Affiliate marketing can be best described as a financial relationship between two partners, an advertiser and an affiliate, who both want to earn a profit. The advertiser has products or services to sell, while the affiliate has the resources and strategies to promote those products or services. In return for helping boost sales, the affiliate will receive commission, usually a percentage of the generated sales revenue.
Watch the video here:
What are the Benefits of Affiliate Marketing?
Advertisers need affiliates to help them connect their offerings to new potential customers. Let’s say that a company sells products for increasing muscle mass. In order to branch out to a new city or state, the company may work with affiliates that know the local market. The affiliates can connect with local gyms and bodybuilders who may be able to promote products to their customers or followers, for example. Affiliates allow the company to make additional revenue without any upfront cost; they only pay a portion of the sales made.
Affiliate Marketing and Performance
Affiliate is a market driven by performance; the company will financially recompense the affiliate based on their performance and sales. Since e-commerce is a highly competitive market, affiliates providing very few, unproductive leads will be usually removed from the affiliate program.
How is Performance Determined in Affiliate Marketing?
There are numerous software applications available to help companies evaluate the performance of their affiliates. Also, search engines, such as Google, have specially designed websites and metrics for monitoring traffic and sales to affiliate sites. The most important metrics in the marketing world refer include:
CPA (Cost per Action)
The main performance-based pricing model used in e-marketing. Advertisers pay when a specific action has been completed (a link has been clicked on or a purchase has been made).
CPC (Cost per Click)
This quantifies the amount of money paid by the advertiser for every click. Usually this method is used when the advertisers plan a daily budget for their marketing campaign. When the budget’s limit is reached, the ad is no longer shown until the next billing period.
Conversion Rate
This measures how well a lead or a sale link is converted in a desired goal (purchase of the product for example). The conversion rate is defined as a percentage of the people who visited a website and completed a goal. For example, if 100 people clicked on a banner which led them on a sales page, but only 4 people bought the product, the conversion rate would be 4%.
ROI (Return on Investment)
This is one of the most important metrics used to analyze performance. It tells the advertiser whether the affiliate is bringing him profit or not. It is expressed as a ratio: ROI = (Gain from Investment – Cost of Investment) / Cost of Investment.
Three Items You Need to Know to Succeed as an Affiliate
Your purpose as an affiliate is to obtain a high conversion rate and maximize the return of investment (ROI). Online marketing is very intricate and over the years, numerous strategies have been developed. In order to succeed with affiliate marketing and actually make a profit, you will need 3 basic things: knowledge, resources and strategies. We will discuss about each one of them below.
Knowledge
In order to become an affiliate, you must become educated about the features on e-commerce. First of all, you must decide what you want to sell and what you will sell. Start by determining your niche —if you don’t know what you want to sell consider doing keyword research for possible ideas to see what ranks high yet doesn’t have too much competition.
Ask yourself the following three questions when determining which affiliate is right for you:
- Who is your targeted customer? What problem do they have, and what solution can you offer them with the product or service?
- Where can you find this customer? Typically, the target audience is found on dedicated forums or websites. When you will find where the potential customers congregate, you can start trying to get their attention.
- How can you attract them to your sales page? How can you entice them complete the sale?
Resources
E-commerce is extremely complex, which means that only well organized, resourceful, analytical minds can succeed in this space. In order to create a winning affiliate program, you will need to have in-depth knowledge of modern marketing software programs, website development languages and image/video editors. Unless you intend to become a “one-man army”, you will need a team composed of:
Content writers who will create the text for articles, blog posts, website content and email marketing letters used to promote what you sell. - Programmers who will build sales websites, monitor databases, add plugins, check for broken links and so on.
- Designers who will create images, banners and animated videos will help your audience connect with your brand.
Strategies
In order to generate traffic and increase conversion rates, specific marketing strategies must be implemented. These include:
High quality, SEO optimized content—Search engine optimization (SEO) will help you find online users and lead them to your site.
Social media advertising—Nobody can deny the overwhelming power of social media platforms, like Facebook. Promoting products on social media is a trend that is predicted to last. Creating social media accounts and communicating with customers to alert them to new products or services, sales and other news can go a long way in creating a loyal customer base.
Ads for mobile devices—Neglecting this huge potential client sector is a critical mistake as many people only use mobile devices to browse online. With billions of people using smartphones, creating optimized ads for this channel is a must.
Monitoring trends—Keeping an eye out for trends should be a top priority for anyone trying to beat the competition. Keep up with Google Trends to identify them and implement strategies to outshine your competitors.
Even if you don’t make or sell the offerings, you must understand that being an affiliate can be a full time job. You must find your target audience, lead them to your site and complete the sale in order to make money.
For more tips on marketing and making more money in general, visit savemoneytricks.com.
