Affiliate marketing is a form of performance-based influencer marketing model where an e-commerce company compensates third-party publishers to generate leads to the company’s products & services. The affiliates also known as third-party publishers earn a commission to promote the company through generating sales or by impressions/clicks. These associate programs rely on the traffic generated from affiliate websites to create awareness and drive sales.
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Affiliate marketing is managed through programs known as an affiliate programs. These are typically arrangements in which an online merchant pays another business or website to generate leads and send traffic their way. This helps in brand awareness consequently driving sales. This can be achieved through product integration, social media posts, or web content.
Components of an affiliate program:
This describes the product or service company that creates the affiliate marketing program and partners with marketers for sales and profit-sharing.
This is the person or business that creates awareness and sells the affiliated products and services to earn a commission. Awareness is typically created through blogs, online content with links to the product page.
3. Deal qualifiers
This is the agreement reached by the vendor and marketer on what qualifies for a successful sale. This may range from a simple download of apps or software to filling out an online form or placing an order and awaiting delivery of the products.
4. Revenue sharing
This is also agreed on by the vendor and marketer depending on the product or service industry niche. Typically, the commission ranges from 3% to 50% of the product price.
Affiliate programs help businesses move along the sales funnel from awareness, interest, consideration, intent, evaluation to purchase. In the next paragraph, we will show you how to create and implement an affiliate program:
Key steps in Creating an Affiliate Program:
1. Select your affiliate program Network
The choice for most entrepreneurs is whether to manage the program internally or outsource to networks designed specifically for this at a fee. The choice of network is dependent on the business goals, resources, and choice of platform. These networks operate like a middle man between the brand and affiliates providing services in; sales tracking, commission payments, vetting of partners, recruiting partners.
2. Create affiliate’s key performance indicators (KPI’s) for success
These goals should be Short, Measurable, Achievable, Realistic, Timebound (SMART), this will help ensure maximum return on investment in the marketing strategy on how partners plan to market their website and drive traffic to your site.
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3. Create a realistic commission strategy
Determine the customer acquisition costs and operational factors such as shipping for physical products. The best strategy is pricing your digital affiliate commissions at a payout that makes sense to your online business. The latter tend to pay more commissions owing to the reduced cost of fulfillment.
4. Recruit high-quality affiliates for your program
It is important to check the following when vetting affiliates to partner with: they should have a platform, understand marketing concepts, have an existing sales funnel of their own, affiliates who complement your products & services. This enables the entrepreneur to maximize the Return on Ad Spend (ROAS).
5. Regularly evaluate your affiliate marketing program
What is measured can be improved. Entrepreneurs should analyze how well the partners are performing, the program performance, and the acquisition cost for new customers and affiliates. These should be constantly tweaked and improved to maximize the output of the program and return on investment (ROI).
Affiliate marketing can be a very rewarding investment for any enterprise. A well-implemented program will expand your product sales while increasing the total number of customers aware of your wares. An affiliate manager is tasked with implementing the named strategies and managing the partners to ensure the smooth running of the program for maximum return on investment.