Learn more about what affiliate marketing is in this article.
Affiliate marketing is a marketing agreement where a publisher promotes a business's product or service on their website and if someone clicks through the link to the business's website and purchases it, the publisher will earn a small commission, usually between 5-30% of the sale. Affiliate marketing has become a very common method of monetising a successful website or blog. Examples of affiliate marketing networks are Amazon Associates and ShareASale.
Affiliate marketers use a range of methods to generate these sales, including organic SEO, paid SEM, email marketing, content marketing, display advertising, and more. Even though large companies, such as Amazon run their own affiliate networks, most businesses and affiliates join affiliate networks as they provide reporting tools and processing of payment.
Affiliate marketing is a form of CPL (cost per lead) advertising as the affiliate only gets paid if they drive a sale through one of their affiliate links. They do not get paid if someone clicks through the link and does nothing on the business’s website.
Note:
Usually, affiliates earn a commission from a sale. However, some affiliate marketing programs can reward affiliates for users who sign up for a free trial, leads, clicks on a website, or downloads for an app.
Types Of Affiliate Marketing
Unattached affiliate marketing - This is when the content of the affiliate's website is unrelated to the advertised product or service and the affiliate has no connection. The affiliate simply places advertising material on their site and the business provides the ad formats, such as the banners. An example of unattached affiliate marketing would be an ad for a local furniture shop on a dictionary website as the dictionary website is unrelated to local furniture. The affiliate has not used the product or service and this is the most uninvolved form of affiliate marketing.
Related affiliate marketing - This is when the content of the affiliate’s website is related to the advertised product or service, but the affiliate has not used the product or service. It is unlikely that someone who posts lots of affiliate links on their blog or website actually uses all of those products and that is okay.
Involved affiliate marketing - This type of affiliate marketing has more of a connection between the affiliate and the product or service they are promoting. The affiliate has used or are currently using the product or service, are confident to share their positive experience, and recommend it to their audience.
Advantages and Disadvantages Of Affiliate Marketing
The advantages of affliate marketing are:
Advertisers only pay a commission for qualified sales. This makes it much more advertiser-friendly of the pricing models as it eliminates the risk that an advertiser will end up paying for accidental, fraudulent clicks, or clicks that don’t generate any sales.
It delivers rewards for both the advertiser and the affiliate. The advertiser benefits from low-cost advertising and a wider place to promote their products, increasing their sales and profit and the affiliate benefits from earning a commission each time someone drives a sale by clicking through one of their links.
After placing affiliate links, affiliates can generate income 24/7 wherever they are without their interaction. Affiliates also don’t need to worry about customer support, ecommerce issues, and maintenance of the products as the advertiser takes care of all of this.
The disadvantages of a affiliate marketing are:
Unreliable affiliate marketing networks can charge businesses very high commission rates to affiliates when a sale is generated. If they are not careful, businesses could lose a lot of money from commissions off their sales.
It can promote dishonesty. Affiliates can engage in false or misleading methods of finding and reporting new customers in order to get sales commissions. Affiliates may make claims about products or services that are false, inaccurate, or exaggerated in order to trick people into purchasing someone else’s product so that they get paid a commission.
It requires a lot of patience. Affiliate marketing usually does not happen quickly unless a webpage receives thousands of unique visits a day. It takes time to grow an audience and to receive a commission from people clicking through the affiliate link and purchasing the product or service.
History
The concept of revenue sharing, which is paying commission for a referred business comes before affiliate marketing and the internet. The concept of sharing of revenue in ecommerce happened in November 1994, nearly four years after the introduction of the World Wide Web.
The concept of affiliate marketing on the internet was put into practice and patented by William J. Tobin, the founder of PC Flowers & Gifts. Launched on the Prodigy Network in 1989, PC Flowers & Gifts stayed on the service until 1996. By 1993, PC Flowers & Gifts generated sales of over 6 million USD per year on the Prodigy service. In 1998, PC Flowers and Gifts developed the business model of paying a commission on sales to the Prodigy Network.
