This post will walk you through the basics of affiliate marketing: what is affiliate marketing and how it works, why brands should know about affiliate marketing and how to boost affiliate programs.

What is Affiliate Marketing

Affiliate marketing is a type of performance marketing. Merchants or advertisers pay affiliates or publishers commissions when they drive a sale (or click/lead/call…). The most well-known case is the Amazon Associate Program.

Some other definitions of affiliate marketing:
“Affiliate Marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or consumer brought by the affiliate’s own marketing efforts.” ——Wikipedia

“Affiliate marketing is performance-based marketing, whereby a product or service gets remunerated for every sale, visit, or subscription sent to the merchant. Because of this performance-based component, which is the cornerstone of affiliate marketing, it is also sometimes called performance marketing. ”——Affiliate Program Management: An Hour a Day

Roles of Affiliate Marketing

There are 4 major roles in affiliate marketing

• Advertisers/Merchants/Brands
• Affiliates/Publishers/Partners
• Affiliate Networks/Tracking Software
• Customers/Users/Shoppers

How Affiliate Marketing Works

1. The merchants set up an affiliate program promoting their products/services on an affiliate network or a tracking software and add the tracking pixel on the website

2.The publishers get the tracking links and promote the merchants’ offer via blog, social media, newsletter…

3.The Customers click the publishers’ link and place an order successfully. The affiliate network generates cookies when customers click the tracking link and record the order information when the pixel is fired on the thank-you page.

4.The affiliates get commission after the affiliate networks give credit to the right one for the sale.

Why Do Affiliate Marketing

2019 Affiliate Marketing Market Size

For US
Total Ad Spend 2019 – $238.63B
Digital Ad Spend 2019 -$129.34B
Mobile Ad Spend 2019 -$ 87.06B

Global Affiliate Industry Value -$15B
US Affiliate marketing Spend -$6.8 B

Over 80% of advertisers, 84% of publishers surveyed ran an affiliate program
Nearly 90% of advertisers claim AM as an important part of their marketing strategy

Source: https://jebcommerce.com/2019-affiliate-marketing-market-size/

Type of Affiliates

There are different types of affiliates that help meet your needs.

Coupon RetailMeNot, Groupon
Loyalty Ebates, Topcashback
Niche closetsamples.com, couponmon.com
Sub Network Skimlink, Viglink
Influencer Network Rewardstyle
Cart Abandonment Yieldify, Salecycle
Search  wickfire, JWEB (trademark + bidding, PPC)
Toolbar joinhoney, wikibuy
Price Comparison pricerunner, pricespy, Idealo
Student Discount Studentbeans, UNiDAYS (verification)
Media BuzzFeed, Business Insider (editorial integrity)

Affiliate And Customer Journey

The coupon/deal/cashback affiliates work best because they are on the bottom of sale channel. If you want to work with content affiliates, your metrics should be about awarness and engagements instead of focusing on sale only. You should create affiliate marketing strategy based on your marketing goal and partner with related affiliates.

Which Affiliate Network/Software is Better

It depends on your need.

What’s your product/service? What is your budget? Which market do you want to target?

The report from Martech Record can be for reference.
Also, there are These are the Blue Book Best Cost-Per-Sale Affiliate Networks from mThink where Rakuten, Awin and CJ are the top 3 for consecutive years.

Is Affiliate Marketing a Good Fit for My Business

The answer is not simply yes or no.

You can think about the questions from the affiliate side——Why do I promote this merchant’s offer? How can I benefit from it?

If your products/services are popular, then your affiliate program can be easy to make a hit. However if you are a new brand with limited traffic on your website, then it will be challenging to boost the program.

Want to know more about affiliate marketing and affiliate program management? Fee free to comment below or contact us.

Learning Resources

Affiliate Program Management: An Hour A Day
IAB Australia_Affiliate Marketing Handbook_2020
Awin Report 2020
https://www.pepperjam.com/affiliate-marketing-guide
https://www.awin.com/us/how-to-use-awin/affiliate-marketing-advertiser-guide-2020
The Ultimate Guide to Partner Marketing