What is Affiliate Marketing?
Build the love with your affiliates
What is Affiliate Marketing? The best way to understand affiliate marketing is to think of sales agents, or if you’re a manufacture/developer/distributor, an extended sales team.
Companies have always used sales agents to sell their products. These, in return for a success based commission, have charged anywhere up to 20% as their slice of the action. The big advantage with agents, or an external sales team, is that they are not on the pay-role, usually stimulate sales and spread the word, and can be further incentivised when sales need a push.
The downside is of course that sales agents can be fickle, usually are not so committed to a company, can move their allegiances quite quickly and don’t have the investment in a product, or service. They are in effect hired guns, looking for the opportunity to make some money.
And it’s the same with affiliate marketing management. An affiliate is a sales agent, they will sell your products, or services, on their website in return for a commission (which can vary from as low as a few per cent, to nearer 40%). If you want an idea of how much commissions are worth, just look at the price of the product, or service on offer.
Small ticket items will carry small commissions, because there isn’t the value in them to share out a large commission. Think of a ferry company selling tickets for around £50 – should you push a sale their way, it will likely earn you around 3%, or £1.50, so if you’re going to make some money, you have to sell a load.
Those which carry the largest commissions are the larger ticket items which can be harder to shift and move out the door in lower volumes. Take PPI Claims which reached a peak some years ago. Certain claims companies were offering affiliates who introduced a viable lead a fee of £500. Big money, but the competition to harvest these leads and turn them into leads was intense.
The other thing to consider is exactly what you are being rewarded for. The days of the click-per-lead deal (CPL), when shovelling traffic to another site was enough to get big rewards, are long gone. Nowadays its click-per-acquisition (CPA) which are the norm – in other words, only affiliates which introduce a sale get paid out.
What Does An Affiliate Want?
To put it crudely, money. Affiliates are there to earn cash from deals – they are not there to love you, or your website. They make their money from sealing as many deals as possible.
A common affiliate has a popular website and some digital marketing ability which means they have active traffic coming to their site which can be sent elsewhere.
Affiliates like big brands, high volumes, high commissions and good payment terms. They have to invest in their own sites, so a decent return is essential.
It can be an uphill struggle if you intend to attract affiliates for a new product, or an unknown brand, or low commissions, or low volumes.
The way to excite them is to encourage them to see the product as niche, or with a high potential, and then build a deal around that. If you want to be tight, forget it. You have to sell the product, or service to the affiliate. You have to excite them and get them on board with decent money, even if you have to net-out your returns in the early days. It’s far better to invest in an affiliate, seeing them as a partner which can grow, than trying to screw them from day one.
How to Manage an Affiliate Campaign
There is no great secret to managing affiliate marketing campaign, but you do have to have the attitude that they are there to be nurtured and grown. The more they do for you, the more money you will earn. So see affiliates as colleagues, not as a necessity.
The more you communicate with your affiliates the better. Ensure that you have them organised into groupings which deliver the best results. Identify your big sellers, those that could be big sellers and those that never sell a thing. Each one of these groups requires a different approach to how you deal with them. And make sure you have a tiered commission structure, which means that the best ones get the best support and financial deals.
Having affiliates is a two-way street and the more you put in, the more you will get out of the partnership.
Need to know more about what is affiliate marketing?
If you need to develop an affiliate marketing channel and need to find out more about what is affiliate marketing, simply contact us or call us on 0203 286 5639