Affiliate marketing for beginners
For companies looking to drive traffic and keep costs low, affiliate marketing offers a clear path forward. Although traditional methods of marketing target prospective buyers more broadly, affiliate marketing can reach online customers directly. These days, people aren’t just spending more time online—they’re also spending more money. And companies have taken notice.
According to a report published by Statistica, affiliate marketing spending in the US is expected to reach $8.2 billion by 2022. That’s up from 7.4 billion in 2020 and 6.8 billion the year before. In fact, company spending on affiliate marketing has grown exponentially since 2010.
What is affiliate marketing?
It’s a transaction between a company and an entity where the business receives leads (and shortly after, customers) in exchange for financial incentive. It’s a marketing strategy where two brands collaborate to promote a product or service from one of the brands. The affiliates promote the retailer's product and earn a commission based on the number of sales generated.
Commission can also be based on clicks to a website, downloads from an app, or number of users who sign up for a free trial. It’s a performance-based opportunity that proves hugely beneficial for affiliates who can, in some cases, turn this supplemental revenue source into a full-time gig.
Affiliate marketing belongs to a broader category of marketing known as partner marketing. Other common types of partner marketing include:
- Content partnerships
- Distribution partnerships
- Loyalty partnerships
- Joint products
However, unlike other types of partnerships that each bring 50% to the table, affiliates conform to the advertiser’s pre-existing business model.
From a company’s perspective, affiliate marketing also makes it easy to identify how and where a lead was generated. This tracking allows companies to assess how marketing dollars should be spent.
Why affiliate marketing?
So why the uptick in recent years? According to the Pew Research Center, three in ten adults say they’re “almost constantly” online, and 48% say they are online several times a day. It’s no surprise that purchasing habits have followed suit.
Today, there are 263 million online shoppers in the US compared to nearly 256 million the year before. By 2024, that number is expected to climb to 278 million. Worldwide, e-commerce sales peaked at $4.3 trillion in 2020 and are projected to climb to $6.4 trillion by 2024.
This is why companies are looking for new strategies of engagement. Affiliate links don’t require a large upfront investment, and ongoing costs are also minimal. Companies can therefore market a product with a tight budget, without any extreme effort. Turning to affiliates — such as bloggers, content creators, or influencers with their own loyal followings — can broaden a company’s appeal and expand their target audience.
The bottom line: You’ve built a strong relationship with this influential customer, turned affiliate, for a reason. Their audience fits your buyer persona and you've almost effortlessly opened the door to a new room of leads by utilizing your existing customers and their communities.
|Your business||Your affiliates|
|Increase in brand awareness||Flexibility to choose the brands you work with|
|Higher ROI for business growth||Healthy commission rates|
|Lower cost per acquisition (CPA)||Low hassle for managing customer service|
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How does affiliate marketing work?
Businesses provide affiliates with a unique link that will track the source each time a sale is made. Every time a prospective buyer clicks the link, an affiliate cookie gets stored on their device.
Affiliate cookies not only allow merchants to track a sale, but also include an expiration date so that the affiliate always earns a commission based on an initial inquiry, even if a sale is delayed.
Because affiliates receive recurring commissions by driving customers to the point of purchase, companies must consider the most efficient and reliable forms of compensation. These are typically:
- Pay-per-click: fixed value commission based on how many clicks an affiliate gets on their custom link, e.g., affiliate makes fixed amount for each click on Facebook post and/or view of product page
- Pay-per-lead: commission payout based on registration or conversions, e.g., affiliate makes a fixed amount for each form fill on your website that originated from their affiliate link
- Pay-per-sale: commission payout when a new lead from the affiliate’s link makes a purchase, e.g., affiliate makes a fixed amount or percent of sales that come from referrals from that affiliate
Affiliate earnings vary drastically. Many affiliates start out making less than one hundred dollars a month, but the payments increase over time. Top earners make six- or seven-figure incomes.
How can I start affiliate marketing?
There are a few simple steps you can take to get started.
- Determine the platform you will use. You can begin affiliate marketing on nearly any platform — from social media, to video platforms, to a personal blog or website. YouTube and blogging are two proven ways to boost your audience, thereby increasing your affiliate sales overall.
- Narrow your brand and search for affiliate programs that complement your service/product offerings. Rather than focusing on a general category (e.g., “travel”), focus on a more specific niche (e.g., “adventurous travel for 20-somethings”). Maintaining a narrow focus can improve your SEO rankings and drive a more targeted audience.
- Pick an affiliate program model that’s right for you. Affiliate programs are typically delineated into the following categories:
High paying, low volume
Low paying, high volume
High paying, high volume
The option you choose will depend on your brand and level of expertise. For affiliates targeting consumers, it’s usually best to choose a low-paying, high-volume model because it produces a higher sales volume. For affiliates targeting other businesses, a high-paying, low-volume model may be the best option.
What does success look like as an affiliate marketer?
Affiliate marketing is based on trust and relationships. Affiliates must build rapport with their audience and create a diverse portfolio of content to drive sales. They should avoid bombarding audiences with too many affiliate links from the start.
Audience engagement will fade over time if products are faulty and receive poor reviews or if it’s clear that an affiliate is including links that contradict their brand or tone.
Some companies have taken affiliate marketing by storm. Wirecutter, for example, relies on a simple model of affiliate commissions. Wirecutter is known for its “Best Of” pages, and every page includes a plethora of Amazon or Best Buy links, each of which provides affiliate commissions. Wirecutter proved itself to be such a successful model that it was purchased by The New York Times in 2016 for $30 million.
Educational sites such as Skillshare, Coursera, and Udemy also boast incredibly profitable affiliate programs. Skillshare, for example, offers affiliates $7 per new customer. Coursera entices affiliates with 10%-45% commission “on any eligible purchases your users make within 30 days of clicking a qualified link.”
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