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Affiliate marketing has been around for ages and is essentially where third party websites promote your brand/website to receive commission on each objective, usually a sale.
We have the advertiser, which we’ll assume to be you with your high end business. We have a network that you have partnered with to manage your affiliates. You then have your affiliates. Keep in mind a business would typically have hundreds or thousands of affiliates.
So you, the advertiser, will start by joining an affiliate network. You set up tracking and provide them with product info and promotional material for affiliates to use. You set the commissions that you would be willing to pay for each sale and you also agree on the fee that the network will receive for their work. The network then goes out and finds affiliates on your behalf. They may have thousands of affiliates that are already registered with their network and notify them that a new brand is on board.
Affiliates may often have to apply to become one of your affiliates and the network will review them to see if they are the right fit. In reviewing them they will be looking at their website to see if it’s relevant or gets enough traffic. Once the affiliates are approved then are then free to use your promotional material on their websites.
When someone is on the affiliate’s website and sees the promotion, let’s assume it’s a banner. They will click the banner and be directed to your high end website. They’ll obviously like what they see, so they’ll make a purchase.
Now the click from the affiliate to your website is tracked and the purchase is also tracked. The network will have a platform for both the affiliate and you the advertiser to see the number of clicks, which affiliate drove the clicks and how many sales each affiliate made. The network will then calculate the amount of commission each affiliate should receive based on a validation process. Validation is where they send a list of all the sales ID’s to the brand and the brand confirms that the sales are genuine, or have not been cancelled or returned. Once this is all sorted and the network has calculated the commission for the affiliate, they are paid.
At month end you, the advertiser, will pay the network their fee or override for their hard work during the month :) Simples!!
There are companies out there that choose not to work with a network and save that fee. I have never taken this approach because all of the brands that I have worked with had thousands of affiliates. That approach may be ok when you have a small number but to really nurture affiliates it’s good to establish a relationship. Affiliates who like the brand will push the brand more so a network can dedicate the time to build that relationship and policing their activity, and save the brand the work.
There are some very large networks out there and you would often find very large brands working with them. Some of the largest include Rakuten, Commission Junction and Affiliate Window.
Benefits of working with large networks would be that they have a large database of affiliates. The downside would be less focus on your brand, especially if they have much larger brands on board.
Smaller agencies will have a smaller database, but they will likely have less clients and be more willing to take the time to nurture the relationship with your affiliates on your behalf.
So, in a nutshell, affiliate marketing enables you to have a mass of promotion through other websites. People are out there pushing you. To be honest I think it’s a no-brainer and has been a standard activity across most campaigns that I’ve worked with. I mean, who wouldn’t want people promoting their business?
I hope this was all clear on how affiliate marketing works. In future videos we’ll discuss how you can strategically incorporate affiliates into your marketing strategy
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