What is Affiliate Marketing?
Whether it is visiting a marketing website, joining a marketing summit or reading books about marketing and advertising: you encounter ‘Affiliate Marketing’ everywhere. This form of advertising has been commonly used for decades throughout the marketing industry and most of the marketing experts have implemented this form within their integrated marketing plans. Despite its’ level of use, there are still many questions about what affiliate marketing is and how it can contribute to every type of store.
Definition of ‘affiliate’
If we look at the definition of ‘affiliate’; according to Oxford dictionaries
, it means to “officially attach or connect to an organization”. This way of connecting is typical for the trend we can see within the international business landscape. More and more companies are finding ways to colaborate to be stronger and more sustainable for the long term, especially when competing with larger companies. The main way to do this is through affiliate marketing, which can be defined as: “A marketing arrangement by which an online retailer pays commission to an external website for traffic or sales generated from its referrals” (Oxford, 2019).
All about partnerships
So, affiliate marketing is all about companies working together to drive as much turnover for individual stores. The stronger the partnership and the closer their relationship, the better the results are to be expected. Within these partnerships, you need to distinguish two main parties: (1) advertisers and (2) publishers.
- Advertisers are the stores that want to sell their products and services with the help of affiliate marketing (or other means of marketing and promotion);
- Publishers are websites and platforms promoting the advertising materials of the advertisers to their visitors and members, in order to generate traffic and sales.
It is when these parties are matching their customer bases and setup targeted campaigns that the best results are shown. Different target groups need different messages and promotions, so a close partnership is required to make the best of the affiliation.
Affiliate Marketing in eCommerce - a win-win
For online Advertisers and Publishers, it is possible to automatize all affiliate marketing activities and it is therefore an ‘easy’ way to either generate additional traffic and sales or to earn additional income by opening your visitor and customer base for advertisers. By partnering in this efficient way, stores, websites and platforms create a unique win-win situation, for all parties involved.
No cure, no pay
The main advantage of affiliate marketing is that advertisers in most cases only have to pay for the generated traffic or sales. There are several remuneration models. The main commission models that are offered to publishers, are:
- CPC ‘Cost per Click’, meaning that the advertiser pays for all the clicks that were generated on the promotion materials and the traffic following from this.
- CPL ‘Cost per Lead’, meaning that the advertiser pays the publisher for every lead that is generated. Leads can be defined by leaving contact details behind on the advertisers’ page or asking for a meeting or consult.
- CPA / CPS ‘Cost per Acquisition’ / ‘Cost per Sale’, meaning that the advertiser pays the publisher for every turnover that was generated through the promotion.
By applying one of these commission structures to the marketing activities, the advertiser can achieve additional, and sometimes a larger reach as well as building its brand, while only paying for the eventual turnover or traffic coming from these marketing activities. As it is applied within the digital world, everything is measurable and therefore this way of marketing is much more effective and efficient than traditional marketing activities like print ads and billboards.
: a must in every marketing plan and for every company taking its eCommerce business serious!