Affiliate marketing: Which advantages brings to the Advertisers and what they should be aware of?
In the past we already talked about how to start affiliate marketing. Affiliate marketing can be described as a partnership between advertisers and publishers. And as in every relationship, also in affiliate marketing there are some pros and cons for both sides. Today we want to talk about advantages, but also about the aspects that advertiser should consider, when running an affiliate marketing program.
Affiliate marketing provides a range of invincible advantages for advertisers:
1. Easy to do: an affiliate program can be started rather fast and easy. Depending on product variety and tracking possibilities that advertiser wants to have, the program can go live within a couple of days. This gives an opportunity to gain leads and sales fast. Advertisers can easily choose between affiliate networks. Advertisers should keep in mind running affiliate marketing is that the product number for which the commission will be charged should be defined first. Focusing on key products helps affiliates work with your program and make it successful from the start.
2. Performance-based: affiliates get commission paid only for valid lead or sale. So that there is no risk for advertisers. The commission rate differs depending on the industry type: Meanwhile affiliates that promote physical products can earn between 5 and 10 %, the commission rate for software affiliates could reach up to 30% per sale. An additional incentive-based model with increasing commission is suitable for affiliates that sell a lot.
3. Inexpensive brand advertising: working with affiliate marketing, advertisers get not only the desired market coverage, but also a free ad space. Since affiliates are paid for completed sales, advertisers get free place for the banner on the publisher’s website. However the amount of promoted banners depends on the success of sales – the bigger the sales volume of a given product is, the more affiliate partners consider promoting the advertiser’s banner.
4. Traffic-generating: especially if advertisers want to generate more traffic, affiliate marketing is a good method in the marketing mix. With affiliate marketing advertisers can increase the number of visitors of their website up to 20% within the first month. The majority of affiliates focus normally only on a few programs: 60% of affiliates promote 1 to 10 programs on their websites.
5. Channel-optimizing: Very often affiliate marketing provides important information about the behavior of new customers, such as where they come from. This helps advertisers to adjust their marketing activities within the whole marketing strategy. Imagine that the traffic from social media is starting to grow. That could be a signal to offer special conditions for affiliate partners that are working in this field, but also to optimize the other marketing channels according to that.
Following aspects advertisers should have in mind to be successful with their affiliate marketing program:
1. Management: the content should be always up to date, the communication between advertiser and publisher should be clear and advertisers should be able to control how publishers promote the product. Are the prices and discounts up to date? Are the links to the landing pages correct? Does the publisher get the right amount of commission? An affiliate program that is not managed continually could minimize the advertiser profit or even be harmful for corporate image by e.g. advertising the product wrongly.
2. Target audience: advertisers should check first, which kind of target audience affiliate partners should cover. Based on that it makes sense to check different affiliate networks. Does it take priority to win e.g. software portals, student portals or fintech-affiliates? Small networks that are more focused on special affiliates can bring more profit than the bigger ones. At the same time it is important to consider who will be addressed by affiliates: the end customer or other companies? 63% of affiliates prefer to promote B2C products, 17% - B2C services, 15% - B2B products and only 5% B2B services.
3. Profitability: the setup of an affiliate program can reach a 1,000 Euro or more, depending on the affiliate network that was chosen. Monthly maintenance can amount up to 500 Euro and the networks get additionally 20-30% override on the affiliate commission as a network fee. The calculation of minimum revenue should be done before starting, to be sure that this marketing channel would be profitable enough.
For sure affiliate marketing is one of the best performance-oriented methods to generate sales and lead within the marketing mix, as long as it stays well managed and continuously developed.