Affiliate marketing is where businesses reward their affiliates when sales are made through the advertising of the partner. The whole thing hinges on web traffic. This can include Pay Per Click strategies, as well as referral marketing, but is always financially motivated. It can be extremely beneficial for merchants because of its reliance on paid performance. Essentially, you only pay for the advertising after the sale is made, which makes it very cost effective.
Some merchants are able to run their own affiliate programs, but software investments are costly. Many merchants use third parties to track referral clicks and sales. These hosted services, often called affiliate networks, can do everything from track traffic and sales, to processing payouts, depending on the setup. But do your research, because uncontrolled and poorly managed affiliate networks can be a disaster. Fraud and cannibalistic practices run amok on these uncontrolled networks, which has given affiliate marketing a somewhat bad reputation. However, when done right, it’s a blessing.
Affiliate marketing is perfect if you need to move inventory of a specific product. Affiliate networks allow you to run targeted promotions, which is a huge benefit if you are overstocked on specific products. A clear goal, such as moving a specific product, increasing incremental sales and revenue, and reaching a niche audience make affiliate marketing a much more efficient way of managing these aspects. However there are still things to take into account, like how each of these goals might make a difference in affiliate marketing strategy. Not all approaches will gain the results needed for each of the individual goals.
If you are thinking of setting up an affiliate program, there are a few things to consider:
1. Is your company brand in a good place?
If the answer is no, this could be a risky proposition. On the one hand, you are only paying for the advertising after the sale, which is a cost effective method of advertising. However, if you don’t have enough pull in your brand, you won’t drive enough traffic and affiliates won’t be interested, or you won’t be able to give attractive enough incentives to attract the advertisers with their own weight to help bolster your brand image.
2. Do you currently have healthy margins?
Again, if the answer is no, this could be risky. If you don’t already have healthy margins, you won’t be able to afford the kind of incentives that advertisers will find attractive. But, on the other hand, if you have a unique product, that cannot be easily obtained through somewhere like Amazon (who have one of the largest affiliate programs), then you will be able to attract affiliate advertisers more easily.
3. Does affiliate marketing fit with your overall brand and other marketing strategies?
If this form of sales and advertising doesn’t fit with your brand, and your current strategies, you have to consider whether you are truly able to devote the time and effort that will be needed to properly manage the affiliate program.
4. Do you have the resources to properly manage your affiliate network?
If you don’t have the resources to devote to managing the affiliate program, it could be a disaster and actually do harm instead of good. Rogue affiliates can damage your brand image if they use fraudulent or distasteful advertising tactics (like spamming or trademark infringement). If you’re unable to properly manage your affiliate network, the best case scenario is that it just doesn’t live up to its full potential. The worst case scenario is that fraud occurs (and becomes a major cost to your company) and your brand suffers from association with distasteful and dishonest advertising practices.
How to avoid disasters:
1. The best way to avoid disaster is to become well-educated– learn how it works as thoroughly as possible so that you can evaluate what you are receiving in the way of services. The whole point of affiliate marketing is value for money, so make sure you are getting good value in the form of a well-managed affiliate program.
2. Hire a reputable affiliate network management company. You will do much better if you have experts in your corner. Draw on their expertise to make your marketing a success.
3. Make sure your program is well-managed. Avoid disaster by making sure that the affiliate program is well-managed from day one. Reduce management strain by keeping the affiliate number low. Also, by keeping to a set number of affiliates, you decrease the chances of fraud and increase transparency, which in turn helps your brand image.
4. Maintain a personal touch. Reach out to bloggers and social media influencers. Being aware of what the market and internet traffic trends are doing is key to finding the right mix of products and increasing conversion rates. Mutual profitability is the driving force behind affiliate marketing programs.
Now that you know how much your company has to gain from using an affiliate partner consider investing in the knowledge of the Copywriter Today team to help you implement these practices. Contact us today and we will help you get started in the right direction.