Affiliate Marketing in 2023 FREE Guide for Beginners
The term "affiliate marketing" also refers to an entire industry in which there are a number of specialized companies and individual professionals who implement this form of Internet marketing in all its diversity.
It can also include affiliate networks, affiliate program managers and various types of single partners (freelancers) who have in their arsenal many methods for promoting the goods and services of their advertisers.
Affiliate marketing overlaps to some extent with other online marketing techniques as affiliates use the same methods as most direct online sellers. These methods include SEO Email marketing, contextual and banner Advertising ect.
Affiliate marketing - if we mean by this term the use of a site to redirect traffic to another site-is the stepson of online marketing. Due to its complexity as a method it loses in popularity to SEO or E-mail marketing.
Successful participation in an affiliate program is a very time-consuming process that requires certain knowledge and strength. However partnerships continue to play a major role in E-commerce marketing strategies.
For many webmasters, affiliate programs often become a trial step towards the first earnings in the network and open the way to other branches of Internet marketing. But at the same time, there are few professional partners for whom participation in the PP becomes the main and significant income.
Affiliate marketing for an advertiser is a good opportunity to automate a marketing campaign. The advertiser gets access to his target audience the work with which lies with the webmaster.
As a rule affiliate programs offer rich tools for advertising campaign analytics and tracking. The advertiser can test different design options different types of traffic and ways to reach the target audience.
Dominant reward methods
Eighty percent of affiliate programs today use revenue sharing or pay per sale (PPS) as their reward method, nineteen percent use cost per action (CPA) and the remainder use other methods such as cost per click (CPC) or cost per thousand impressions. (CPM) or views (CPT) or a hybrid model that is a profitable combination of CPA and Revshare.
Other reward methods
In more mature markets less than one percent of traditional affiliate marketing programs today use CPC and CPM. However these compensation methods are widely used in media and contextual advertising.
CPM
requires a publisher to place an ad on their website and show it to page visitors in order to earn a commission. PPC requires one additional step in the conversion process to generate revenue for the publisher.
The visitor must not only be aware of the ad, but must also click on the ad to visit the advertiser's website.
CPC
was more common in the early days of affiliate marketing but its use has decreased over time due to click fraud issues very similar to the click fraud issues modern search engines face today.
PPC advertising programs are not included in the statistics relating to reduced CPC usage as it is not clear if PPC advertising can be considered affiliate marketing.
All of these models have declined in mature E-commerce and online advertising markets. Yet they still predominate in some emerging industries.
China is one example where affiliate marketing is clearly not the same model in the West. Many partners receive a flat "Cost Per Day" fee, and some networks offer CPC or CPM.
Performance / affiliate marketing
In the case of cost per CPM/click, the publisher does not worry about whether the visitor is a member of the audience that the advertiser is trying to attract and is able to convert , because at that point the publisher has already earned his commission. This leaves great risks or even losses to the advertiser if the visitor cannot be converted.
Cost Per Action/Selling Methods requires that the referred visitors take more action than just visit the advertiser's website.
It is in the partner's interests to send the most accurate traffic to the advertiser in order to increase the possibility of a conversion. The risk and loss is shared between the partner and the advertiser.
Affiliate marketing is also referred to as "performance marketing" because of the way in which sales people are typically rewarded. Such workers typically earn a commission on every sale they close and sometimes receive performance rewards for exceeding targets.
Affiliate individuals do not work as an advertiser for the product or service they are promoting, but the reward models used for affiliate marketing are very similar to those used for advertisers' internal sales staff.
The phrase “Affiliates are your extended sales force for your business” which is often used to explain affiliate marketing is not entirely accurate. The main difference between the two is that affiliate marketers have little to no influence on a possible prospect in the conversion process if that prospect is directed to the advertiser's website.
However the advertiser's sales team has control and influence until the prospect either (A signs the contract or B) completes the purchase.
Multilevel programs
Some advertisers offer tiered programs that distribute commissions to a hierarchical referral network of subscribers and sub-affiliates. In practice publisher "A" subscribes to a program with an advertiser and is rewarded for the agreed-upon activity carried out by the invited visitor.
If Publisher "A" engages Publishers "B" and "C" to subscribe to the same program using their registration code all future activities performed by Publishers "B" and "C" will incur an additional fee (at a lower price) for publishing house "A".
Two-tier programs exist in a minority of affiliate programs most of them are just one level. Referral programs beyond two-tier resemble network marketing but differ from each other.
Network marketing associations tend to have more complex commission requirements/qualifications than standard affiliate programs.
Benefits for merchants
Affiliate marketing is preferred for sales because in most cases it uses a "pay for performance" model which means that the seller does not incur marketing costs until results are obtained (excluding any initial setup costs).
Implementation Options
Some merchants run their own affiliate programs using dedicated software while others use third-party intermediaries to track traffic or sales recommended by affiliates. There are two different types of affiliate management methods used by merchants.
Standalone software or hosted services commonly referred to as affiliate networks. Payments to affiliates or publishers can be made by networks on behalf of the merchant by a network consolidated across all merchants with whom the publisher has a relationship and who earn commissions, or directly by the merchant itself.
Partner management and program management outsourcing
Rogue affiliate programs help fraudulent affiliates who use spam trademark infringement false advertising cookie stuffing sealing and other unethical practices that have given affiliate marketing a bad reputation.
Some vendors use third-party (affiliate) program management companies which themselves are often managed by affiliate managers and network program managers.
Such companies manage affiliate programs for merchants as a service similar to the role that advertising agencies perform in offline marketing.
