Affiliate Marketing

You may have heard the term affiliate marketing and wondered what it was and how it worked. Not to mention whether affiliate marketing is something you’d like to pursue, to earn an additional income! We’ve outlined the key points below, to help you get started.

What is Affiliate Marketing?

Affiliate marketing is a performance-based marketing that works on a revenue share basis. It is one of the most effective ways for a company to generate new business. A company will allow marketers, individuals, networks and other businesses to promote their brand using various marketing channels such as SEO, PPC, email marketing, social media marketing, display advertising, reviews of products and services, as well as content marketing.

How Does Affiliate Marketing Work?

At the heart of a good affiliate marketing program is the relationship between advertisers, publishers and the consumer. Affiliates sit in the middle of this relationship and help bring sales to the advertisers and great products to the consumer.

Advertisers

An advertiser is any company selling products and services like loans, electronics, gaming and much much more. Affiliate marketing is a cost-effective way for an advertiser to generate sales as the affiliate will do much of the work to drive traffic online. And in most cases, the affiliate will only be paid for the sales they generate.

Publishers

The publisher is the company or individual who generates sales or leads through their marketing efforts. The publisher or affiliate will agree to work on behalf of the advertiser using approved marketing materials, which are generally supplied by the advertiser. These could be email creatives, banners, text links or display ads. It is the publisher’s job to use these and their own websites to generate leads, all while ensuring they are compliant with local marketing laws, as well as rules and regulations relating to the particular industry they're working in.

Consumers

The consumer is the final piece of the puzzle. Without the consumer buying, there is no affiliate marketing. They are the ones who will see the ad, click on it and hopefully purchase a product or service from the advertiser. If a customer purchases or performs the right action, the affiliate will be paid. But how they get paid differs depending on the agreement set out by the advertiser.

When a customer visits a publisher’s website and clicks through to an advertiser’s website, this prospect will be tracked through a cookie placed on the customer’s device. If the prospect later transacts within an agreed period (usually 7-90 days) the publisher will be credited with the sale through an agreed amount (percentage or fixed amount).

Examples of Successful Affiliate Marketing

Money Saving Expert

MoneySavingExpert.com is one of the biggest consumer financial information websites in the UK, with over 8 million visits every month. Its goal is to help people make better financial decisions.

How they make money : How they make money : The website doesn’t accept advertisements or sponsored posts, nor does it offer any paid products. Their only monetary method is using affiliate links. Some of their different tactics include maintaining a list of discount codes and deals for a number of retailers and taking a cut from each sale. They also feature pages showing the best bank account or credit card, taking a cut from anyone signing up using an affiliate link. Money Saving Expert additionally have mortgage/loan calculators, and take commission from recommended financial products.

TripAdvisor

TripAdvisor is a global travel and dining website that shows hotel and restaurant reviews, accommodation booking, interactive travel forums and other travel-related content. It’s estimated that the website receives 166 million visitors a month.

How they make money : TripAdvisor has an affiliate partnership with some of the biggest travel companies in the world. As a very trusted company, many consumers don’t realise they are an affiliate website. TripAdvisor works with many travel companies who pay them a generous commission for each lead and affiliate sale due to their high lead quality.

Types of Affiliate Marketing Channels

Most affiliates share common practices to ensure that their audience is responsive and likely to buy promoted products. But not all affiliates advertise the same way. There are several different marketing channels they may use, including:

  • Influencers - Influencers are in a great position to benefit from affiliate marketing as they’re able to impact the purchasing decision of a large segment of people. They usually have an impressive following so it’s easy for them to direct consumers to an advertiser’s product through social media posts, blogs and other follower interactions.
  • Bloggers - With the ability to rank organically in search engine queries, bloggers can help spread information about a brand or new product. Typically, the blogger would write a review of the advertiser’s product or service that promotes the brand in a compelling way, thus driving traffic back to the seller’s site.
  • Email list - Email marketing is still a relevant and effective tool in affiliate marketing. Some affiliates use email lists to promote the advertiser’s product directly. Alternatively, the product could be featured in a weekly/monthly email newsletter that includes hyperlinks to products, earning a commission after the consumer purchases the product.
  • Coupons - Consumers love the saving power of coupons. This is why leveraging coupons and offers is one of the best affiliate marketing channels. Money Saving Expert is a great example of this.
  • News/Media websites - Large media websites create a large amount of traffic, and it is a great place to promote products to consumers through the use of banners and affiliate links. This channel offers high exposure and improves conversation rates, resulting in money for both the advertiser and publisher.

But What About How the Commission Works?

Commission is usually based on a percentage of the product sale price or a fixed amount for each sale, but may also sometimes be based on a per-click basis. Though high commission rates from advertisers may be tempting, it's important for publishers to ensure the product offered is a good fit and relevant to their audience.

Industry will also greatly affect commission rates. For example, digital products such as music, movies and electronics have relatively low commission rates, whilst financial products and the health industry offer relatively high commission rates.

Below are examples of the different commission structures:
  • Cost per Accepted Lead/Acquisition - This is common in short-term loan affiliate programs. This is where a customer has been sold or provisionally been accepted. You can read more about Leadtree Global’s financial services affiliate network on our How It Works page. With other networks a cost per accepted lead will be triggered by a sale of a product or service.
  • Cost per Click - This is associated mainly with Google Adwords but does extend to affiliate marketing. It works exactly as the name suggests - affiliates are paid every time a consumer make a unique click. This is not as common as it once was due to fraudulent activity with this commission type.
  • Cost per Lead - Commission will be paid for every lead that is generated. What classes as a lead can vary with networks and advertisers. This could be filling out and submitting a form or allowing your details to be passed to the advertiser for a follow up.
  • Cost per Valid Lead - This is where an affiliate is only paid for valid leads. So if the lead is duplicate or there is no interest from the consumer, the affiliate will not be paid.
  • Cost per Funded Lead - This is mainly in the finance industry where the affiliate is paid if a loan is approved.

Advantages of Affiliate Marketing for Advertisers

  • Cost-effective customer acquisition

    Affiliate Marketing is a cost-effective way to obtain new customers. As you’re only paying commission when your desired conversation occurs, you’re not spending needless amounts on PPC or ad placements that do not guarantee a return. Also, most affiliate marketing businesses have a fixed price that can be easily added to the product price.

  • Better brand visibility

    Whether you have a physical product or digital product, it is likely there will be a relevant website to align with. Best of all, these affiliates will already have an established audience base. By forming these partnerships, advertisers have the chance to expand into new markets that they may not have been able to explore solo. Advertisers can also provide more content for their existing market, giving them a stronger online presence.

  • Narrow target prospects

    Many consumers who click on the ad won't conduct a purchase on the advertiser’s website right away, but they’ll still enter the sales funnel. Since affiliates choose only relevant ads, all the prospects that come through the affiliate link represent the advertiser’s target audience.

  • SEO improvements

    With high levels of referred traffic, you can expect a slight increase to direct and organic traffic as well. Though affiliate links won’t directly boost your search engine ranking, it will increase the number of people searching for your product and navigating to your page, which can improve your ranking in Google.

  • Build a solid reputation

    When researching your products, consumers are likely to trust 3rd party opinions over direct content from the seller. By partnering with trusted bloggers and reputable websites who will champion your products, may solidify consumers confidence in your products or service.

Advantages of Affiliate Marketing for Publishers

  • Low-cost idea

    As there are very few barriers to entry, affiliating marketing is a straightforward industry to join. You just need an affiliate website or blog, choose a compelling niche, and select a particular product that is relevant to your market.

  • Relevant to your audience

    Unlike other forms of advertising, affiliate marketing is actually helpful to you and your audience. Linking the products that you’re discussing helps connect your audience to the seller directly, making the purchase process easier and rewarding you for the role you play in generating purchase intent.

  • Very low risk

    As the concept doesn't require any form of investment or set up charge, there is very little risk to the publisher. As long as you’re producing relevant content and generating traffic to your website or blog, you can guarantee a steady cash flow.

  • It makes money 24/7

    A great benefit of being an affiliate marketing publisher is that you can earn a passive income. As websites and blogs are available at any time, you could earn money in your sleep, or have it a secondary source of income. But it’s important to keep in mind, the more you put in the more you’ll get out.

There are multiple ways to market

There are many ways you can market your affiliate product. These include setting up a blog and posting regularly, creating an email list, posting on social media or creating a PPC campaign. The more you do, the greater the chance of earning a commission.

Affiliate Marketing in Financial Services

When promoting any financial products, it's important to stick to the Financial Conduct Authority’s rules. The FCA regulates advertising for most financial products including:

  • Loans (including payday loans, guarantor loans and car finance)
  • Investments
  • Cash savings and current accounts
  • Insurances (including home, car and travel)
  • Pensions
  • Mortgages
  • Life assurance
  • Payment services and e-money (excluding cash-to-cash activities)
  • Claim management (including personal injury)

Regardless of whether it’s a social media post or blog about a financial product, it can form a part of a consumer’s product knowledge, and thus influence their decision when choosing a product. It’s important that all promotions and adverts are fair, clear and not misleading, so consumers can make an informed decision.

For more information regarding FCA’s rule, check out their Social Media Guidelines or find out more on their Financial promotions and adverts page.

How Does the Leadtree Global Platform Work?

More and more consumers are reading about finance online. Informative and well-written content that answers common financial questions with strategically inserted links to active affiliate products can be helpful for consumers and profitable for publishers and advertisers.

Leadtree Global works in the underbanked finance sector alongside short-term loan lenders, matching borrowers with a finance provider who may be able to help them access credit. Affiliates working with Leadtree Global can generate leads through their websites, email, SEO, PPC, display advertising or social media advertising. All affiliates are paid on a Cost Per Accepted lead (CPA) or a Cost Per Funded (CPF) basis, depending on the campaign, with the ability to earn up to £75 for every accepted lead. For more information on how it works you can visit our How It Works page. Leadtree Global is one of many networks. Whatever the industry there is likely to be an affiliate network available. Check out mthink for a list of some of the best affiliate networks.