Communication and Information Technology have played a fundamental role in the business world in recent years. This sector faces new challenges and opportunities on a daily basis when it comes to attracting or retaining customers. As a result, the way of communicating with customers, the strategies that need to be adopted and the speed of adapting to changes have taken a complete 360° turn.
Affiliate marketing has become an extremely important, useful and effective tool which is based on concrete results. It is a way to promote and sell physical or digital products online.
Summary
- Affiliate marketing is based on a commercial relationship between an advertiser and an affiliate.
- It is compensated for different actions such as pay per sale, pay per click, pay per registration, pay per thousand impressions, among others.
- The payment system is secure since the action performed by the user comes from a link that belongs to the affiliate, and the tracking system allows the user’s navigation to be tracked to know where it has come from.
What you should know about affiliate marketing
Over the last few years, as a result of technological developments, the role of companies and users has been changing. Users are no longer just consumers, but also generators and creators of content for these companies. With affiliate marketing, people can earn money by advertising third-party products, and generate customers and revenue on a low budget.
What is affiliate marketing?
According to Simon Goldschmidt (2003), affiliate marketing is an online commercial relationship where the affiliate communicates messages to other users, via their own virtual platforms. This leads to possible transactions on the marketer’s website. The affiliate then receives financial compensation if the users carry out the action the advertiser was looking for (1).
Affiliate marketing is a branch of online marketing that aims to achieve results. Affiliates advertise for advertisers and thus receive a commission when the user enters their website and performs the previously agreed action (2).
Who are the players in affiliate marketing?
This will depend on whether the affiliation is direct or indirect.
- Direct affiliation is an affiliation where only the advertiser and the affiliates are involved, i.e. without third parties. Here we have as players the advertiser, the affiliate and the consumer.
- Indirect affiliation is where a platform or network is the intermediary between the advertiser and the affiliates. In addition to these three actors, there is also the consumer. Examples of indirect affiliation are platforms such as Awin or TradeTracker
How does affiliate marketing work?
If you want to promote products or services, you need to affiliate with a product, either physical or digital, directly or indirectly. You will be given an affiliate link that is specially designed for you. The system is able to track all users who perform an action on it. If one of those actions matches your previous agreement to receive a commission, it will be granted to you.
The key to success in this type of marketing is to produce content that generates traffic to the advertiser’s site, as this is the only way to receive a commission. Some examples are banners, emails, and putting this link on your blog, among others. You should never forget to put your affiliate link in every piece of content you create.
How to get started with affiliate marketing?
If you want to start as an affiliate, we recommend you follow these steps.
- Search for all the platforms that offer affiliate marketing. There are many options on the Internet, for many niches and types of affiliates.
- Once you have identified them, we recommend you make a list of them. Write down some details that you must take into account for each one: what products are marketed (physical or digital, or both), what action is required for earning the commission, and what is the commission percentage, among others.
- You must define the niche you are going to focus on. The niche is a fundamental concept in affiliate marketing because once you find it, it will be easier to generate sales. The right niche for you is a subject that you know about, understand, and are able to explain easily. It is something that excites you, that you connect with.
- You should affiliate with the products you choose within the platforms you have previously selected. You will get your affiliate link, which is the one you must promote to receive your commissions.
- You must define what strategies you are going to use to advertise or promote these products. Either organic strategy in social networks, your blog or wherever you consider that you can sell without investing. Or paid strategy, where you must invest some money in advertising to sell automatically on, for example, Facebook or Google Ads.
How to make money with affiliate marketing?
There are different payment models within affiliate marketing. In the following table, you will find the main models to help you understand what action you will be paid for (3).
| Remuneration model | Description |
|---|---|
| Fixed | A specific payment is made for an agreed positioning or integration over an agreed time period. |
| CPT | Cost per thousand impressions, the impression that the ad has had in positioning is remunerated. |
| CPC/PPC | Cost per click/pay per click, the activation of a link that eventually redirects to the landing page set by the advertiser is compensated, regardless of the action taken on the link. |
| CPL | Cost per lead, is paid when the user completes a data, contact or registration form. |
| CPA | Cost per action, is paid with the completion of commercial activity, whether it is a sale or purchase, service lease, or licence of use, among others. |
Is affiliate marketing profitable?
Affiliate marketing is profitable. Companies like Amazon and Netflix have adopted this system because it benefits them financially. Your income will depend on the commission you receive for each action taken, what product and niche it is about and how hard you work to get users to take that action.
For example, there are products on platforms such as Hotmart that give 70% commission on the sale price. If you manage to sell a product that costs 50 USD, the commission you will receive is 35 USD. Doing the maths, if you manage to sell only one product per day, at the end of the month you would make a profit of approximately 1050 USD. And if you manage to sell 2 products per day, it could be 2100 USD.
The niches that are currently booming and most profitable are hobbies, money, lifestyle, health and fitness, home and family, and technology.
Who determines the prices in affiliate marketing?
The prices of each action or product are determined by the company or advertiser. On each platform, you will be able to see how much the commission and what is action you will be paid for. For example, Amazon handles commissions between 3% and 10%, but on other platforms such as ClickBank or Hotmart, the commission depends on each product and varies between 1% and 80%. The prices of each action or product are determined by the company or advertiser.
Advantages and disadvantages of affiliate marketing
Like with any other marketing approach, there are some risks and benefits of affiliate marketing too. Here we find two perceptions to analyze: the affiliates’ side and the companies’ side (1).
Advantages and disadvantages for affiliates
To become an affiliate, you should keep in mind that there are some advantages and disadvantages when you start promoting third-party products or services.
Advantages:
- It is a way to monetize your networks
- Low cost and risk
- Flexibility and independence
Disadvantages:
- Economic instability
- Often the profits are not immediate
Advantages and disadvantages for companies
There are also some pros and cons for companies, incorporating this type of marketing practice.
Advantages:
- Advertising for a low cost
- Increased brand reach on social networks
- Getting leads through affiliates
Disadvantages:
- No control over brand reputation
- Can be unprofitable for small businesses
What types of affiliate marketing are there?
There are a different variety of types of affiliate marketing in the world (4). The main ones are:
- Through web pages: Here, affiliates make web pages with content related to the advertiser’s product or service. Affiliates advertise for them and receive a commission for each lead or conversion generated.
- Through cashback: This model is based on sites that share their income with users, that is, they return a part of the commission for purchases generated through their websites. This return can be in the form of money, points, and discounts, among others.
- Through search engines: In this case, the affiliate buys keywords in pages such as Google AdWords and promotes the product or service through them. The payment is per click.
- Through email marketing databases: The affiliate monetizes the database built with emails from users interested in the advertiser’s products and services.
- Through affiliation networks: They act as intermediaries between the advertiser and the affiliates and make the relationship between both parties more pleasant. This is the case with networks such as Hotmart.
Affiliate marketing on Amazon
Amazon is a platform that allows anyone with a functional website to become an affiliate. The only requirement to be accepted is to produce content of value that does not promote hate, racism, violence, or illegal activities. You must pass Amazon’s prior validation process.
Amazon offers different ways to incentivize users such as percentages on the value of the product or a fixed amount, and they are updated periodically. Other advantages offered by this program are:
- The affiliate will receive a percentage or fixed amount for the product he/she promotes and also for those products that the user adds to the same shopping cart.
- You will also receive a commission for the products that the user has left in the shopping cart, after logging in with your affiliate link and having completed the purchase within 90 days.
- If the user enters with the affiliate link to see the product that the affiliate promotes, and within 24 hours buys another product, you also receive a commission for that purchase.
Affiliate marketing in Hotmart
Hotmart is a platform that hosts digital products, i.e. courses. It was created in Brazil, but today it is present in more than 170 countries. This network is composed of a producer or advertiser, the platform as an intermediary, the affiliate and the final consumer who buys the course.
This platform’s requirements include having an identity document, being over 18 years of age, having a valid email address and registering on the platform. Once you join a course, the platform provides you with your Hotlink so that you can promote it and receive commissions for each sale it generates. Commissions are between 50% and 80%.
Affiliate marketing on Trade Tracker
Trade Tracker is an affiliate marketing platform that connects advertisers with affiliates who advertise their products or services. You must have your own website to be accepted on this platform. They are in charge of evaluating it to define whether or not you are accepted to work with them.
They have offices in 20 countries, so it is an internationalized platform that manages to connect with global markets. It has many companies, such as AliExpress and Allianz, and retailers that offer their products and services in fashion and beauty, home and garden, home appliances, devices, offices, and toys, among others.
Affiliate marketing on Awin
Since March 2017, Affiliate Window and Zanox have merged and now form one company, known as Awin. It is an affiliate marketing platform that manages to connect advertisers and affiliates from different industries such as blogging, social media, and email marketing, among others.
In order to join as an affiliate, you must have a website or YouTube, Twitter, Facebook, or Pinterest. Your site must be able to add links to advertisers in order to promote their products or services. The difference between Awin and the other networks we have noticed is the deposit Awin asks for to join, which is returned to the affiliate when they register their first purchase.
Conclusion
After analyzing the different characteristics of this new marketing trend, we can say that affiliate marketing is the new way of doing business online. Now you can monetize blogs, social media, and sales channels with almost no budget.
Today, 80% of the big brands have an affiliate program. This makes you understand that the market is adapting to the great changes that have taken place around the world.
