While paying publishers to boost traffic to your site could prove to be a valuable revenue stream, if you don't have the right business model or online presence it might not make business sense
Affiliate marketing – sometimes known as performance marketing – was one of the first digital channels to emerge, yet it remains poorly understood and under-utilised.
The concept is simple: companies – sometimes known as merchants – pay others –sometimes known as publishers – a commission for driving sales. The publishers don’t need to buy inventory from the merchants, handle shipping or deal with complaints; they simply link to the merchant site. For example, Amazon is a merchant. It pays a commission on books and other items. This means that if your business recommends books to people, you can use Amazon’s affiliate program to link through to the bookseller. If anyone clicking on your recommendation buys a book then Amazon credits your account with a percentage of the sales value.
If you have a quality site, even if it’s a small one, then you can approach affiliate platforms like Awin, TradeDoubler, Affilinet or Skimlinks to find merchants like Amazon and apply to join their platform. Amazon and eBay are rare in that they provide their own affiliate system directly to you. Companies like MoneySuperMarket, Sainsbury’s, Quidco and Confused.com are all in the affiliate publisher space and these larger publishers are now able to dictate their own terms to the merchants who would like to work with them.
Startups could become affiliates themselves but some might find becoming a merchant is a faster route to success. For example, a reputable site like MoneySuperMarket could draw its website visitors’ attention to your product and mark it as a great deal. For a new business that’s still building up its online presence, this can prove to be an effective tactic when it comes to reaching your target market.
Sadly, affiliate marketing isn’t for every brand and some companies are better placed than others to make the most of it. For a start, being a merchant takes time. Affiliates need to be managed as you’ll want to set out some rules and make sure they’re being followed. You might need to spend at least eight hours a week on managing even a relatively small affiliate program.
And while affiliate marketing isn’t all that technically complex, there are some things to bear in mind. For example, you’ll want to make sure you have access to the right tech skills to get the tracking tags up and running on your site. If you’re already using something like your own Google Analytics account to measure sales then you can probably step into affiliate tracking. However, if you’re selling goods via a platform like Etsy, Redbubble or Zazzle then you’ll not have the right technical permissions to access those sites and add your own tags.
You also need to have a business model that works in the affiliate space. For example, you’ll need a product or service that’s sold via a website so the sale can be tracked. Sales need to happen at sufficient intervals for your affiliate partners to be able to build their own business plans around. After all, these companies or individuals will be spending their own time and money on building websites and creating marketing campaigns on your behalf in order to earn their slice of the sale value.
Your website also needs to be up to scratch: there’s no use in driving high-quality traffic to it if your user experience is poor or your checkout is a nightmare to navigate. Your website needs to be optimised to convert leads into sales. As an indicator, if you’re generating at least 50 sales a day then you’ll have some proof that there’s demand for your product or service and that your website is capable of handling sales.
This means that affiliate marketing is usually best suited to businesses that sell to consumers rather than other businesses. In the business to business (B2B) space, lead times tend to be longer and e-commerce purchases slightly less commonplace. B2B sales often involve developing relationships over a slightly longer time period and can play out offline in meetings or over the phone. In contrast, business to consumer (B2C) sales tend to be speedier and it’s not unheard of for B2C retailers to offer affiliate partners specially modified landing pages to encourage consumers to take actions that can be tracked, therefore maximising the affiliate marketing revenue.
As a merchant, you should carefully consider whether affiliates can drive real value for you. After all, you don’t want to pay partners for sales you would have had anyway without their involvement. However, while larger brands might be able to employ digital marketing agencies to help measure the returns on affiliate marketing, startups might not have this luxury. To help you decide if it’s for you, one of the most important things to ask is whether you believe there’s an audience for your product or services out there that your marketing initiatives can’t reach. If that is the case, working with affiliates might make sense.
But whether affiliate marketing is capable of delivering value to your business or not, don't be put off by a lack of knowledge. It’s easy to understand whys some marketers might feel intimidated by it but there are plenty of conferences like Affiliate Huddle and the PerformanceIn series that offer useful and practical advice, as well as access to important affiliates. Once you get your head round it, it’s definitely an avenue worth considering.