Affiliate Marketing (AM)
A few years back, life without online communication or digital solutions was definitely a dream and the more you think about it, the higher you think of how fast the changes have been
The way businesses are being handled today is a far cry compared to what was being done in the past and Affiliate Marketing is now at the forefront of changing the business dynamics
This direction has been one of the biggest changes that have been brought about in the recent past and it has opened up plethora of opportunities.
Affiliate Marketing is one of those directions which has made Entrepreneurship, an exciting direction with minimal risks
Most of the businesses today are not limited or restricted by the support systems around them as outsourcing has become the new normal.
The transition that’s happening in the business world is nothing short of a miracle as there are solutions being provided in areas that seemed impossible.
These solutions are just not coming from urban places, but due to the penetration of internet, the rural areas are also contributing, massively.
Your firm might need more people in the sales / marketing domain so that you can improve your foot-print in a way that can enhance your reputation
In the earlier days, these resources were only available in the urban belt and hence the major firms started migrating towards the cities and towns
However, the digital economy is turning things around with new models of business flourishing all over as start-ups are the new normal
With the kind of different ideas emanating, all it needs is some basic infra to take things to the market and digital solutions like Affiliate marketing is at the forefront
Earlier, these solutions were limited to big players since it needed money power to handle the marketing requirements
However, now the same solutions can be applied to small entrepreneurship models, handed by individuals and not a team (as was the case in earlier days)
Influencer Marketing is the new kid on the block that has starts off from being a solopreneur, but as it grows, it starts to influence a larger market and that’s the route of Affiliate Marketing as well
Entrepreneurship has become a popular business model which helped so many wonderful business ideas come to life.
There are multiple opportunities that have opened up due to the transition from the offline world to the online segment.
There are so many different ways and strategies to set up and grow a business, depending on the niche, resources, knowledge, etc.
Due to this engagement which is changing the way businesses are done, there are various changes that have happened and affiliate marketing is definitely at the cusp
The online business models have some mandatory requirements like website creation, traffic generation using various channels
These include SEO (Search Engine Optimization), SEM (Search Engine Marketing), SMM (Social Media Marketing) or Email Marketing
However, the oft overlooked strategy is Affiliate Marketing, which actually is one of the best options because it works for models that are Profit Centric
Through the next few pages, you will see the great potential that Affiliate marketing brings to the table and implementing it, will aid in all your business needs
There are two major players in this domain viz. Merchant and Affiliate. As a marketer, you can look at both options. The strategies for developing each business is different, which is what we will be exploring
At the 30,000 feet level, you need to understand that an Affiliate helps Merchants. The former’s work is to generate sales, while the latter’s role is to supply the product/service
As seen above, both have a completely different roles to play, but this space is unique that you can develop both business models and create revenue streams out of it
There are different aspects of this industry and having a clear understanding of all can help you have a complete control over the different aspects of AM
As a business, your basic needs are enhancing your brand presence and improving sales and if you are able to understand the working of this industry, there is a very good possibility that it can be achieved
Affiliate Marketers work on various models that aid your requirement and can enhance your growth rapidly, which has happened for many brands
It’s a common-sensical thing to understand that AM is part of the entire Online Puzzle. To be successful in implementing the AM strategies, it is critical that you have a proper IDM (Integrated Digital Marketing Approach)
A few important data points that provide the direction in terms of how the AM industry’s footprint is currently present across the world is critical
- As per Business Insider’s survey, close to 15% of the total revenue of the digital media is contributed by the AM industry
- Half of the AM industry has four major segments viz. Fashion, Sports, Health & Beauty (AM Navigator’s research)
- The major factors for choosing an affiliate program are product or service relevancy (18.15%), affiliate program reputation (15.97%) and affiliate network or tracking platform (11.58%). (As per AffStat research)
- The latest trending affiliate program’s information is generally found on the merchant’s website, or affiliate network sites like Clickbank / CJ Affiliate. (Affiliate Summit)
- Some searches on Google or Bing also show up some new AM programs launched recently – sometimes UNI-BRANDED sites like Four Percent
- Another report by DigitalCommerce360 shows that almost 15% of E-Com sales in U.S.A. is positively affected by AM strategies employed by the merchants
- A Rakuten report has shown that shoppers are more informed that earlier days and their decisions for purchases are being influenced differently
- It shows that AM strategies employed by merchants are critical for these directions taken by customers
- With the power of social media, content publishers, and a plethora of digital media readily available at their fingertips, today’s consumers are more educated and shopper-savvy than ever before.
- When it comes to purchasing decision, price point had the most influence on a Millennial (62%), outweighing recommendations from a friend (55%), brand reputation (47%), and product quality (35%). (Rakuten)
- Mobile devices were crucial for millennial mothers to search for the best possible price of a product (79.4%), read reviews (68.9%), and download coupons (67.1%). Even in-store shopping was greatly influenced by millennial mobile users, with over half (52%) comparing prices to other retailers. (Rakuten)
- More than 30% of affiliate-generated sales originate from a mobile device & nearly 50% of affiliate-referred traffic originates from a mobile device. (Awin)
- 40% of marketing professionals quote affiliate marketing as the most desired digital skill. (AM Navigator)
Some salient inferences from the above research and data points are:
- E-commerce’s growth, is expected to be about $6.5 bn. by 2023 and AM will be a major contributor towards this growth
- This is a great opportunity for both the players (Affiliates & Merchants) to improve their revenue streams exponentially
- There are various ways to promote the affiliate links, but mostly it’s done through Blogging as it’s the best way to enhance your Content Strategy
- There are two ways you can promote this – Niche based and Function based. The marking shows an Affiliate Link
Merchant & Affiliate
- Merchant: Is anyone who owns a product of service like HP / Wal-Mart etc.
- Affiliate: Is anyone who aids in selling that product or service. That could be done individually or through the help of networks like Clickbank / CJ
The basic concept is that in AM, the merchant shares the revenues with the affiliate based on the work the affiliate has done for the merchant. The models are
- Percentage Sharing
- CPS (Cost Per Sale)
- CPL (Cost Per Lead)
- CPC (Cost Per Click)
- CPM (Cost Per Impression)
If you notice, that from to 1 to 5, the risk factor increases for the merchant and decreases for the Affiliate as we move from Percentage Sharing to CPM
These are Variable models. However, there are models where the merchant sometimes pays the affiliate on fixed / retainer models.
In some structures it’s a combination of Fixed & Variable models. These are termed Hybrid structures, where the affiliate makes an income from a standard work and the results, he / she produces
Any structure can only be achieved, only if there is a mutual trust between both the players
The 1st AM program is a three decade old concept, when the floral industry started to explore this model and today all the big names in the E-Com space are adopting this.
Today names like Amazon and Indian brands affiliated with some big organizations like Reliance are well entrenched here.
The model is very lucrative for the merchant as the firm can increase its sales without much of investment in advertisements
Another term that the industry uses for merchant is Advertiser
Over the years, there have been various models of AM. But when the orientation moved towards user-generated content, optimization, and integration of social media (Web 2.0), the idea of AM changed 1800
This transition made the impacts transcend from a B2B model to B2C model, where the individuals who were different types of Influencers saw this as a route of enhancing their revenues
This transition has changed the entire landscape of AM as now even entrepreneurs can take advantage of this model and they are also termed as Publisher
One of the important aspects of AM is that the payment is based on the performance. It could be a periodic payout or based on results
In either case, the benefit is there for both the players, as they are clear about the payment terms as it is based once the closure is achieved by the affiliate as per the merchant’s term
Both the players, viz. Affiliates and Merchants are important for the industry to be effective and the reason, why this model is so popular is because its Performance-based system and the merchant do not have to invest anything upfront
Each affiliate is provided a unique link so that the merchant can track the sales done by them with their systems
In addition to the two main players, the consumer today who is looking at the online space is equally important for this industry to flourish
The consumers of the modern age are comfortable with the current business models and are willing to trust the information being provided
Hence it’s critically important that both the merchant and the affiliates provide the right information at the right time to the right kind of people
Consumers are now more informed before taking the decision. There are two terms that are making the rounds these days
- Showrooming – It is the practice of examining merchandise in a traditional brick-and-mortar retail store or other offline setting, and then buying it online, sometimes at a lower price. Online stores often offer lower prices than their brick and mortar counterparts because they do not have the same overhead cost
- Webrooming – The consumer practice of researching products online before buying them in a physical store. The term is often used to contrast with another consumer practice called ‘Showrooming’ wherein shoppers first try out the products they want in a physical store before buying them online. Webrooming is the opposite – shoppers first research the products online before buying them in a physical store.
All of this has a positive influence on affiliate marketing because it increases the chance of online buyers finding the products through recommended (affiliate) links.
Furthermore, a lot of surveys show that affiliate marketing drives performance, which includes brand discovery and awareness, as well customer engagement and purchase.
Affiliate marketing basically connects merchants and buyers and affiliates are those who connect the two.
Coupon Websites / Loyalty Sites / Bloggers / Newsletters /Deal Sites / Social Channels /
Managing the Affiliates
As a merchant, you can look at your affiliate as Partners or Agency. If it’s the former, then you share lot of details like how you are running the ads, giving them training etc.
If you have an approach that has a structure of the latter model i.e. Agency, then you share only information that is needed
It is a call that as a merchant, you need take
Be cognizant of this
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