Digital advertising and marketing ecosystem is growing and Affiliate Marketing is a key part of the value chain. Affiliate Marketing has outgrown its role as just another marketing channel and become an objective in its own right.
Affiliate Marketing uses many of the same tools as the more traditional digital marketers such as email, search, social, SEO and re-targeting and now is an integral part of many integrated marketing campaigns.
Well managed and executed affiliate campaigns will help brands thrive by driving efficient consumer acquisition. I know from my time at Wealthy Affiliate.com just how valuable Affiliate Marketing can be in driving product sales. Yet it can do so much more for a brand.
With the ubiquity of mobile devices and the continued rise of programmatic trading, it can deliver valuable audience- and consumer-data insights across multiple platforms.
What Is Affiliate Marketing?
It’s a good question, and one with an ever evolving answer. So let’s start at the beginning by trying to give it a simple definition:
What Is Affiliate Marketing, is the practice whereby a digital publisher or website promotes an online retailer and earns a commission based on the sales or leads that the advertising generates for that online retailer.
We term this payment metric CPA Cost Per Action. Typically an ‘Action’ is a sale of an online good or service, but it can also be a lead or registration, a call, a download or any other track able action that is desired of the end customer.
In recent years this has grown to even include offline sales provided they can be tracked back by a coupon or barcode. There are two ways the CPA are set:
Flat rate: For every action a fixed fee is paid. This is typically used for registration type actions with no cost, such as a credit card sign-up or for a fixed price product like a mobile phone contract.
Revenue Share: The price of the item purchased is tracked and a percentage of that price is then paid to the affiliate. This is generally favored by advertisers selling a range of tangible goods at varying prices, such as fashion retailers.
Affiliate Marketing is part of the performance marketing family, meaning the return on investment is guaranteed and the advertiser is only paying for advertising that has succeeded.
It’s a versatile channel and is very effective at driving actions for merchants selling consumer products or services across a wide range of verticals, including apparel, travel, electronics, health and beauty, telecommunications, finance and groceries.
It should be considered as a key part of an advertiser’s marketing mix in an integrated campaign, specializing in turning brand awareness and interest into conversions towards the end-of-purchase funnel.
For now, let’s just dispel a common misconception: Affiliate Marketing isn’t just banner advertising, in fact, most campaigns will get less than 10% of their sales as a result of banner advertising.
Consumers have learned to ignore these banners, so successful affiliates employ smarter, more engaging tactics to generate sales for the advertisers they work with, with most sales coming from ‘text links’ often hidden behind ‘Buy Now’ or ‘Shop Here’ type buttons.
A ‘text Link’ in the affiliate world is just a track able URL that redirects to the relevant page of the advertiser’s website. Whilst the majority of affiliates still generate actions for their advertisers by promoting on their own website or blog, there’s now many other ways they generate customers.
This includes email marketing, mobile apps, paid search, re-marketing widgets or campaigns, offline promotions and social campaigns. The scope is almost unlimited.
Any publisher or partner paid to promote on a CPA metric could be considered an affiliate.
Technically How does it work?
Most advertisers will employ an Affiliate Network to administer the tracking of their Affiliate Campaign.
The network will provide a set of tracking links to the affiliates that sit behind the banners and text links on the affiliates’ websites. When the customer clicks on that link a cookie is dropped onto their computer and that click is registered by the Affiliate Network.
When that customer then completes a purchase and reaches the advertiser’s confirmation page, the Affiliate Network’s tracking tag is fired. That tag checks for the relevant cookie and if the customer has come from one of the Affiliate Network’s publishers, the sale is recorded by the Affiliate Network in their platform.
Via that platform both the advertiser and affiliate should be able to see that the sale has tracked and a commission can be awarded.
The advertiser populates the tracking tag with all of the information relevant to the sale, typically the price and order ID are always included, then additional fields such the product stock keeping unit (SKU) or promotion code can be added and tracked to assist with analysis of the campaign’s performance.
Again, there’s a wide range of complications and options to improve on the basic tracking model. The more advanced networks are able to provide cookie-less tracking, so that sales can still be attributed to affiliates when the user has blocked or deleted the affiliate cookie.
This is becoming increasingly important as so me browsers automatically block third-party cookies. More complex tracking can utilize unique promotional codes or block non affiliate codes to record sales.
Affiliate tracking pixels can be conditionally fired to de-duplicate against other traffic sources though complex programming is needed around the rules for this, given that cookie lengths are typically much long than a single session.
When we talk about Affiliate Marketing, it is important to note that there are different types of affiliates. The method chosen by the affiliate to promote the advertisers’ products is the key differentiation. Each affiliate type fulfills a different role in terms of value, volume and reach.
By understanding affiliates on an individual basis, advertisers will have the knowledge of who is best positioned to deliver in certain industries or to promote particular products.
(1) Reward sites
With online shoppers becoming increasingly savvy, reward sites have seen a surge in popularity. This type of affiliate drives sales by rewarding its members through a share of the commission it earns from an advertiser. If provided with a competitive offer, reward sites can generate significant volume.
They provide brands with an effective way to increase its exposure, especially if products are not strongly positioned on aggregator sites. If used strategically, reward websites can drive incremental growth (e.g. reward increase averag e order value, higher commission for purchase of new customers).
It is important to have a sophisticated validation process in place in order to avoid paying commissions on cancelled bookings or return purchases.
(2) Content sites and blogs
These types of websites are often focused on a niche interest and feature unique content. A few examples are product review sites, blogs and online forums. Often, Content Affiliates form part of an Affiliate Program’s long-tail strategy and are rarely large volume drivers.
Regardless of their contribution to overall sales, they are valued partners. The reason for this is that unique content suggests editorial credibility and often has a positive impact on an advertiser’s search engine optimization (SEO) efforts. Content sites can also help reach a new audience.
This audience might not necessarily be looking for your brand in particular but could come across it through a feature in a newsletter as the affiliate reaches an audience that is actively looking for the topic around your brand.
A great way to engage and optimise activity with content sites is by providing fresh content or an exclusive offer. Recently we have also seen an increase in integrated content pieces as well as affiliates who are using video to monetize a product.
An Email Affiliate sends targeted emails to its own (or third-party) data base to drive conversions on behalf of a brand. In order to drive volume, a strong and time-sensitive offer is required and creative should be refreshed regularly.
It is important to always consider the size and source of the data to ensure it is compliant with local and brand regulations and to avoid over promotion or database exhaustion.
(4) Comparison websites
These sites offer consumers the opportunity to compare products of different advertisers (like credit cards or phone plans). Through a compelling offer, comparison websites can generate large sales volumes. They vary a lot on how they structure their rankings, which is not always based on best product but often earnings per click (EPC).
(5) Retargeting Affiliates
Affiliates retarget most commonly through tags that they place on the advertiser’s site and try to re-engage with consumers who have not completed their purchase.
This could either be via an overlay when a consumer is about to leave a website, trying to persuade them to stay, or via email if they have abandoned their shopping cart, making it easy for them to return and to complete their purchase.
The advertiser has full control over traffic source and targeting options. It is recommended to trial different creative and messages and not to rely too heavily on handing out incentives.
(6) PPC Affiliate
A PPC (pay-per-click) Affiliate is a search specialist who drives traffic to an advertiser’s site by bidding on relevant keywords via a custom-built landing page.
They generally work on a CPA basis but sometimes require hybrid commercial agreements. PPC Affiliates are not for every client but can be great strategic partners if:
Competitors are cannibalising advertisers’ ads
Limited budgets don’t allow for an ‘always- on’ approach, leading to lost exposure
Aggregator ads are appearing on advertisers’ search terms and directing brand traffic to competitor products The key to a successful trial with a PPC Affiliate is to set up strict guidelines which help ensure affiliates are compliant.
(7) Voucher and deal sites
These type of sites generate sales by offering their users a discount code that can be redeemed online against their purchase. They also of ten promote generic deals in a designated section.
An exclusive code will usually increase exposure on the site, where a quick expiry date will create a sense of urgency for consumers and can be used as a strategic tool to drive quick sales.
(8) Social Affiliates
This type of affiliate works via highly targeted posts on social networks or sponsored tweets, which can help to drive awareness and assist in generating need. It is important to keep the creative relevant, with a strong call to action.