Affiliate Marketing: What It Is and How to Get Started
Companies create affiliate programs where participants receive a reward for each attracted client. The partners are owners of websites, blogs, channels, active users of social networks, traffic managers and entire teams.
For promotion, partners use various online marketing tools: targeted and contextual advertising , email newsletters , banners, advertising on blogs and social networks.
Affiliate marketing is especially popular in the e-commerce market . Banks, insurance companies, marketplaces, booking services, online schools, and game developers have their own programs.
Affiliate marketing also refers to joint advertising campaigns or mutual promotion of products by two non-competing companies. For example, online cinema and food delivery. In this case, it is more appropriate to talk about cross-marketing or cross-marketing. Since the term “affiliate marketing” is now most often applied to promotion through affiliate networks and programs.
Why and who needs affiliate marketing?
The idea of paying commissions for referring clients arose even before the invention of the Internet. Any company can attract partners for promotion - from a car service center to an international bank.
Affiliate marketing is needed to:
- advertise goods and services on the Internet;
- attract a new loyal audience;
- search and hire employees;
- quickly launch advertising of a new product with a minimum budget;
- reduce promotion costs, since the advertiser pays only for the result: a new user, an application, a purchase.
Types of Affiliate Marketing
Affiliate programs are referral and affiliate. They are very similar in essence: a partner attracts a new client and receives a reward. But there is a fundamental difference.
Referral Marketing
Referral marketing encourages current customers to recommend the company to friends, colleagues or subscribers. As a reward, the referee receives discounts, bonuses or points that can be spent on company products.
In a referral program, a loyal customer brings new loyal customers.
Affiliate Marketing
Affiliate marketing attracts partners who promote a product for money. The affiliate is most often not a client of the company.
The affiliate assumes the obligations and risks associated with promotion. He invests his own resources, knowledge, time, and sometimes money in order to make a profit. For example, affiliates can independently purchase advertising that leads to the advertiser’s landing page.
How does affiliate marketing work?
Companies attract participants to their own affiliate programs or look for partners through CPA networks. The first option is suitable for large companies that have the resources to develop a service. A quick and easy way to start an affiliate program is to join a CPA network as an advertiser.
An affiliate or CPA network is a platform that acts as an intermediary between the advertiser and the webmaster. They work according to the following principle:
- The advertiser places an offer - an advertising offer. It describes the product, target action, amount of remuneration and other requirements.
- The webmaster ( traffic arbitrator ) selects an offer with attractive conditions and receives a unique affiliate link. He runs an advertisement, places a banner on a website, publishes an article on a blog, and uploads a video on YouTube.
- The buyer follows the affiliate link and performs the target action: buys the product, installs the application, and leaves a request.
- The advertiser, using a unique link or utm tag, tracks which partner brought the client and pays a percentage or a fixed amount.
There are three main payment models for affiliate networks.
CPS (cost per sale) - payment for sales. The affiliate receives a percentage of product sales. This model is most profitable for the advertiser, since he pays for a specific attracted client.
CPA (cost per action) - payment for action. The partner receives a reward for downloading a file, registering for a webinar, or submitting a request. There can be several targeted actions: install the application, register in the game, make the first purchase. The affiliate receives a payment when all conditions are met or for each event separately.
CPC (cost per click) - pay per click. The affiliate gets paid for clicking on the link. The model is rarely used, as it is unprofitable and risky for the employer. An unscrupulous affiliate may attract users who simply click on the link but are not interested in the product.
Benefits of Affiliate Marketing
The company can independently attract customers and promote products using Internet marketing. However, affiliate programs have a number of advantages:
- Variety of promotion channels. The company receives traffic from blogs, websites, social networks, and mobile applications. Partners use all available tools and channels, unless otherwise specified in the offer.
- Loyal audience. Partners place banners, articles or videos on their own resources. Subscribers and readers trust them, so they respond more positively to advertising.
- Payment for results. The advertiser pays a reward for a targeted action, a specific lead or client. There is no risk of wasting your advertising budget on ineffective channels.
- Savings on a professional team. There is no need to hire expensive internet marketing specialists.
Common Advertiser Mistakes in Affiliate Marketing
When working with CPA networks, advertisers most often make the following mistakes:
Lack of promotion strategy. When launching advertising through affiliate networks, it is necessary to develop a promotion strategy. Advertisers delegate campaign management to partners, including channel selection and activity planning. As a result, promotion is haphazard and inconsistent with the company's marketing strategy.
Bad creatives. Provide your partners with high-quality, relevant and original images, videos, and text materials. Webmasters can independently develop creatives, test them and select the most effective ones. Check and approve promotional materials. It will take more time, but you will be confident in the quality of your advertising.
Low conversion on the site. The affiliate brings traffic to the advertiser's landing page, but they do not turn into real customers. Analyze your landing page and increase website conversion .
No traffic analysis. Advertisers evaluate the effectiveness of the affiliate program as a whole. It is important to analyze the results of each partner, segment affiliates and further motivate those who bring quality traffic.
Another common mistake advertisers make is the same cost for different channels. Webmasters receive the same income for expensive, high-converting traffic and for cheap, low-converting traffic. This encourages partners to abandon efficient channels that require more costs and resources.
For example, a blog owner places native advertising and a banner. Let's imagine that customers who come from an article make a purchase more often and give a higher average check . At the same time, the company still pays the same for each lead.
For a blogger, creating native advertising requires more time and effort: you need to shoot a video, write an article, and layout the material. Therefore, it is easier for him to place a banner and receive his reward with less effort. But the company will not receive loyal, solvent traffic from native advertising.
To understand which channels are most effective, track the full customer journey using end-to-end analytics and adjust payment for leads.
Reward calculated incorrectly. To set a cost for a target action, you need to analyze your own advertising campaigns, look at competitors’ offers, and calculate LTV—customer lifetime value. A universal rule when choosing a bet: for a simple action - the price is lower, for a complex action - the price is higher.
Affiliate Marketing: Tips for Beginners
Partnership business in this form is a beneficial cooperation for all participants. First, you will have to study the theory, the experience of competitors, marketing strategies and tools.
Pay attention to CPA networks, where there are all conditions for starting and helping beginners. Start by registering on one of these sites, study your personal account and offers.
But don't expect to make quick money with minimal investment. Those who make such promises make money from gullible listeners by promoting their “training” and not the products from sellers’ offers.