What is affiliate marketing?

Affiliate marketing meaning

Affiliate marketing is a performance-based online marketing strategy where businesses reward affiliates for each customer brought by the affiliate’s own marketing efforts. It helps increase sales and gain advertising in places that can’t be reached otherwise. Our Affiliate Marketing Guide explains how it works and why it’s valuable.

Affiliate marketing is a collaboration between advertisers (e-shops) and publishers (affiliate partners). Publishers use their online platforms to promote the advertiser’s products or services, earning a commission for each resulting order. This guide will:

• Explain how to earn income as an affiliate marketer by recommending products to others
• Offer expert advice and showcase popular affiliate programs to help you get started
• Serve as your comprehensive resource for understanding and implementing affiliate marketing strategies

Who are the affiliates?

Affiliates or Publisher are individuals or businesses who promote products or services for other companies in exchange for commissions. They can be bloggers, social media influencers, website owners, or content creators. These affiliates use their platforms to recommend products to their audience. They earn money when their followers make purchases or take specific actions through unique referral links. Successful affiliates typically have strong marketing skills and understand their audience well. They can create engaging content that drives sales.

What are merchants?

Merchants in affiliate marketing are the businesses or individuals who own the promoted products or services. They can range from e-commerce retailers and software companies to service providers and financial institutions. These merchants partner with affiliates to boost their sales. They provide unique referral links and commission structures. The merchants handle product delivery, customer support, and affiliate payments. They benefit from increased exposure and sales through their affiliate network.

What is an affiliate network?

Affiliate networks are intermediaries that connect merchants with affiliates. They provide platforms to manage affiliate programs, track sales and clicks, and handle payments. These networks offer tools for both parties. They simplify the process by aggregating various merchant offers. This allows affiliates to find and join multiple programs easily. They also provide reporting, analytics, and support services. Popular affiliate networks include CJ Affiliate, ShareASale, and Rakuten Marketing. These networks earn money by taking a cut of the commissions or charging fees to merchants and sometimes affiliates.

Who are the consumers?

Consumers in affiliate marketing are the end-users who purchase products or services through affiliate links. They’re typically individuals browsing content online, such as blog posts, social media, or review sites. These consumers may be looking for product information, comparisons, or deals. They often value the opinions of content creators they trust. While consumers generally don’t pay extra for using affiliate links, their purchases generate commissions for the affiliates who referred them. The consumer’s buying journey is crucial to the success of affiliate marketing campaigns.

Affiliate Marketing Guide: Types of Affiliate Marketing

Affiliate marketing is a dynamic, performance-based strategy where individuals or companies (affiliates) earn commissions by promoting products or services for other businesses. This mutually beneficial arrangement allows businesses to expand their reach while providing income opportunities for marketers. The affiliate marketing landscape encompasses three primary types, each with its own unique approach and benefits:

Involved Affiliate Marketing

Involved affiliate marketing is characterized by affiliates who create content that includes reviews or demonstrations of the products they promote. This type of marketing relies heavily on personal experience and genuine recommendations, which can build trust with the audience. Affiliates in this category often provide detailed insights into the product’s benefits, leading to higher conversion rates due to their established credibility

Key Characteristics

• Personal Experience: Affiliates have firsthand knowledge of the products.
• Trustworthy Source: Their recommendations are seen as reliable.
• Active Engagement: Affiliates create content like reviews, tutorials, or demonstrations.

Benefits

• Higher Conversion Rates: Trust leads to more sales.
• Long-Term Relationships: Affiliates build loyalty with their audience.
• Enhanced Credibility: Personal endorsements strengthen authority.

Examples

• A fitness blogger recommending supplements they use.
• A tech reviewer showcasing gadgets they’ve tested.
• A beauty influencer demonstrating skincare products they trust.

Related affiliate marketing

In this method, affiliates focus on products or services that resonate with their established audience. These marketers have typically invested time in building a following through various content platforms like blogs, video channels, or social media. Their status as trusted voices in their niche can make their recommendations particularly impactful.

Key Characteristics

• Relevance: Products align with the affiliate’s content (e.g., a fitness blogger promoting supplements).
• Established Audience: Affiliates have built trust with their followers through blogs, YouTube, Instagram or other social media.
• Credibility: Knowledge of the niche enhances their authority.

Benefits

• Higher Conversion Rates: Trust leads to increased sales.
• Easier Promotion: Familiarity with the affiliate’s expertise simplifies selling.
• Collaboration Opportunities: Affiliates can form partnerships with brands for mutual benefit.

Unattached affiliate marketing

This approach involves affiliates who act as general advertisers, not necessarily connected to specific brands or niches. They might promote a diverse range of products to various audiences. These marketers often utilize paid advertising on social platforms and search engines to reach potential customers.

Key Characteristics

• No Personal Experience: Affiliates do not use or endorse the products.
• PPC Focus: Traffic is generated through paid ads on platforms like Google and Facebook.
• Low Commitment: Easy to start without needing to build a brand or audience.

Advantages

• Accessibility: Anyone can participate without extensive knowledge.
• Quick Setup: Fast to launch campaigns without content creation.

Disadvantages

• Trust Issues: Lack of personal endorsement can lead to skepticism from consumers.
• Higher Risk of Failure: Lower conversion rates in saturated markets due to minimal authority.

Each of these approaches has its own strengths and can be effective depending on the affiliate’s skills, resources, and target market.

How affiliate marketing works

Friends of Shakespeare published a collection of his plays, the First Folio, after his death. In the preface, they wrote: “Spread this work far and wide, and tell those who like it to spread it far and wide”.

However, to understand the basics of affiliate marketing, we need to add an incentive – a reward – to that recommendation. If we go back in time, the royal court ladies might have recommended whom they had their dresses made for the next ball. The seamstress would then receive an agreed-upon reward for her new customers.

However, the advent of the internet made affiliate marketing as we know it today possible. The internet allows us to accurately measure all the essential KPIs, such as the number of conversions (sales), the number of clicks, or the total sales generated. Based on this, an appropriate reward for the affiliate is calculated.

Own affiliate programme vs. affiliate network campaign

The first affiliate programme was set up by the owner of a flower and gift shop. He paid a reward to affiliates who brought him traffic from their websites.

Today, e-shops have the option of setting up their own programme or using an alternative choice: opening an affiliate network campaign.

The advantages of an affiliate network are:

• Ready-made technical solution.
• Connection to an extensive database of publishers and professional support for both parties.
• Since the networks manage a number of affiliate campaigns, they can use their experience to help the advertiser set the terms of their campaign in a way that benefits both the advertiser and the publisher.
• A good affiliate network should also bring new ideas for strategic collaboration with individual partners and advice on optimising the campaign to its full potential.

How does it work?

Each campaign and publisher is assigned an ID in the affiliate network, which creates unique affiliate links. The system can track which publisher the customer came from and the order value they placed using a tracking code on the advertiser’s website. It then allocates this to the customer along with the calculated reward.

In affiliate marketing, it’s very important to understand the revenue / conversion funnel. This funnel shows the customer’s path from first becoming aware of a product or service to making a buy. Affiliates try to move potential buyers through this funnel by using targeted content at each stage.

For example, informational articles are good for people who are just starting to learn about a product, while comparison reviews are better for people who are almost ready to buy, and special discount offers are best for people who are ready to buy. By looking at this funnel, affiliates can figure out where they can have the most impact on the customer’s trip and make their marketing more effective by doing their own conversion funnel analysis.

Affiliate marketing compensation models

1. CPS (cost per sale): Affiliates receive a percentage or fixed amount for each purchase their referrals make. This is widely used in e-commerce partnerships.
2. Lead Generation Payouts (cost per lead): Compensation is provided when an affiliate brings in qualified potential customers, often through form submissions or sign-ups.
3. Action-driven Rewards (per action): Affiliates earn when referred visitors complete specific tasks, such as requesting information or subscribing to newsletters.
4. Click-through Payments (per click): Some programs, particularly those focused on increasing visibility, pay for each click on affiliate links.
5. Installation Bonuses (per install): Popular with software and app companies, this model rewards affiliates for each successful download and installation.

Each model aligns with different business goals, from direct sales to brand awareness, offering various opportunities for affiliates to monetize their efforts.

Who is a publisher?

A publisher is a person or company that promotes the products/services of selected e-stores. They usually do this using their own website or social networks. However, they can also use publicly available space on the internet (e.g., Google Shopping, Facebook Ads, etc.) as long as the affiliate campaign allows it.

• Review sites – provide customers with new product information and share their experiences through reviews or product comparisons. They answer customer’s questions, e.g. “What will be the best turntables in 2024?
• Blogs and magazines – personal or topical websites with a relevant group of readers who share the same interests. For example, interior design magazines, books or sports portals.
• Product Catalogues – sites that collect products in a structured catalogue where customers can search, filter and compare products from different e-shops.
• Cashback portals – motivate customers to buy by refunding the amount they spend on an order. The portals share their commission directly with the customer or with a charity of their choice.
• Coupon sites – work with customers who are looking for bargains. They collect discounts and promotions to motivate customers to buy from you before competitors. They can persuade a customer to try a new e-shop, complete a purchase or increase the value of an order.
• Social networks and influencers – content creators on social networks who are followed by people with similar interests. They can influence their followers’ opinions and purchasing decisions based on their relationship with them.
• CSS Partners – advertise products on the Google Shopping platform to help advertisers rank higher in search results than their competitors. They can also be used alongside your own Google Shopping campaigns.
• PPC partners – drive paid traffic to the advertiser through paid Google Ads, Facebook Ads, etc.

Affiliate Marketing Guide: How to Start Affiliate Marketing

1. Identify Your Niche : Begin by selecting a focus area that aligns with your interests or expertise. This could be a passion you’re knowledgeable about or a market segment you’ve identified as potentially profitable through audience analysis. Your chosen niche should allow you to create authentic, valuable content for your target audience.
2. Select Your Platform and Channel: Choose a marketing channel where you feel comfortable engaging with your audience. This could be a blog, social media platform, or video sharing site. Then, decide on the type of content you’ll create, such as product reviews, comparison guides, or lifestyle content that incorporates product recommendations.
3. Find the Best Affiliate Marketing Programs: Explore various affiliate networks and programs to find products or services that resonate with your niche and audience. Look into popular networks or directly approach brands you admire to inquire about partnership opportunities. Always review the terms of service for any program you’re considering.
4. Curate Your Product Selection: When choosing products to promote, prioritize items that provide genuine value to your audience and align with your brand. Consider factors such as relevance to your niche, your personal experience with the product, and its suitability for your chosen marketing platform.
5. Create Engaging Content: Develop high-quality, authentic content that showcases the products you’re promoting. Focus on providing honest insights and helpful information to your audience. Remember, building trust is crucial for successful affiliate marketing.

By following these steps, you can establish a solid foundation for your affiliate marketing efforts. Remember, success in this field often requires patience, consistency, and a genuine commitment to serving your audience’s needs.

Starting an Affiliate Campaign

What do I need to start an affiliate campaign?

As long as the advertiser meets the basic requirements, the affiliate network will help them to launch a campaign.

Each e-shop has only one affiliate campaign, meaning publishers can promote products/services from that e-shop. In the campaign, the conditions and permissions for affiliates are written down, such as:

• Commission amount. It should be incentive-based for publishers but sustainable for the e-shop based on margin, overlap with other marketing channels and discounts
• The length of the cookie during which the affiliate’s sales are recorded
• The types of publishers the advertiser wishes to work with
• The materials available in the campaign (product feed, banners, coupons, etc.)
• The time it takes to evaluate or approve orders (when the e-shop is sure the order cannot be cancelled or returned)

To realise the true potential of your affiliate campaign as soon as possible, it is advisable to involve all types of partners and not underestimate the power of first impressions – offer a detailed campaign description and motivating conditions from the start.

Campaign optimisation

In affiliate marketing, campaign optimization is the process of regularly monitoring and changing strategies depending on key performance indicators (KPIs). Thereby improving the performance of marketing campaigns. Here is a quick guide on how to maximize affiliate marketing campaigns.

Data Collection and Analysis

It typically takes about six months to gather sufficient data to evaluate campaign performance.

Important issues consist in:

• Are partners attracted to the campaign?
• Are affiliates actively making sales?
• Which kinds of publishers are participating, and how effective they are?

Key Performance Indicators (KPIs)

Track crucial KPIs like:

• Number of sales – show general success.
• Measuring interaction with affiliate links, click-through rate (CTR)
• Conversion Rate – share of clicks that generate revenue.
• Assessed relative to campaign expenses, return on investment (ROI) evaluates profitability.

Relationships and communication and management

• Maintain open communication with affiliates.
• Steer clear of regular, significant changes in campaign conditions since this could cause affiliate disengagement.
• By helping affiliates with their marketing initiatives, create smart, long-term alliances.

Engagement with affiliates

• Closely coordinate successfulaffiliates to maximize their marketing plans.
• Reward best performers and provide tools to enable their success.

By concentrating on these elements, companies may improve their affiliate marketing efforts, therefore making sure they are appealing to partners, profitable for affiliates, and finally effective in increasing sales.

Pros and cons of affiliate marketing

Affiliate marketing has seen significant growth, with industry spending reaching impressive figures in recent years. It offers an accessible entry point for aspiring entrepreneurs with minimal upfront costs. However, before jumping in, it’s important to weigh the pros and cons of affiliate marketing.

Pros:

1. Streamlined Operations Affiliates can concentrate on marketing, while leaving complex tasks like product creation and shipping to the retailer.
2. Low Initial Investment Most affiliate programs are free to join. Once you’ve built an audience, you can start earning without significant financial risk.
3. Growth Potential Successful affiliates can increase earnings by expanding their product range, negotiating better terms, or reinvesting in audience growth.

Cons:

1. Gradual Progress Building a substantial following and influence takes time and consistent effort. It often requires years of regular content creation before generating steady income.
2. Restricted Autonomy Affiliates must adhere to program guidelines, which may limit promotional strategies. Additionally, the commission-based model means earnings are a fraction of each sale.
3. Negotiation Skills Required While successful affiliates may be able to secure better terms, such as higher commissions or exclusive promotions, this requires effective negotiation with partner companies.

Affiliate marketing can be rewarding, but it demands patience, creativity, and strategic thinking to overcome its challenges and capitalize on its opportunities.

Myths about affiliate marketing

Myth 1: The more affiliate networks, the better the earnings.

In affiliate marketing, the well-known Pareto principle applies – 20% of publishers bring 80% of orders to a campaign. The quality of affiliates is more important than the number of affiliates, and most high-performing publishers are on all the major affiliate networks.

Launching a campaign on multiple networks rarely results in more sales. Instead, performance is redistributed according to which network certain affiliates prefer. As a result, it is more challenging to monitor campaign performance and identify the best-performing affiliates for each relationship. It is more difficult to optimise the campaign, and there is a risk of double commissions as an order may be assigned to a publisher in both networks.

Instead of opening a campaign in another network, it is advisable to work actively with affiliate managers, respond to their recommendations and suggestions, support the publishers involved and establish individual cooperation with them.

Myth 2: An affiliate campaign will bring new sales to the advertiser as soon as it is launched

While it’s a matter of seconds after launching a PPC campaign when we see the first results in Google Ads, with affiliate marketing, it can take several days to weeks.

Setting up a campaign with a publisher involves a process: studying the campaign, analysing the terms and conditions, preparing documents, gathering information, preparing the e-shop profile, articles, etc.

Therefore, the actual turnaround time to see if the campaign interests publishers and what performance they can deliver is usually 6-9 months.

Myth 3: I can turn an affiliate campaign off and on at any time

Publishers spend a lot of time preparing a campaign and, therefore, expect a return on their investment in revenue.

While suspending an affiliate campaign may seem like a good cost-saving solution, it means that the advertiser loses a lot of the advertising content they have placed in the campaign, which is no longer profitable for them at that moment.

Publishers will replace your campaign on their sites at that point and may not be open to continuing to work with you if you decide to rerun the campaign, as they will see it as unstable.

The affiliate relationship is a partnership between the advertiser and the publisher, and it should always remain fair. Therefore, an affiliate campaign should always be viewed in the long term.

Additional Affiliate Marketing Resources

Best Affiliate Marketing Tools / Affiliate Tracker

• ShareASale is an affiliate network that connects publishers with marketers. It has an easy-to-use interface and different ways to pay publishers. It’s a great place for new ad marketers to start.
• Tapfiliate: This tool automatically adds affiliates and keeps track of them. It’s great for eCommerce companies. The first plan costs $89 a month.
• BeMob: Offers tracking for conversion statuses and traffic loss. Provides a free trial with paid options based on event volume.
• Post Affiliate Pro is known for having a lot of features and working with more than 200 platforms. It’s good for medium to big businesses that want to run their affiliate programs well.
• CPV Lab: A powerful ad and affiliate tracker designed for CPA marketing. Offers deep tracking capabilities and integration with major traffic sources.
• Voluum: A leading cloud-based tracker that provides real-time data tracking.
• Everflow: This software is great for established online stores because it has advanced tracking features like tracking coupon codes and click-to-conversion reports.
• LeadDyno: Its main purpose is to promote partner programs, and it offers many marketing tools and advanced tracking options. The price starts at $49 a month.
• Raptive (formerly AdThrive): This tool helps affiliates get the most out of their ads by improving click-through conversion rates with data-driven insights.
• Kochava: Combines affiliate tracking with mobile analytics.
• FunnelFlux: Visualizes conversion funnels, showing where users drop off.
• Affiliatly: Integrates with platforms like Shopify to track sales linked to affiliates.
• Grammarly and Hemingway are not typical affiliate tools, but they can help you write better content, which can increase interest and sales in affiliate marketing.
• SEMRush and Ahrefs are both strong SEO tools that can help you find keywords and analyze your competitors, which is important for getting people to click on your affiliate links.

Best Affiliate Marketing Courses

• Highly recommended is The Affiliate Lab by Matt Diggity, which focuses on SEO and useful strategies to help you build great affiliate sites. It goes over everything, from choosing a niche to writing material and building links.
• Author Authority Hacker wrote The Authority Site System: This course is for people who are just starting out. It shows you how to make money with affiliate sites step by step, with examples and themes.
• Income School – Project 24: This course is for content makers and teaches them how to build affiliate sites and make money from them in a way that will last.
• Franklin Hatchett’s Savage Affiliates: This course, which is known for being easy on the wallet, teaches newbies the most important things they need to know to start affiliate marketing.
• YouTube Affiliate Marketing Mastery 2.0: This course focuses on creating video content and passive income techniques to teach you how to use YouTube for affiliate marketing.
• Blog Growth Engine: This program teaches you how to use blogging to make affiliate income. It includes keyword research, content methods, and ways to get more people to your blog.

Free / Best Affiliate Marketing Software

• Refersion is one of the best platforms for handling affiliate programs, and it has powerful tracking and reporting tools. It works well with e-commerce sites like WooCommerce and Shopify. However, the price starts at $89 per month, and it’s famous for making affiliates money.
• Effects: This cloud-based platform automates programs for affiliate and influencer marketing and comes with a full set of tools. Because prices are custom and not shared with the public, it works better for bigger companies.
• Tapfiliate: This service is great for online stores because it lets you track and report on sales in more detail. The Pro plan costs $149 a month, while the Essential plan costs $89 a month.
• Post Affiliate Pro: This platform lets you handle all parts of your affiliate program and is known for having a lot of features. It works with more than 200 content management systems and comes with a strong help system. Details about prices can be found by asking.
• LeadDyno is a service that offers marketing tools for agents and costs $49 a month. It has some tracking tools, but not as many as other platforms’ more advanced control tools.
• Rewardful: This app is designed to work well with payment processors like Stripe and Paddle, which makes it easy to set up partner programs for SaaS companies.
• Awin is a world platform that connects advertisers with a huge group of publishers. It has a wide range of partner networks and flexible fee structures. Custom quotes can be used to get prices.
• Everflow: This software keeps track of sales data from many sources and has features like tracking coupon codes to correctly credit affiliates for sales.

Key Takeaways: Affiliate Marketing Guide

• Affiliate marketing is a performance-based strategy where individuals earn commissions by promoting products or services for businesses.

• Three main types: Involved (personal experience), Related (niche-focused), and Unattached (general promotion).

• Key players: Affiliates (promoters), Merchants (product owners), Affiliate Networks (intermediaries), and Consumers.

• Benefits include low initial investment, potential for growth, and streamlined operations.

• Challenges: Gradual progress, restricted autonomy, and need for negotiation skills.

• Success factors: Choosing the right niche, creating valuable content, and building trust with your audience.

• Essential steps to start: Understand basics, select a niche, join programs, create quality content, promote, and monitor performance.

• Various compensation models exist, including cost per sale, lead generation, and click-through payments.

• Campaign optimization is crucial, involving data analysis, tracking KPIs, and maintaining good relationships with affiliates.
• Numerous tools and resources are available to support affiliate marketing efforts, including tracking software and educational courses.

Frequently Asked Question