Affiliate Marketing

Explore the Strategy of Affiliate Marketing

affiliate marketing

Imagine yourself creating a small business, and looking to spread the word about your new products and services. Where will you advertise? Who will help carry your message?

Avenues like the Internet have provided businesses more opportunities to connect with a high variety of consumers. Unfortunately, the Internet is also an extremely "noisy" environment, where consumers are pelted with advertisements from a variety of directions from untrusted sources.

Hoping to cut through some of this noise, many businesses enter into affiliate partnerships, where a website advertises the business for commission. These tactics allow businesses to enter into partnerships with trusted sources who market the business. Instead of paying a set price for a certain ad period, companies pay by performance for affiliate campaigns, giving many newer businesses a cheaper alternative to traditional marketing routes.

Who employs affiliate marketing?

Why Use Affiliate Marketing?

  • Get quick access to huge audiences
  • Low risk: If the advertising doesn’t bring in sales, it costs nothing
  • Website publishers volunteer to participate, instead of having to be recruited

Affiliate marketing tactics are used most frequently by online retailers.

Amazon.com is one of the biggest names in affiliate marketing (See also E-Commerce Marketing). Its program was one of the first major affiliate marketing campaigns developed, and became a model for other companies’ subsequent campaigns. The advent of Google and LinkShare enabled affiliate marketing to extend to a higher variety of website publishers at all levels of traffic. Thus, a blogger might serve as an affiliate for a multi-million dollar company.

Because of the affiliate website’s commission, the profit margin on products sold is lower, but total volume of sales tends to be higher. Products that particularly benefit from high exposure, such as books and music, are good candidates for an affiliate marketing strategy (See also Product Marketing). Entertainment, and particularly gaming, has also experienced growth through such marketing. Other business sectors that are growing through affiliate marketing include finance, travel, and mobile-phone sales.

For what kinds of customers is affiliate marketing effective?

For people to respond positive to affiliate marketing strategies, they must feel comfortable with making purchases online. For younger generation(s), this may include nearly everyone; however, many older adults still prefer to purchse goods or services in-person at brick and mortar stores. (See also Internet Marketing)

The customers most impacted by affiliate marketing are those who already shop online. Fortunately, their online shopping behavior drives website publishers to structure and create websites to meet those demands. These include (but are not limited to):

  • Comparison-shopping websites and directories
  • Coupon and rebate websites, which collect and advertise special promotions
  • Niche-market websites, which often provide product reviews
  • Blogs and vlogs (video blogs) with subjects related to your product
  • Websites which use adbars with dynamic content, generating ads relevant to page content

Customers who shop online have an easy and immediate means to research products and compare prices. Any affiliate marketing strategy must take into account that its customer base will tend to be more informed about its products—and those of its competitors.

How is an affiliate marketing campaign developed?

When implementing an affiliate marketing campaign, businesses first must ensure their products are competitive in the marketplace. Many affiliates—such as comparison shopping websites, or discussion websites devoted to particular industries—readily offer visitors information about many other products on the market.

Crucial Elements of Affiliate Marketing

  • Awareness of competition
  • Acquiring the right affiliates
  • Tracking incoming data (particularly sales conversions) from affiliate websites
  • Maintaining the program, correcting issues and abuses

Businesses then find website publishers to enter into affiliate partnerships with. Established affiliate networks already have large pools of publishers, so connecting with one network automatically connects a business with a significant number of potential affiliates.

To take advantage of such volunteers, a business should also have affiliate program information available through a link on its home page. Businesses must be careful to ensure affiliates won't earn them a poor reputation if they engage in negative practices, such as spamming users to increase their commission.

Effective website design is fundamental to making any Internet marketing campaign work. Thousands of affiliates may increase web traffic, but if the landing pages aren’t attractive, a business won't convert these visitors into paying customers. Internet shoppers in the process of researching and comparing are likely to spend only seconds summing up a page.

Finally, an effective affiliate marketing campaign requires maintenance. This involves tracking data from thousands of affiliates and responding to issues—such as poor affiliate behavior -- that must be eliminated. (See also Closed Loop Marketing) Maintenance also helps businesses identify which websites bring in the most traffic, so they can adjust accordingly.

What career titles work with affiliate marketing strategies?

Internet Marketing Manager

What do they do?

  • coordinate a company’s internet marketing campaigns, including affiliate and social media campaigns
  • identify online marketing opportunities, including where to place advertising and recruit affiliate partners
  • establish standards for the expansion of online business—such as minimum standards for affiliates (for example, requiring them to avoid unethical tactics such as “cookie stuffing”)
  • oversee the daily operations of the marketing staff, as well as the company relationship with affiliates
  • work with company’s website development team, ensuring that affiliate information is made available from the front of the website

What type of salary should I expect?

  • Internet Marketing Manager
    Average annual pay: $92,000
  • Affiliate Manager
    Average annual pay: $66,000
  • Account Executive
    Average annual pay: $98,530

Source: Bureau of Labor Statistics, 2012

Internet marketing managers should have at least a bachelor’s degree (often in marketing, advertising, or business management) and substantial experience in online commerce (including advertising and sales). They must understand how to leverage social networking sites, viral marketing, and affiliate marketing strategies to ensure success.

Affiliate Manager

What do they do?

  • identify websites and online resources where they can market their company’s products
  • work with companies to establish mutually beneficial cost-per-sale agreements
  • create online marketing tools, including sales copy and advertising banners
  • manage customer and affiliate retention, and verify that affiliates are conforming to the company’s quality and ethical standards
  • field incoming communications on affiliate programs

Affiliate managers need at least a bachelor’s degree (typically in marketing); and experience with online commerce, including sales, advertising, business-to-business marketing, and affiliate marketing. Education preparing them for this career includes classes in marketing, market research, statistics, microeconomics, consumer behavior, and internet law.

Account Executive

What do they do?

  • sell pay-per-click advertising
  • review and communicate monthly analytics with advertisers
  • identify new revenue opportunities with affiliates, and thus expand range of sales
  • visit with clients—either in person, over the phone, or through webinars

Account executives need at least a bachelor’s degree, typically in marketing; and five-plus years’ experience with internet commerce—particularly sales and advertising. Education preparing them for this career will include classes in marketing, market research, and computer science.

How can a marketing school help you in this field?

Effective marketing involves getting a clear, persuasive message out to the right audience. In order to do that, you not only have to know how to communicate, but also how to identify, reach, and respond to your target audience.

Marketing programs emphasize communication and analysis. Communications classes will help you not only to develop persuasive skills, but also to understand linguistic pragmatics (how language is used differently depending upon the context). Internet communication, for example, involves different expectations and options than face-to-face communication.

Meanwhile, marketing classes will help you to understand markets as a whole, as well as how smaller market segments function. You’ll learn how to identify a target market, and collect data about that market’s needs, as well as analyze how it responds to different communications.

Coursework in statistics and in economics will further develop your ability to analyze markets, and seize opportunities. Finally, classes on internet business and e-commerce will give help you develop the knowledge and skills required to successfully engage in internet marketing, including affiliate programs.

To learn more about what a marketing program can do for you, request information from schools with degrees in marketing.

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