With the growing popularity of influencers, podcasters, and bloggers, the opportunity for affiliate marketing is bigger than ever before. Why pay for ads when you can have your brand appear alongside organic content that your customers already love and trust?
Over the past several years, affiliate marketing spend in the U.S. has grown 10% annually as more brands discover its usefulness and more content creators become affiliates. Currently, affiliate marketing drives 5 to 25% of online sales for large retailers.
So what is affiliate marketing and how can you execute a great AM campaign? We’ll dive into all that and more below.
What is Affiliate Marketing?
There are three players in an affiliate marketing campaign: the affiliate (or content creator), the seller (or brand), and the consumer (or audience). The seller pays the affiliate and the affiliate markets the seller’s brand to their audience on their own platform. Popular platforms that affiliates use include Instagram, TikTok, microblogs, websites, podcasts, and YouTube.
How Does Affiliate Marketing Work?
In a successful affiliate marketing campaign, the affiliate advertises the seller’s brand or product to their audience and, in return, the seller pays the affiliate. They may pay for this exposure upfront or else pay the affiliate a percentage of every sale that originated from their platform. Each player in affiliate marketing has a role to play and benefits to gain.
How Do Affiliates Benefit?
Affiliates or content creators primarily benefit in the form of monetary gain. Creating rich organic content for an audience base requires a lot of time and effort. Oftentimes, creators share all their content for free online. Affiliate programs allow creators to get a stream of income while still providing high-quality content to their audience at no cost.
Under some arrangements, affiliates can also benefit by gaining extra audience exposure. The brand they work with may promote the affiliate on its own channels. This can be a great way for affiliates to gain new followers and to prove their legitimacy through association with an established brand.
How Do Sellers Benefit?
Sellers are able to market their products to a wider audience than they would be able to reach with ad placements only. Additionally, they can improve their brand perception with an endorsement from an affiliate who is trusted in the space. This can be more persuasive than an ad released by the brand itself.
Affiliate marketing can be a great tool for brands that are cornered into a niche audience and wish to expand their potential customer base. For example, a protein powder company that sells mainly to men can demonstrate their product’s value to women through an affiliate partnership with a trusted female influencer.
How Do Consumers Benefit?
Even though they aren’t involved in the dealmaking side of affiliate programs, consumers can also benefit from this form of marketing. When making decisions about purchases it can be useful to hear an endorsement from a trusted content creator who has tried the product. Though creators earn money as affiliates, most choose to promote products that they would also endorse organically.
In some affiliate program setups, users get a discount code provided by the content creator, which they can use to try the product at a reduced price.
What are Affiliate Marketing Networks?
The trickiest part about affiliate marketing (for both affiliates and brands) is finding a corresponding match to partner with. Luckily, there are lots of affiliate marketing networks. You can use these to connect with people to market your product, connect with brands you want to market for, and iron out the details of the partnership.
Affiliate marketing networks save you from having to do cold outreach to potential partners who may or may not be interested. They also allow you to quickly filter for specific industries and categories. Affiliate marketing networks are kind of like eBay except, instead of buying and selling goods, users buy and sell brand promotion.
Most Popular Affiliate Marketing Networks
Below is a list of the most popular affiliate marketing networks. Check them out to find one (or a few!) that works for you.
- Amazon Associates Program
- Walmart Affiliates
- Rakuten Advertising
- CJ Affiliate
Do You Need to Use an Affiliate Marketing Network?
No! While affiliate marketing networks make affiliate marketing easy and accessible to anyone, you can certainly execute a successful affiliate marketing program with a bit of your own leg work. It will be up to you to find, research, and connect with affiliates and to iron out the details of your partnerships with them. This takes extra work on your part. However, it also allows you to develop your program exactly as you want it.
Affiliate marketing without a network can open up more opportunities for person-to-person connections between brands and affiliates. If you value having a personal relationship with your affiliate partners, it’s better to send a personalized email or set up a time to chat face-to-face rather than using an impersonal third-party network.
Payment Models for Affiliate Marketing
When you set up an affiliate marketing program you get to decide the terms under which you will pay your affiliates. Will you pay them for each time they feature your brand on their blog or for each time a reader views the feature or for each time one of their readers buys your product? Your choice depends on your marketing goals and your product type. Below are a few common payment models for affiliates.
Under a pay-per-placement model, you’ll pay your affiliate for each time they feature your brand in their content. For a podcast, you may pay $1,000 each time the affiliate talks about your product for one minute on their podcast. For an Instagram account, you might pay a set amount each time the affiliate features your product on their story.
When using a pay-per-placement model, it is important to find out how large your affiliate’s audience base is. That will help you value the price you are willing to pay for a placement. For example, a placement in a newsletter with 100,000 readers is much more valuable than the same sized placement in a newsletter with 18 readers.
Under a pay-per-click model, you pay your affiliate a set amount for each person that clicks on a link from their page to yours. This is a useful set up to make sure you are paying for actual traffic and not simply being ignored by users. It also incentivizes affiliates to place your feature somewhere with maximum viewability.
The tricky part of a pay-per-click model is that you will need to install URL tracking to count the number of users that reach your site through the affiliate. This can be done with UTM parameters in the URL.
Under a pay-per-lead model, you’ll pay your affiliate for each person that converts to a lead by filling out a lead form with their contact information. Marketers will pay more for a lead because it provides information you can use to contact the user and ensure that they continue through your sales funnel. On the other hand, after clicking on a link, a user can simply leave the site without giving your product a second thought.
Pay-per-lead can be set up in a couple of different ways. You can use URL tracking to have the affiliate direct users to a lead form hosted on your website. Alternatively, you can have the affiliate gather leads on their own platform and send them your way afterward.
With a pay-per-sale affiliate program, marketers give affiliates a cut of every sale that they generate. For example, you may pay the affiliate a 5% cut of all purchases made by a user who heard about your brand from them.
There are a few ways to track purchases that originated from the affiliate. You can use link tracking as you would do with pay-per-click models. Alternatively, you can provide the affiliate with a special discount code to share with their followers. Each time a user makes a purchase with the discount code the affiliate receives a cut of the sale. Another way is to simply have users fill out a “How did you hear about us?” question – though this is not as reliable since users may opt-out. Generally, marketers will pay affiliates more for a sale than for a lead, since a sale guarantees revenue, while a lead does not.
Which Media Platforms Can Be Used for Affiliate Marketing?
The most common platforms used for affiliate marketing are Instagram, TikTok, newsletters, blogs, websites, podcasts, and YouTube. Any platform that allows content creators to develop a following of devoted audience members is ideal for affiliate marketing.
How to Start Affiliate Marketing
If you are a marketer or brand hoping to leverage affiliate marketing in your spend mix, these are the first steps you can follow:
- Identify audience segments you hope to reach.
- Research content creators who are popular with your target audience. Take note of their content format, the size of their audience, and the frequency of their content releases.
- Do the math! How much can you afford to pay for each new user or sale generated from the affiliate? How many new users or sales do you need to reach for the campaign to be a success?
- Come up with a brand playbook with guidance on how your brand should be positioned by affiliates. Highlight value props that you would like affiliates to highlight.
- Start reaching out! Connect with potential affiliates by email, LinkedIn, social media, or through an affiliate network. Make sure to explain what your brand is and what products or services you offer. It is also nice to review the affiliate’s content and add a few comments about why you enjoy it and how it would fit well with your brand.
Affiliate Marketing: In Conclusion
Affiliate marketing is a useful and growing subset of digital marketing. It can help brands reach new audience segments or position themselves in a new light. A successful affiliate program can work on a small scale (with just a few affiliates) or a large scale (with hundreds of affiliates across platforms).
It can take a bit of work upfront to find affiliates who are a good match and to establish a working relationship with them. However, once you have a good report, affiliate partnerships can be extremely fruitful for years to come.
Reading through this guide is a great first step and you’ve already done that! Next up, do some research on potential affiliates and consider what your goals are.