How Does Affiliate Marketing Work?
It is important to have some ground knowledge and perspective before moving into what affiliate marketing is and how it works.
How Affiliate marketing works isn’t exactly a tough concept to grasp though it is of relevance to have an understanding of what affiliate marketing is.
WHAT IS AFFILIATE MARKETING?
Affiliate marketing which is often times referred to as “channel” is a marketing channel, framework or model that makes it possible for a partnership to occur between companies or individuals, known as partners, affiliates and publishers, so as to follow up and measure their individual performances efficiently and with low costs.
In summary, you, as an individual, are an affiliate or publisher. Through your affiliate program, you can use your marketing skills to refer prospective customers to the product you are to market. The job of the publisher is to drive high leads to the business owners and get to be paid for the actual outcomes. Whether the person you referred gets to purchase the product based on your recommendation, you receive your commission.
THE KEY PLAYERS IN THE AFFILIATE MARKETING MODEL
Affiliates
Affiliates are otherwise referred to as partners or publishers. They are generally referred to like a brand’s marketing partners. Affiliates can either be a company or an individual that aids in promoting a company or a brand. They are most times in the same or very similar industry with the company they are promoting.
Affiliates are tasked with the responsibility of promoting a service or product by making use of posts, videos and other marketing and promotion schemes. Affiliates can either be one of the following: active social media posters, shopping sites, mobile apps, mass media sites, app-to-app marketing platforms, bloggers, content sites, etc.
Promotion of a company by means of putting up ads via text links, search box and banners is also done by affiliates. The affiliates get paid whenever a lead is created.
Customers
The customers are the general public but most importantly, the selected audience that the affiliate target to either sign up for a newsletter, submit a lead form, test a service or even make a purchase.
Affiliate Network
The affiliate network is tasked with the responsibility of taking care of all the payments, tracking and reporting to the affiliates. Apart from making provision for the tracking technology, a few affiliates also provide service management. The companies are at liberty to pick any affiliate network of their choice. Some companies get to choose multiple companies within the affiliate network.
Commission Junction, ShareASale, and ClickBank are examples of popular affiliate networks.
Software as a Service (SaaS) Platform
The Software as a Service (SaaS) platform is mainly concerned with the technological section of the affiliate marketing program. It provides companies with reporting, payments, and tracking. It should, however, be noted that the SaaS platform doesn’t serve the capacity of providing management to affiliate programs. They don’t also offer companies access to an affiliate network.
Agency
The agencies play the role of taking care of or managing the day to day strategy and operations of the brand. This includes partner recruiting, partner relationships amongst a few others. The agencies directly work with the affiliate network or affiliates.
Companies
A company is otherwise referred to as the retailer, merchant, brand or advertiser. In generating more sales and leads, the companies run a partnership with the affiliates. The services that these brands offer includes B2B, telecom, travel, gaming, broadband, subscription, retail, financial services, e-commerce, etc.
Is it the companies that later provide payments to their affiliates for their role in helping them to reach their goal. This payment can be done in Lead Per Lead, Pay Per Sale, or Pay Per Click. These forms of payment are known as performance marketing.
This is more economical to the company than the Pay Per Click advertising, where a lot of money is being invested but without getting any feasible outcomes in terms of sales or leads in the end.
HOW DOES AFFILIATE MARKETING WORK
An affiliate partnership is a multi-layered structure that has a foundation of genuine relationships and transparency, not just transactions.
The goal of any affiliate program is to create a framework where both the affiliate partners and the brands they work for gain from their relationship. Below are steps on how an affiliate program drives your sale:
-
The affiliate partner begins by promoting a brand’s service or product on their website
-
When a consumer gets to click on the brand’s promotion on the affiliate’s website. A cookie is then stored on the consumer’s browser. When this is done, the window for the SaaS Platform or affiliate marketer to follow up on the consumer’s progress from the affiliate’s website is now opened.
-
The consumer is then immediately redirected to the website of the brand.
-
The consumer then finally get to purchase a service or product from the brand
-
The affiliate is then paid a commission automatically, for making a sale possible. The network or SaaS platform makes this sale.
PERFORMANCE-BASED MODELS THAT ARE USED IN AFFILIATE MARKETING
Below are the performance-based models that are used in affiliate marketing;
-
Pay Per Lead or PPL- This is referred to a situation where companies are required to pay a fixed sum or commission for every service generated. This service could be in the form of Short Survey, Online Form Submission, Free Trial and a couple of others
-
Pay Per Click or PPC- This is a situation where an affiliate get paid in full for all the effective clicks he or she generated regardless of whether it made enough leads or sales
-
Pay Per Sale or PPS- A percentage of all qualified sales are paid by the company in this model. One of the commonest of the Pay Per Sale program is the Amazon Associates, where an earnings of 15% is made by the publisher, although this depends on the products sold.
Conclusion
How does affiliate marketing work? It’s as explained above, grasping the content of this article will answer most of your questions concerning things to know to get started with affiliate marketing. If you’re good at it, indeed, many companies or ventures will seek you out. Moreover, you can as well use the knowledge to start or develop your own products.
