Affiliate marketing is a win-win situation for companies and content authors.
By 2016, 81 percent of advertisers and 84 percent of publishers in the USA were using it. The total investment in affiliate marketing worldwide is over 12 billion euros.
In the following, we explain how affiliate marketing works.
So, What Is Affiliate Marketing?
Affiliate marketing is a performance-based marketing tactic. Online merchants reward the webmasters of other websites with a commission for customers generated by their advertising activities.
Let’s think that you are an Amazon partner, right? How are you going to generate leads for them?
Most of the people would use websites, tricky advertising, and public resources.
The question is, how do you properly structure a good affiliate business?
These can be individuals or companies acting as publishers. It can cover all subject areas from media and technology to fashion and lifestyle.
A special affiliate link is always inserted, which redirects users to a relevant product page. If users click on this link and execute a transaction, the affiliate partners receive a corresponding commission.
The advantage for affiliate partners is obvious: For comparatively little effort, they receive a remuneration if the promotion is successful. The affiliate becomes a virtual sales partner for the merchant, so to speak.
Supplier / Dealer / Advertiser
Some online stores also advertise directly with their own partner programs, such as Amazon or eBay.
In principle, anyone can offer an affiliate program, regardless of whether they are a sole proprietor, SME, or corporate group. All it takes is some know-how on how to start your affiliate program.
Advertisers can profit from an advertising effect without taking a high risk. They only pay affiliate partners if potential customers show a clear interest in the products.
Affiliate networks act as intermediaries between affiliate partners and merchants.
Known representatives are, for example, Awin or AdCell. Merchants may lack the (time) resources to track, calculate, and manage payments to affiliates.
Ideally, visitors to affiliate content offerings will click on a provided affiliate link. There, a relevant transaction (usually the product sale) occurs, and visitors become customers of the merchant.
How Does Affiliate Marketing Work?
If you, as an author or blogger, wish to serve as an affiliate partner and provide content for an affiliate program, the following steps are needed:
You must first register with the corresponding participation program, such as the Amazon PartnerNet.
The new partner will then obtain an affiliate link with his ID, which he can incorporate into his own content.
Suppose the user now clicks on this affiliate link (e.g., in the form of a banner advertisement). In that case, a cookie is inserted into the user’s browser that records their further browsing activity on the merchant’s website.
If the customer is now taking action applicable to the chosen billing model, the merchant may register it and delegate it to the specific affiliate partner.
Since cookies are typically valid for several hours to days or weeks, relevant activity is credited to the affiliate partner.
In separate accounting periods (usually monthly), the affiliate will be paid the commission on all registered shares in the corresponding period.
Depending on the affiliate program and the particular contract, the involvement of the affiliate partners in sales is focused on various behavioral habits of users or customers:
Pay per click Pay (PPC)
In this situation, the affiliate partners earn money for any click on their affiliate links, regardless of whether or not and how users connect with the merchant websites-only visiting the websites is enough. This model is unique, as the merchants here bear the full risk: they pay without knowing if they will also profit from the traffic on their websites.
In this case, the affiliate partners are paid for each created lead, which in turn, is made dependent on certain actions, such as when a user fills out an online form on the respective merchant website or requests a trial version.
In this situation, the risk to affiliate partners and traders is approximately the same as ensuring that consumers are interested in the marketed product but do not have to make a final buying decision.
Affiliate partners are only involved in this model when the customer makes a transaction, and the merchant produces revenue. This model is the most popular, and the risk lies solely with the affiliate partner.
In addition to these three common models, there are, in theory, other very rarer) billing models:
In this situation, integrating an affiliate connection on the affiliate partner’s website is already being paid for. However, this model is very unusual since it cannot be ensured that users would actively see the connection and click it.
Pay by click-out
The users referred to here must not only access the merchant’s site by clicking (“click in”) but must also click on one of the providers listed to be redirected to that provider (the so-called “click out”).
This model is primarily used for coupons or related items. Here the affiliate members are reimbursed by printing on paper.
This model is also only applicable to unique goods, in particular software. Affiliate partners shall earn their commission if users install the product (for example, a demo version or a toolbar).
Compensation for Lifespan
Suppose forwarded consumers can be hired as a regular customer, for example, for a monthly tariff service or as current customers who make transactions again and again.
In that case, the commission will be charged for each new order as long as there is a contractual relationship between the consumer and the broker.
Of course, this model is the most appealing from the point of view of the affiliate partners and makes the affiliate programs of traders such as insurance firms or financial institutions with corresponding conditions especially attractive.
Affiliate online marketing with the Amazon partner program
The greatest benefit of Amazon’s associate relationship is the immense product range of the direct mail order business. According to estimates, Amazon.de offered about 229 million items in 2017, separated into separate key and subcategories.
That makes it easy for customers to browse the web marketplace and provides value for partners in the Amazon Partner Project.
For example, the Amazon affiliate’s commission shall be calculated based on the product type using the normal tariff rate.
These payments can be viewed free of charge, and the cost of your associate commission may be determined by applying the value of the consumer shopping cart.
However, they also consider whether sales made by the partner links are directly or indirectly eligible transactions. This is what Amazon measures sales that contain items from a particular product group.
For example, suppose a reader of your blog post clicks on your Amazon affiliate connection. In that case, he or she will end up in the product category “books” with a novel that you advertise on your blog as part of your online marketing affiliate.
If, though, when searching the Amazon web page, the consumer realizes that he would rather buy an action-packed video game, he would turn to the “Games” computer category and maybe buy a new “Prince of Persia” title.
Thus the buyer did not make a direct eligible purchase through your affiliate channel but made a qualified indirect purchase in another group of goods. You would also get a fee on this but a smaller commission than for eligible direct sales.
Tips For Choosing A Good Affiliate Partner
In addition to the Amazon partner network, there are also other affiliate services open to you. You should consider different factors to make the correct decision.
As an associate member, the right package would contain, first and foremost, items that you can truly get behind and that you know best.
The items must also complement your content and thus, therefore, your readers or audiences so that they are encouraged to click on some of your affiliate links.
Of course, the standard of the goods must be right. Just promote the items you will suggest to your friends with a strong conscience.
Otherwise, you risk losing faith in your culture.
So the credibility aspect is key. Choose a software whose goods you use and trust, and don’t yield to the desire to merely try to sell something-which just hurts your reputation.
Besides, the requirements set out in the partner programs can, of course, be as profitable as possible for you. Therefore the billing model proposed should be beneficial to you-i.e. It provides sufficiently large fees and spread the risks equally.
And, of course, the participating retailers should be eager to make as many profits as possible. And then, the odds are high that transactions will also be made through the partner links.