Affiliate marketing is basically a process where a brand or supplier, for example a book retailer, attract customers by rewarding the third-party (or affiliate) for marketing their goods and services, and driving traffic to their website.
The affiliate relationship is based upon the conversion; the conversion is the action on the part of the consumer which forms the central reason for the affiliate relationship. The conversion or the action can take a number of forms; so for Amazon this might be the sale of the product; for others it might be the placing of an online bet, or booking a holiday.
Within the affiliate relationship are the merchant, the brand or seller and the consumer or customer. The merchant is the brand or retailer; there are lots of examples such as Amazon and others. In fact today affiliates come from all sorts of companies from any industry, including travel, gaming, smart phones, marketing research, not-for-profit, and the voluntary sector.
The affiliate is your digital salesman. Your digital salesforce owns websites, social media, blogs, mailing lists, and other digital marketing media, and they recruit customers for a merchant. Finally the consumer is at the blunt end of the business; they are the target market or customer and we often talk of a sales funnel which will begin with the affiliate; an obvious example would be a blog which offers advice on weight training, whereby the customer learns how to lift weights, and the blogger recruits you as a customer for weight training books and supplements supplied from the merchant; the website or blog never takes title or owns the products; they take a commission from the merchant.
Benefits of Affiliate Marketing
• everything is tracked and so each stage can be checked by the merchant and the affiliate; this means that both parties are accountable.
• access to many different industries, segments and markets both nationally and internationally means that merchants gain access to channels quickly.
• Marketing to new channels, especially international markets tends to be time-consuming and fairly risky; affiliate marketing is less risky than comparable modes of entry into new channels and overseas markets.
As time moves along and affiliate marketing becomes more commonplace there will be more and more industries and sectors that take advantage of its benefits. There are currently a number of different types of affiliates and will look at a few of these now.
• Voucher code affiliates for example Groupon.
• Social networking sites; Facebook and Twitter now carry advertising and there are affiliate sites which have seized upon this opportunity.
• Retargeting specialists use data from customers that have viewed particular items to try and sell them products from different sectors; this is similar to CRM.
• Paid search specialists essentially use PPC via Google or Bing, to drive traffic to their website based upon keywords for which they bid. Obviously there will be a prophet in terms of sales of product from the merchant less the cost of online advertising.
• Content sites which give information away free to visitors are ideal places for affiliate marketing. For example websites that review college education are often affiliates for colleges and universities.
• Comparison sites are now very popular example Moneysupermarket.com and comparethemarket.com and many others. Essentially these sites compare prices and products from a number of suppliers and display them in one place.
• Loyalty and cashback sites give users and shoppers rewards based upon their shopping behaviour; for example quidco.com.