You may have heard the term affiliate marketing and wondered what it was, how it worked and if it was worthwhile spending your time learning about it.
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 companies to promote their brand using various marketing channels such as SEO, PPC, email marketing, social media marketing, display advertising, reviews of products and services and 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 the relationship and help bring sales to the advertisers and great products to the consumer.
An advertiser is any company selling products and services like loans, electronics, gaming and much much more. This is a cost-effective way for an advertiser to generate sales as the affiliate will do a lot of the work to drive traffic online and in most cases will only be paid for the sales they generate.
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 link or display ads. It is the publisher’s job to use these and their own websites to generate leads ensuring they are compliant with local marketing laws and also rules and regulations relating to the particular industry.
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 a advertisers website, this prospect will be tracked through a cookie placed on the customer 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 MarketingMoney Saving Expert
MoneySavingExpert.com is one of the biggest consumer financial information website in the UK with over 8 million visits every month. Its goal is to help people make better financial decisions.
How they make money : The website doesn’t accept advertisements or sponsored posts, nor does it offer any paid products. Their only monetary method 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. Also featuring pages showing the best bank account or credit card and taking a cut from anyone signing up using its affiliate link. As well as featuring mortgage/loan calculators and taking commission from recommended financial products.TripAdvisor
TripAdvisor is a global travel and restaurant 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 purchasing 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 post, blog 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 purchase 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.
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 and movies and electronics have relatively low commission rates, whilst as 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 here. 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 is exactly as it says, affiliates are paid every time a consumer clicks on 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 the bandwidth to explore. Or further, saturate your 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.
With high levels of referred traffic, you can expect a slight increase to direct and organic traffic as well. Though affiliates 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
As there are very few barriers to entry, affiliating marketing is a very pretty industry to join. You just require an affiliate website or blog, choose a compelling niche and select a particular product/s that 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 charge to be part of the operation, 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 such as 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 Finacial Conduct Authority’s rules. The FCA regulates advertising for most financial products including:
- Loans (including payday loans, guarantor loans and car finance)
- Cash savings and current accounts
- Insurances (including home, car and travel)
- 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 the 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.
How does the Leadtree Global platform work?
More and more consumers are reading about finance online. Informative and well-written content that answer 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 and works with short-term loan lenders to match borrowers with a lender who may be able to help get finance. 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 click here. Leadtree Global is one of many networks. Whatever the industry there is likely to be an affiliate network available. Check out mthink for list of some of the best affiliate networks.