The focus lies in supporting others to successfully sell products and directly benefit from successful transactions. Affiliates usually profit from some kind of pay-per-sale or pay-per-display compensation. The company, on the other hand, is able to gain access to a more diverse potential customer base without additional active sales or marketing efforts.
Examples: Iconic Cases
https://bit.ly/3nY1yvV
What Is The Affiliate Business Model? The Affiliate Business Model In A Nutshell
Understanding the affiliate business model
While affiliate marketing and the concept of revenue sharing predates the internet, the strategy has become a staple for many online businesses and has played a significant part in the success of eCommerce itself.
Entrepreneur and inventor William J. Tobin was the first person to implement affiliate marketing in an online business. The online flower retailer was founded in 1994 and had amassed almost three thousand affiliate partners before it was sold to Federated Department Stores six years later. Tobin was encouraged to patent his technology in 1996, but the patent itself was not issued until 2000.
This opened the door for Amazon who, after witnessing Tobin’s success, launched its own affiliate program in 1996. The Amazon Associates affiliate program was the first such program made available to the general public. Webmasters could display custom banners that linked back to the Amazon website with a unique tracking ID and receive a percentage-based commission on any resultant sales.
Today, approximately 2.3% of all websites using advertising networks are Amazon Associates members. The model remains popular because it is a relatively passive source of income for merchants. For the affiliate, the business model allows them to promote products and earn an income without the hassle of shipping and customer service.
The essential elements of the affiliate business model
The affiliate business model relies on the interaction between two or more of the following elements:
The affiliate (publisher)
The affiliate is the entity that promotes a third-party product to its target audience in exchange for a commission on every successful sale. The first affiliates promoted products by reviewing them in blog posts, but products are now promoted on social media accounts and in videos.
The merchant (advertiser)
The seller of the product who may also be the product manufacturer. The merchant can be a large retail conglomerate such as Amazon or an individual craftsperson on Etsy.
The network (middleman)
In some cases, there is also a network that connects merchants with affiliates and handles product payment and delivery for a fee. Many affiliate networks rely on the affiliate business model to generate all their revenue.
The customer
Or the individual who buys the product after being referred by the affiliate. Historically, the customer was unaware that their purchase was part of affiliate marketing. But recent legislative changes made by the Federal Trade Commission (FTC) now stipulate that the affiliate must disclose its relationship to the merchant when promoting products and services.
Payment methods under the affiliate business model
There are five main ways an affiliate can be paid under the affiliate business model, although usually affiliates are mostly paid through pay-per-sale:
- Pay-per-click (PPC) – where the affiliate is paid whenever their links are clicked. Note that in most cases, the affiliate must create and manage ad campaigns at their own expense and are only paid once a conversion (sale) takes place.
- Pay-per-impression (PPI) – where the affiliate is paid when a consumer visits the merchant’s site. In some cases, pay-per-impression also encompasses revenue based on how many times consumers view display or text ads.
- Pay-per-lead (PPL) – here, the affiliate is paid when an individual clicks on an affiliate link and completes some desired action such as filling out an online form. Payroll software company Gusto pays $25 to affiliates for every lead that signs up for a free trial of its product.
- Pay-per-call – where affiliates are paid for each call they make to a potential customer. This approach is favored by service companies such as home-improvement contractors and real estate agents.
- Pay-per-sale (PPS) – the most common form of payment where the affiliate receives a percentage commission from every sale they facilitate. Merchants set the exact percentage, with rates varying according to the product category. For example, Amazon offers a 1% commission on baby products but 3% on headphones, musical instruments, pet products, and furniture.
Key takeaways:
- Under the affiliate business model, a business pays commissions to affiliates who promote and sell products on its behalf. The Amazon Associates affiliate program was the first such program to be made available to the general public.
- The affiliate business model may have up to four essential elements: the affiliate, the merchant, the network, and the customer. Many customers were unaware they were participating in the model until an FTC ruling forced affiliates to disclose their position.
- The affiliate can earn money in five core ways: pay-per-click, pay-per-impression, pay-per-lead, pay-per-call, and pay-per-sale. In each case, the merchant dictates how much the affiliate will be paid for completing a certain action.
Affiliate Marketing Business Model Explained
The commission-based business models have existed from long before the advent of the internet. Even though this model doesn’t involve developing a product to sell, they make use of their expertise of influencing buyers to buy a partner’s product while taking commissions for the same.
With the advent of the internet, this business model has even gotten a new name – affiliate marketing, and the people who exercise affiliate marketing have come out to be known as affiliate marketers.
If you’re new to affiliate marketing and want to know how affiliate marketing works and how you can make money out of it, you’re at the right place. Here’s a complete guide to the affiliate marketing business and revenue model.
What is Affiliate Marketing?
Affiliate marketing is a revenue earning strategy of promoting other company’s products and charging commissions for every sale that you make.
Affiliate marketing used to be a sought after passive income source some years ago when affiliate marketers used channels like blogs, videos, and even social media profiles and pages to promote partners’ products. However, with an increasing number of people and companies opting for this revenue earning strategy, affiliate marketing has now become a full-fledged online business model where the entire business is developed to promote and earn money by making people buy other company’s products.
Affiliate Marketing Business Model
If you’ve ever searched for smartphones reviews before making a decision, you’ve come across an affiliate marketing business. These businesses attract the audience by posting reviews, tutorials, rankings, deals, suggestions, etc. and give the users a link to buy from the partner website. Whenever a user completes a purchase after he has clicked on that link, these businesses earn a commission.
Mostly the affiliate business model involves the interaction of 3 or 4 parties depending upon the type of partnership between the affiliate and the company which owns the product. These parties are:
Affiliate (Publisher): the party which dedicates its time and resources to promote a third party product to its target audience in return for commissions on every successful sale referred by it. Affiliate consists of bloggers, vloggers, social media influencers, etc.
Merchant (Advertiser): the actual seller of the product. It partners with the affiliates to increase the sales of his products. A merchant can be an individual selling a small course to a big company like Amazon selling millions of products.
Network: Most of the times, there’s a middleman which connects the merchant and the affiliate and also takes care of the payments and the product delivery of the merchant. In such cases, the affiliate is in the direct contact with the network and not the merchant.
Customer: The customer is the actual person who ends up buying the product after being referred by the affiliate. He might or might not know about the partnership between the affiliate and the merchant.
How Affiliate Marketing Works
As we’ve already discussed, the affiliate business model works on the principle of commission. Merchants advertise and sell their products through partner (affiliate) websites and other mediums but don’t usually pay anything for just the placements of the ads and links. They pay commissions for the actual sales or measurable success like leads collected.
The way affiliate marketing works is very easy to understand. It is a pay-for-performance model. Affiliates are provided with a unique link which includes their unique identity code. Every click, lead, and sale coming from this link is tracked by the merchant or the network and the affiliates are paid according to the contract (per visitor referred, per lead collected, or per sale).
This model is a win-win situation where the affiliates receive the benefit in a similar proportion to what they help merchants make.
Some merchants even pay a commission every time the referred customer renews his subscription or buys the product again. This is known as rebill.
How To Start An Affiliate Marketing Business
Starting an affiliate marketing business is as easy as starting a website and as hard as selling your own product.
It is a different venture altogether.
You need to gain the trust of your audience as a neutral brand and form strategies to make them buy the products you refer to them. Here’s a detailed guide explaining the affiliate marketing process to help you get on the right course.
Choose Your Niche
The niche is the backbone of the affiliate business. While most people are inclined towards the tech or similar niches, affiliate marketing isn’t limited to technology products and services.
Pick a niche that you’re passionate about. Affiliate marketing is a game of patience. One can easily get bored of the niche he’s not passionate about.
There is an affiliate opportunity for almost any niche you can think of.
Like home décor? Designer Living offers an affiliate program.
Interested in Makeup? There are 50+ companies offering you commission to sell their products.
Pick a niche which is profitable. There’ll be no one to stop you if you find a profitable niche that you are passionate about. Pick a niche where either the demand of the products is high or the products are sold at a price where you’ll get a good commission. You can check Amazon’s bestseller page, ClickBank, Google Trends, Pinterest, Etsy, Aliexpress, Reddit, etc. to find what’s working and what’s not.
Choose a niche where there is room for another affiliate marketer. Niches like smartphones, laptops, etc. are so competitive that new affiliate marketers have a very less chance of succeeding.
Research Affiliate Programs
Once you select the niche your business will be based on, it’s time to select the offering. The offering can be in the form of physical products like makeup kits, smartphone, headphones; digital products like ebook; or service like SAAS, course, etc.
Head over to ClickBank, Commission Junction, or Amazon Affiliates and look out for the affiliate marketing program and products that suits you best.
It’s better to select an offering having niche demand and low affiliate competition. Select a product where you’ll get enough return; where commission you’ll get is enough (over $40) or where you expect high sales.
Build & Market A Channel
Once everything is ready. Start building your channel. It could be a website, a youtube channel, or a social media profile.
Affiliate marketing websites either save the effort and time or the money of their users. That is, you can either develop a brand identity of an influencer or a niche expert and post reviews, tutorials, rankings, suggestions, etc. or create a deal website where you stand out as a channel which lets the users save money.
Promote The Affiliate Product
We suggest not starting with the product promotion right from the start. Build an authority first. Post quality content and build trust among your visitors by interacting with them and answering their questions. It makes more sense to take off with your revenue earning strategies once the trust is built.
Repeat
Keep on adding more products and better quality content on your channel to grow.
Best Affiliate Marketing Websites Examples
While there are innumerable affiliate marketing businesses out there, here are three notable examples of profitable affiliate marketing websites.
LifeWire is among the best tech affiliate marketing websites. The website posts tech related content like how-to guides, buying guides, fixing guides, etc. to build the authority and trust and capitalizes on the same to sell affiliate products like best gaming phones, Bluetooth keyboards, etc.
WireCutter
ShoutMeLoud
Harsh Agrawal is a blogging guru followed by thousands of bloggers. He capitalizes on this trust to suggest blogging tools (affiliate products) to his followers and other website visitors.
The Affiliate Marketing Business Model Explained
Affiliate marketing is one of the foundational business models that almost everyone who has made money online has some experience with. It can be incredibly lucrative, but provides its own set of benefits and flaws, as every business model does.
At its basic level, affiliate marketing is simply where you sign up with a company or a network (a network is just a company that houses many offers from different businesses) to sell their products or services. You get paid typically every time someone either buys something or executes the desired action.
You are paid a commission every time you succeed, and this money is more or less from the marketing budget of the company who is offering the affiliate program.
Some affiliate programs will pay you long after you make the sale as well-known as rebills. These products can be harder to sell, but with the right angle, they can be worth it in the value they offer with their monthly paychecks.
While there are far too many affiliate networks out there to list them all, here are a few common ones that many people use:
If you want an explanation of how affiliate marketing works and a proactive plan that can help you make money in this business model, then check out our Youtube video below:
Affiliate Website Examples
It is often hard to visualize what affiliate websites would look like, so I gathered a few here for you to gain inspiration from when you go about designing or redesigning your own affiliate site.
Money Saving Expert
MSE is a great example of an affiliate site that has become an authority site. It is not offering thin content and barely veiled “reviews” that are trying to sell something. Instead they are offering actual actionable advice and maintaining a strong code of ethics in the often dirty personal finance niche. They make their affiliate commissions by linking out in their posts and pages to affiliate products they have agreements with.
DatingAdvice.com
Dating Advice is another affiliate site that makes money by promoting their affiliate links to different dating apps and websites (like Match and eHarmony). The dating niche is an incredibly profitable niche for internet marketers of all stripes. They often attracts people who want to make a quick buck, unfortunately, selling gimmicky info products or shady memberships.
This website takes a different tack on that, and offers good advice while keeping its ethics alive by promoting quality offers that aren’t out to scam those who buy.
The design is also a great design, one that you might be inspired by when you go about creating your own affiliate site.
The Pros of an Affiliate Marketing Model
There are many benefits of an affiliate marketing model. For one, it is a fairly passive model if you go the SEO route with your website. Unlike Amazon affiliates, there is a bit more of link management to do, which we will get into below.
Affiliate marketing can be incredibly lucrative with just one website and a bit of content. This is different than the Amazon affiliate model, which often takes several sites to create a great income with their sliding tier of commissions. In addition, there is an incredible variety of products to promote and sell. Almost every business has an affiliate program of some kind, you just scroll down to the bottom of their site and their affiliate program will be hyperlinked right next to their Contact Us link.
While every affiliate program is different, you are less likely to be hit by a ban hammer in the affiliate space than in the Adsense space. In general, affiliate networks can be a bit more lenient with their terms of services. You also have the benefit that many networks are hosting the same offers, so if one does ban you, you can usually replace that income with the new network offer.
Or you can do what many affiliates do and go direct to the company.
The vast majority of affiliate offers come direct from the company rather than affiliate networks.
Many affiliate programs can be found with relative ease. For example, if you had a website where your target audience was interested in products found on Gilt, you can search for “gilt affiliate program” to determine if they offer a program and what the terms are.
In addition to all of this, you don’t really have a store to look after. You have zero products to ship or be held responsible for. You are literally just the marketing arm, unlike the ecommerce business model where you are sourcing the products that you are selling and dealing with the customer service portions of the business, along with logistics.
With affiliate marketing, you have next-to-zero need to do any kind of customer service. That is taken care of by the company that created the offer in the first place.
Unlike an Amazon affiliate business model, affiliate marketing tends to be more lucrative in terms of the profit margins you can earn per sale. This makes paid advertising easily profitable, so it can be a valid choice to grow your website. Many affiliate marketers focus almost 100% on paid traffic. They create a landing page, a sales letter, and off they go with Facebook ads or Google Adword campaigns.
While you should not invest in paid traffic without knowing a little bit about it first, having this opportunity can really boost your sales quickly, and almost overnight, versus having to wait around for rankings like you do with SEO.
Finally, one of the major benefits of affiliate marketing is that you can get paid a commission, even if you don’t sell a single thing.
This is usually called Cost-Per-Action or CPA offers. CPA offers typically require the visitor to take some kind of action, and if that visitor takes that action, then the affiliate network pays you. Often this action is submitting an email to become an email lead for a company, or filling out an entire form, whether a lead form or a survey data collection form. While CPAs pay lower than offers that pay you per sale, they often convert at a much higher rate, since there is no money that the visitor has to put down for the conversion to be complete. This higher conversion can often more than make up for the lower profits earned on an individual basis.
The Cons of an Affiliate Marketing Model
Affiliate marketing done right can be ethical, extremely helpful to the end consumer, and an overall good thing for both the company that created the offer and the affiliate promoting it (and, of course, the customer). Even still, there are drawbacks to the business model you should know about.
In fact, affiliate marketing often has a reputation for being sleazy, cheesy, or scammy in nature. This is something that affects the industry, mainly because of the low barrier to entry. Anyone can become an affiliate marketer, you just need to sign up for an offer and start promoting.
As you might imagine, this attracts a lot of unsavory characters to the field.
Because of this low barrier, affiliate marketing can also be incredibly competitive. After all, you are all selling the exact same product or service using the exact same sales letter and checkout process. If you don’t find a way to differentiate yourself, it is unlikely you are going to be able to succeed.
First thing to pay attention to, once you decide to go ahead with “good” affiliate marketing, is the affiliate offers themselves. Affiliate offers can come and go. I mentioned above that there is more link management involved with affiliate marketing versus Amazon affiliate sites because of this. If your affiliate link is pointing towards an offer that an affiliate network is no longer offering, you’re missing out on all the commissions you could be earning.
Secondly, while an offer might not disappear, you might be earning far less than you should be, because that offer suddenly has a max cap. In other words, the company that set up the offer only wants to spend a certain amount to get a certain number of customers or leads. The network limits how many paid leads/sales count towards the affiliate marketer in this case. You might end up giving away free leads or sales by accident in this case, so it is something to watch out for.
Finally, you don’t control the entire process.
That ultimately means there is less growth ability. For example you can’t just go in and change a checkout process to split test which one will perform better. You only really control the front or what is also known as “top of” marketing funnel. This makes your options more limited than if you were running a full blown business where you sourced the product yourself and controlled the logistics and check out processes.
The Importance of an Affiliate Marketing Business Plan
An affiliate marketing business plan can not only help you stand out from the noise of competitors but can also provide you with clarity in your daily, weekly, and monthly tasks.
Having a clearly laid out plan can save you time and, just as importantly, help you to stay consistent in your business-building tasks.
Along the way, you may find the need to make adjustments according to your research, but it is far better to have a plan to get you started than to feel as if you’re constantly playing catch-up each week to figure out what to do next.
Some components of a business plan for affiliate marketing include clearly defining your goals as well as what metrics you will use to measure progress, articulating your target audience, and deciding on your method of promotion.
What Buyers Need to Know
To join other entrepreneurs who are buying vetted and profitable affiliate sites, register for a free account on our marketplace.
Where you buy a site from is important, but before you buy an affiliate site from anywhere, you should know a few things in advance.
First, find out all the affiliate networks being used on the website and figure out which other networks have the same offers, so you can use these as backups. You may need to move if the offer with the current network goes down or starts capping you. If at all possible, ask yourself if the offers on this site are evergreen or a flash in the pan kind of offer. If you are buying a website, you will likely want to make sure the offers are going to be sticking around for the long term versus only a couple of months after you purchased the website.
If the website isn’t an authority in its niche, ask yourself if it is setup to be one. You should always have this in mind, but especially with affiliate sites. Since affiliate sites have such a low barrier to entry, by buying an authority site, you are significantly putting yourself ahead of your competition who will be entering the game without an authority site. This will help you keep market share and dominate the niche.
Before purchasing the site, ask the seller if they have any special offers with their affiliate managers/networks. If they do, you will want to make sure that you are going to be getting the exact same special deals when you take over the website. These special deals could be something as simple as allowing extra people into a capped offer, or even as lucrative as providing a bump in pay percentage.
What Sellers Need to Know
Exit planning is your best chance at maximizing how much your affiliate site is worth. If you want someone from our team to create an exit plan for your business, schedule a free 30-minute call here.
More generally speaking, you know by now the low barrier to entry that affiliate marketing has. So the more an authority your site becomes, the higher chance you have of selling your site for a much larger multiple.
Always be thinking about how you can make your business more defensible and more difficult to copy.
You should also have tracking setup for every affiliate link of yours. You can do this with something like Voluum that can track the sales you are getting and where those sales are coming from. This will be useful data for an analytical buyer who wants to split test the website, not to mention it will allow you to split test the site and possibly push your monthly net profit up which will also increase your site’s listing multiple price.
If you have any kind of special deals with your affiliate manager, make sure that you can pass these along. If you can’t, then you need to take that portion out of the business and sell as if you weren’t getting those extra benefits. One of the best ways to transfer these kind of special perks is by also making sure that your affiliate manager becomes the manager for the new buyer as well when they sign up for that network. Most affiliate managers work on a commission basis from the sales that their affiliates are doing, so they will likely be more than happy to do this since your website is already a proven profit maker for them.
Finally, email every network you are associated with for this website to inform them that you are selling your site and that you want to make sure that the new owner will be approved for that affiliate network. This is an important, if not obvious, step to follow. If a network denies the new buyer, that is going to lead to a lot of trouble when it comes to them taking full ownership over the site.
What Buyer Persona Best Fits the Affiliate Marketing Business Model?
Every business model attracts a different set of people. The interesting thing about affiliate marketing is that it can really attract a lot of different personas versus other business models.
It is perhaps one of the most diverse ways of making money online in that there are just so many different affiliate programs out there in almost every niche imaginable.
Lifestyle Larry
If an affiliate site is using SEO as its primary traffic getting method, then affiliate sites can become very appealing to a Lifestyle Larry. Outside of doing some link management and making sure the offers are still valid, there isn’t a whole lot of work to be done unless the new owner wishes to grow the site. If they are content with living off the residual income though, there isn’t a lot of day to day management that they are going to have to do.
Portfolio Paul
Having a website selling affiliate products from programs outside of Amazon can make a lot of sense for a Portfolio Paul. It is just another route of diversification and, like Amazon or Adsense, affiliate sites do not take up a lot of time to run.
DIY Dave
A DIY Dave might absolutely love buying affiliate sites and running them. Since affiliate programs usually have higher margins than Amazon affiliate products, a DIY Dave could seriously dive deep into paid traffic and create entire sales funnels around the affiliate program or the niche that the site operates within.
Strategic Sally
If they own a website or a business in a similar niche, then owning a large affiliate site could be a great complementary way to make more money while still dominating the main niche that they are focusing on. Since affiliate sites do not take a lot of time to manage when not in growth mode, a Strategic Sally could buy this site and just use it to boost her personal brand or the business that she is currently growing with ease.
Flipper Fred
There are many ways to grow an affiliate site, so it makes sense that a Flipper Fred would want to purchase one of these websites and grow it using various growth strategies that we will mention below.
Growth Strategies
There are many ways to grow an affiliate site to produce even more profit than it currently is, but this is by no means an exhaustive list. It should leave you with some good ideas, though, on where you can take your site and how you can scale it up even further.
Ask for a Raise
Probably the simplest route, if you have an affiliate site that is already making sales, then you should hit up your affiliate manager with a pay bump request. Many affiliate marketers do this, and then run incredibly successful paid campaigns, with this pay bump as their only real profit margin. Because they have this extra bit of money to work with, they are often given an advantage over other affiliates who did not get a pay bump.
Find More Keywords
Use a tool like Longtail Pro to find more keywords that you can target with your website. The more content your website has, the faster it will become an authority and the more authoritative it is, the easier it will be for the search engines to pick up your content and start sending you more free traffic.
Create a Paid Ads Sales Funnel
For more expert internet marketers, craft a sales funnel around your affiliate products you are promoting. This could be done via a 7-day bootcamp that you give away to your email list, or perhaps a cheat sheet that contains affiliate links. By creating a sales funnel and building an email list though with paid ads, you can seriously scale your business to the moon very quickly once you have a profitable campaign underway.
Find the Offers with the Best EPCs
EPC stands for Earnings Per Click. It is the estimated amount of money a marketer can expect to earn from a 100 clicks to their affiliate offer. This is a great piece of knowledge. You should be on the lookout for affiliate offers with the best EPCs. In addition to finding new offers, look at other affiliate networks that are doing the same offers that your website is doing.
Is the EPC higher with that network than your current network you are using? If so, it might be worth your while to test out to see which performs the best.
Resources to Learn More
There are thousands of blogs on the internet that talk about affiliate marketing. Though not very many of them actually have successful experiences with affiliate marketing. Remember what I said about that low barrier to entry? Below are two good guides that can help you in this crazy world.
Affiliate Marketer Training
This is an authority style blog that talks about both the positives and the negatives of the affiliate marketing world. Unlike many affiliate marketers, this blogger focuses on content marketing as his main push for his affiliate sites.
Charles Ngo
Charles is a huge internet marketer and a big promoter of the affiliate marketing industry. His blog is one of the best there is out there on the subject of affiliate marketing and how to turn all those EPCs into a viable career, like he did.
Buying and Selling Affiliate Sites
Did this article excite you about the possibilities of affiliate marketing in your own business? If so, maybe it is time to head over to our marketplace and check out our current affiliate site listings.
Or maybe you already have an affiliate site that is producing a solid profit month after month? In that case, sell your website today for a big payday.
https://bit.ly/3yyoE0V
Affiliate Marketing
DESCRIPTION
Affiliate Marketing is a very commonly used business model pattern. It is applicable in various contexts ranging from massive multi-million dollar companies (Amazon) to small and medium sized enterprises (from fashion, insurances to any business other business), or bloggers and opinion leaders. In simple terms, a company offers financial compensation to people that advertise the company’s products and services. It is often seen as a win-win situation because the more one sells, the more profit the other earns and vice-versa. If you want to boost your products and need more online presence and sales channels, you can have relevant bloggers or other website owners to publicize your products in exchange for a percentage of the earnings. On the other hand, if you want to make some extra money, you can offer to publicize the products of a partner company and generate some revenue by encouraging your audience to buy a product from your partner company.
One main challenge for companies in partnering with affiliate marketers is making sure the revenue generated from selling products through an affiliate link covers the costs to promote the product. Such an issue is more likely to arise if the company is mainly or even primarily reliant upon affiliate marketers; however, if the affiliate marketing strategy is nothing more than an added supplement to the core business model, there is almost no risk in using this pattern. Only reputation issues in case of bad quality, poor service or bad publicity can be a risk – therefore it is important to carefully choose your partners.
As for affiliate website owners, the issue seems to be ensuring that potential consumers are referred to your website. You have to decide on an attractive share and find partners who want to promote you.
CHANCES for Affiliate as revenue stream
· Low Barrier to Entry: Affiliate Marketing can be started at any point in time with minimal efforts and low capital.
· Existing Audience / Community: use your reputation and brand awareness to promote products of your partners
· Numerous Revenue Streams: The more affiliates you attain, the more opportunities you will have.
CHANCES for Affiliate as Sales Channel
• Additional sales channels help to broaden the customer base
• Possibility to enter in markets that are not connected to one’s own business
• High loyality in your partner can help you as well
• Cross Selling effects RISKS for Affiliate as revenue stream
· Changes in the commission rates: if the merchant provides a platform for affiliate marketers rather than an official contract, you have no say in how the commission structure evolves
· Small revenues: It can take some time before your website gains enough traction and you master how to engage with your target audience, i.e. posting the right content for the right people.
Reputation: you need to carefully decide who your affiliate marketing partners are to avoid bad reputation for your brand
RISKS for Affiliate as Sales Channel
· High Commissions: Balancing the commission rate with the profit you generate
· Poor Involvement: Affiliate merchants may say or do anything for quick cash. Thus, they may misrepresent the product or service on sale.
Reputation: you need to carefully decide who your affiliate marketing partners are to avoid bad reputation for your brand
SUCCESS FACTORS (Businesses Using Affiliate Marketers)
Know Your Affiliates Depending on the number of affiliate marketers you encourage to promote your products, it is important to have a good relationship with them and to explain your company’s principles and values.
Do Your Research Dig into your affiliates’ promotion strategies and understand the tactics they use to ensure they are not intercepting buying customers.
Ensure Consistency Consider hiring an in-house affiliate manager who can follow up with these marketers and make sure they are working effectively to ensure you meet your goals.
SUCCESS FACTORS (Affiliate Marketers)
Create and care for your community The more you are an opinion leader in your field the easier it is to promote other products.
Make A Plan It is important to think from the perspective of the product owner and bring together the value of your brand with the brand or product of your partner when promoting the product.
Learn About The Product You’re Promoting Always make sure you have done your research on what you are selling. Specifically, be aware of the advantages and disadvantages of the product and why it outperforms competitors.
Generate Traffic In order to guide your audience to the partner company for buying a product you first need to have traffic on the website you are promoting the product. This can be done by content marketing : Think about the user journey and the value proposition that bring the reader to your website and use the link to buy the product. This might be interesting content, easy research for products or recommendations.
Optimize You will naturally have some failed attempts. Think of this as an opportunity to continue refining, testing and improving your promotion strategies and the way you are displaying the affiliate content until you find the right one. Even then, there is always room for improvement. Always think about the value proposition for the customer. In order to optimize the traffic and conversion rate, use web analytics to analyze acquisition, behavior and conversion and methods like A/B testing to improve these KPIs
RESPONSIBILITY
· Financial sustainability: The simplicity and low capital needed to implement an affiliate business model makes it easier for people to become self-employed.
EXAMPLES
Amazon Associates A free-to-join affiliate platform where you can easily set up a referral link for amazon products and make money by simply sharing the link.
Nerdwallet An Affiliate Site for financial products and services ranging from insurance to credit cards.
MoneySavingExpert It helps people make better financial decisions while promoting other brands.
RESOURCES
• Ben Edelman & Wesley Brandi: https://www.hbs.edu/faculty/Publication%20Files/14-041_bcd9df75-7e50-4bf3-8129-656f35a813c2.pdf
• Kyle Davis: https://www.volusion.com/blog/top-5-benefits-of-affiliate-marketing/
• Robert Glazer: https://www.businessknowhow.com/internet/affiliate-marketing-dangers.htm
• Jake Frankenfield: https://www.investopedia.com/terms/a/affiliate-marketing.asp
• https://affiliate-program.amazon.com/
• Gael Breton: https://www.authorityhacker.com/successful-affiliate-websites-examples/
• Amy Carabini: https://www.cleverbridge.com/corporate/affiliate-marketing-benefits-risks/
• Andy Charlson: http://www.adotas.com/2018/08/main-risks-affiliate-marketing-watch/