Affiliate marketing is playing an increasingly important role in online marketing. Big companies like Amazon do it on a grand scale. The reasons for this are obvious: Through affiliate marketing, you as an entrepreneur benefit from the recommendation of others. It does not require high start-up costs, which is why it offers you an efficient way to acquire new customers on the Internet. In this post you will find out everything you need to know about affiliate marketing.
How does affiliate marketing work for companies?
Affiliate marketing is initially intimidating to many entrepreneurs. However, we will show you how this type of marketing can easily generate significantly more leads, sales and ultimately customer growth.
Affiliate marketing originally comes from the USA. It is an internet-based collaboration between two parties: a company (“merchant”) and one (or more) “affiliates”. The affiliate earns money for the dissemination of the products, services and offers of a company (merchant) on the Internet, for example by setting links to the merchant’s pages on their own pages.
This works, for example, through a blogger a social media page. For this purpose, the merchant provides the affiliate with certain advertising materials (e.g. advertising banners, links, etc.). As soon as a customer clicks on these advertising banners or links, they are redirected to the company’s website. With the help of the illustration you can see the 5 steps of affiliate marketing and get a rough overview of how it works:
Affiliate Marketing: The Steps
In affiliate marketing, every advertising material contains an individual and unique “Affiliate ID”. With this, the merchant always knows through which affiliate he has won which customer (or a certain action has been carried out) and to whom he has to pay the corresponding remuneration. In SeanAbbottMarketing the use of the IDs are mentioned.
What does affiliate marketing cost?
There is no general answer to the question of the costs of affiliate marketing, because too many different factors play a role. A total of 3 types of costs can be distinguished:
- Fixed costs (one-time network fees, creation of advertising material, special costs, etc.)
- Maintenance costs (e.g. agency fees)
- Success-related costs (e.g. affiliate commission).
- Factors and costs to consider
- Average sales value
What is the average sales value of your advertised product or service? And the amount of the average purchase per customer?
How many competitors are there?
How many competitors are there in your market who are already doing affiliate marketing? This plays an important role, because when there is a lot of competition, the publishers usually have to be offered a higher commission in order to win them for your affiliate program. To answer this question, you can scour platforms like affiliate and look for offers from the competition.
How is the partner program looked after?
Will you oversee your partner program in-house or commission an external marketing or advertising agency? If the latter is the case, there are of course additional costs. An affiliate advertising agency usually requires an amount to be paid monthly, which depends on the success of the affiliate program.