Marketing can be costly for businesses. Big investments into advertising can be an elevated risk if you do not know the return. Would it not be great if someone else better at marketing took up that risk and funded the marketing? You could pay them a small commission fee for each sale. It may sound too good to be true, but it is not. This is called affiliate marketing. Week 33 of 50 weeks of marketing explores affiliate marketing. What is Affiliate Marketing? Affiliate marketing is an endorsement-based advertising strategy, that earns promoters (affiliate) money when internet users act on that marketing. Based on a model of revenue sharing, vendors (merchants) offer a financial incentive such as a commission, through an affiliate program. Affiliates earn a piece of the profit for each sale through creating marketing content to try redirect customers to the merchant’s product. Affiliates can make money promoting products and services and make an income, without actually having any of their own. The merchant employs the help of affiliate to invest their own time and money into marketing their products or services, expanding their reach to their target audience online. According to Mediakix, affiliate marketing spending increases every year in the USA, with around a 10 percent yearly increase. How Affiliate Marketing works Affiliate marketing involves four different parties: • The merchant, • The affiliate, • The affiliate marketing network, and • The customer. From a marketing point of view, there are two components: the merchant who has produced the product or service for sale and the affiliate marketer who promotes it. With a traditional business model, the seller bears the risk that profit exceeds the overall marketing costs. However, an affiliate takes on the promotion efforts and then earns a piece of the profit from each sale they make. This is usually via a predefined commission, and the sales are tracked via personalised affiliate links. #affiliatemarketing

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Affiliate marketing is an endorsement-based advertising strategy, earning promoters (affiliates) money when
internet users act on their marketing.
Based on a model of revenue sharing, vendors (merchants) offer a financial incentive such as a commission,
through an affiliate program. Affiliates earn a piece of the profit for each sale through creating marketing
content to try redirect customers through a custom URL to the merchant’s product.
Affiliate marketing spending increases every year in the USA, with around a 10 percent yearly increase.
“Affiliate marketing refers to an online relationship between the so-called merchant and the affiliate, where
the merchant pays the affiliate a commission to redirect potential consumers to the merchant’s website.”
(Libai et al., 2003).
WHAT IS AFFILIATE MARKETING?

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Affiliate marketing involves four different parties:
• The merchant,
• The affiliate,
• The affiliate marketing network, and
• The customer.
From a marketing point of view, there are two components: the merchant who has produced the product or
service for sale and the affiliate marketer who promotes it.
Affiliate marketing works similarly to somebody employed in sales on commission, such as real estate agents.
This incentivises their performance.
OBJECTIVES OF AFFILIATE MARKETING

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• The merchant - also known as the seller, vendor, or
retailer. They are the party who created the product to
market – it could be a physical object or a service.
Through affiliation, they are not required to be actively
involved in marketing.
• The affiliate - also known as the content creator or the
publisher, they create appealing marketing to attract
customers to the merchant’s website. They create
content for the products to share on social media, blogs,
and websites. Affiliates often already have an audience
or following on social media, so they choose products in
their niche that meet the needs of their audience.
• The Network - Many merchant/affiliate relationships are
managed through affiliate marketing networks. There
are two key relationships: The first is with the affiliate
and the second is with the merchant. The network works
as an intermediary between the merchant and the
affiliate, facilitating the tracking of sales and managing
the commissions and affiliate payment.
• The consumer (customer) make this relationship work. If
they do not purchase, there is no revenue, and the
affiliate will not receive a commission. When consumers
buy the product, the seller and the affiliate share in the
profits.
PARTIES INVOLVED IN AFFILIATE MARKETING

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Affiliate marketing is beneficial to both the merchant and the affiliate. The relationship spreads the
responsibilities of marketing, leveraging the abilities of a variety of individuals for a more effective marketing
strategy.
For the affiliate, it is an inexpensive method of making money with little overheads. It allows digital marketers
to make money as free agents for a variety of merchants. They can earn money promoting products/services
without actually having any of their own. The affiliate gets a share of the profit and the merchant benefits from
predictable marketing costs as a percentage of sales.
Affiliates receive a commission depending on predefined consumer actions. These include pay per click – for a
redirect of a consumer, such as a click-out to their online shop for a lead, or they might get paid per sale if a
transaction takes place.
THE BENEFITS OF AFFILIATE MARKETING

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MERCHANT STRATEGY
Assume you already have a product or service to sell and there is a market for it. Merchants find affiliates,
often through an affiliate network, to promote their product or service.
The difficult part for the merchant is finding an affiliate who already have an engaged audience, that matches
their target market.
The commission amount positively affects the number of leads. The affiliate will work harder on their
marketing. For digital products, because they are easily replicable, commission rates can be 50% or even higher.
Merchants should provide their affiliates with various advertising media to suit different applications and to
keep fresh in the marketplace. This will improve the results of the affiliates.

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Affiliate marketers find a product or numerous products that they think will be profitable to promote.
If an affiliate marketer is starting without having a following, they could begin by reviewing products on a
YouTube channel or blogging with product reviews and comparisons in their chosen niche. Part of this strategy
involves trying to build your contact list by incentivising people to join your mailing list. When an affiliate has an
income, using pay per click advertising will help scale up with faster growth.
“Social media activities showed a significant effect on the number of leads generated by the affiliates.
Affiliates predominantly use social media to engage with their target audience. Especially if an affiliate’s
business focus is congruent with the merchant’s, affiliates may employ social media messages to draw their
audience’s attention to the relevant merchant.” (Olbrich, Schultz, & Bormann, 2019)
AFFILIATE STRATEGY

8. Daniel Hopper
Marketing Specialist - BYB MARKETING
#50WEEKSOFMARKETING
50 weeks of 50 marketing topics