when commissions lock and are considered realized earnings. If a seller is looking for downloads for their app, the conversion point will be likely be realized before an advertiser who sold a product but has a 30-day return policy. The seller will only want to pay out when they know for certain that sale is complete.

In terms of how payment is received, most affiliate networks pay by check or PayPal. If an Affiliate Network is used, most allow the affiliate to decide how much earnings are made before they’ll issue a payment. They also have a minimum amount before an affiliate can be paid. For example, Share-A-Sale allows affiliate to be paid when they hit a $50 threshold, or an affiliate can select to only be paid once the hit $1000.

Should all brands be affiliate marketing?

Yes! Every single brand on earth should be participating in affiliate marketing on some level. As a small-business or start-up it makes perfect sense to use marketing dollars on a channel than only requires an investment on a sale. With affiliate marketing, a business doesn’t have to pay for traffic, clicks, or impressions. The affiliate does that work for free but is rewarded when their efforts result in a sale. It is a low-risk (maybe even no risk), high-reward marketing tactic. However, depending on how a business is tracking affiliates, their can be a cost for the platform.

As an advertiser, especially starting out, tracking affiliates on the backend of a site makes the most financial sense. Once a program starts to build and grow, joining a larger network with access to an affiliate marketplace is the next step. Until then, an affiliate marketing program can be self-managed in-house. When a business grows into a larger affiliate network, it may also need to consider bringing on an OPM to manage the program.

What are Affiliates?

Affiliate is a broad term because anyone promoting a brand and being rewarded would be considered an affiliate. Affiliates can range from a single influencer on Instagram to a major cashback app. When starting out as a brand in affiliate marketing, most affiliates are past or potential customers willing to promote the brand. When evaluating an affiliate for a program, it’s important to consider the reach of the affiliate and the audience. If a brand sells mountain bikes, an affiliate with a coffee blog isn’t going to be a great fit. Furthermore, if an affiliate has 100 followers on Facebook, or negligible traffic to their website, the results will mirror that lack of reach. Audience size and niche are very important to affiliate marketing.

However, that doesn’t mean a loyal customer promoting to friends and family can’t add value to a brand. If a brand brings on 100 affiliates who have minimal reach, but each affiliate is responsible for 1 sale, that goes a long way to increase visibility and brand recognition. It all boils down to how much time a brand wants to spend managing affiliates.

Some common affiliates you may not have known were affiliates

  • Coupon Posting Websites
  • Cashback/Loyalty Apps
  • Content and Review Sites
  • Instagram and Facebook Influencers
  • Display Advertisement

How to get started in Affiliate Marketing

  1. Decide how to track the affiliate marketing program
    •  Internally
    • Third-party Tracking Platform
  2. Determine Affiliate Payouts, Conversion Points, Lock Terms, etc.…
  3. Recruit Affiliates
    • Through Social Media channels
    • On website
    • In affiliate Network Marketplace
    • Use an Affiliate Publisher Agency who manages affiliates
  4. Test Tracking
  5. Monitor Quality
    • Fraud Attempts
    • EPC
  6. Scale
    • Increase recruiting efforts
    • Optimize program
      • Better Payouts
      • Changed Conversion Points
      • Better Promotions

Next Steps

Affiliate marketing is more common than most people realize. It’s an often-unseen part of daily life that consumers don’t even realize they’re a part of. According to Hosting Tribunal, the affiliate marketing industry in 2020 is worth more than 12 billion dollars. If your business is looking to increase sales and only pay on performance, affiliate marketing is the perfect addition to your marketing mix. At Magnattract, we work with all tracking solutions and can help you grow your business through a multitude of channels. Contact us today to learn more.