What is Affiliate Marketing? Definition, Types and Best Practices

Affiliate marketing is defined as the marketing strategy by which an affiliate marketer is paid based on predetermined commission for sales of a product or service. Learn more on affiliate marketing types, examples and best practices for 2021.

Table of contents:

What is Affiliate Marketing?

Types of Affiliate Marketing Programs

Best Practices for Affiliate Marketing Strategies in 2021

What is Affiliate Marketing?

Affiliate marketing is defined as the marketing strategy by which an affiliate marketer is paid based on predetermined commission for sales of a product or service.

For example, a SaaS product company may affiliate external blog owners, who in turn link the company’s products on relevant content to send leads to the product page. If a visitor comes from the blog to the product page and makes a purchase, the blog owner gets a cut of the deal." said Jonathan Tian, founder of Mobitrix, an iPhone solution provider whose sales massively depend on affiliate marketing.

While traditional media may be leveraged, affiliate marketing today is largely online as it is the least cost-intensive channel.

Based on the example, let us understand the 4 key components of an affiliate marketing program are:

Vendor: This is the product or service company, or a reseller/ channel partner of a brand that puts the affiliate marketing program in place and partners with marketers for sales and revenue sharing.
Marketer: The marketer is the person who needs to sell the affiliated products and services to earn commission on the items. This is typically done through blogs/ online content with links to the product/ service page. For example, Blow My Budget showcases some of the internet's most innovative and exciting products, with the aim of earning a commission on some of the items listed on the site.
Deal qualifiers: The vendor and the marketer come at an agreement on what qualifies a successful sale. This may be simple for online products such as software and apps. but gets more complicated for industries such as e-commerce, where an order once placed may be cancelled before or after dispatching the item.
Revenue sharing: Typically, the pay percentage may range between 3% to 50% of the product price, depending on the niche of industry, brand recall of the product company (less brand awareness equals more pay) and profit margin of the seller that they can afford to share.

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Types of Affiliate Marketing Programs

1. Content marketing programs - blogs and web pages

These are people who own their own sites and those who are also building websites. The number of webmasters available is mind-blowing and they all have different levels of expertise. If you don’t have content writing experience you can outsource it to a content writing agency. A well-experienced content writing agency can boost your content marketing campaigns.

Most of these webmasters are already signed into shareasale or CJ where you can easily contact them for a partnership or you can decide to directly contact them on their website and give them a proposal.

These are people who actually spend their own money to try and leverage the search engines, facebook advertising and many other paid advertising models so as to generate an ROI for affiliate offers as well as themselves.

These types of affiliates are great when it comes to posting information about the company and reviews about your new products.

All you will need to do is send them samples of the products and ask them to do a review which will help to spread the word about the products.

All the things that bloggers write about tend to organically rank in the search engine. It’s quite important to look for a blogger who is willing to promote your products or your company and its services as this will help to increase your traffic and ultimately the number of conversions you get.

A really good pool to get bloggers from is the mummy blogger pool as they are many and essentially have the time to blog about you.

2. Coupon-site programs

Due to the resent recessions, most people are on the search for coupons from various merchants. This makes coupon sites a really important affiliate for your business.

These sites can sort of behave like a double edged sword as it has equal parts advantages and disadvantages. The advantage is that you will get increased traffic to our website and thus increase your revenue.

The disadvantage of working with coupon sites is that these sites will capitalize on the organic rankings that are associated to your company’s name and the word coupon code.

These sites usually have an established member base that can be quite beneficial to you as a business looking to improve its conversion rate and revenue thus making it a bit important to overlook the negative of working with coupon sites.

3. Review-site Programs

These types of affiliates will build a website that will review up to six different advertisements in a particular niche. These review sites are quite popular with affiliate marketers.

This type of hosting is mostly used by hosts dealing with dating companies, flower companies, phone companies and all others that require taking about 5 different advertisers, putting them in one site and running an organic search or a paid search through all those pages that feature different reviews.

The affiliate will only earn a commission when he/she refers some business to any of those advertisers thus making review sites a very large and well converting demography of marketing affiliates.

4. Loyalty Portals

Loyalty portals are basically companies which have a very large membership base and are able to expose your offer as an advertiser to its members and sometimes may even contain a cash back policy.

There are very many loyalty portals in the market right now that work on a performance basis that you can choose from to improve your business.

5. Incentive Programs

These programs have both advantages and disadvantages. The advantage is that you will get increased traffic of prospects while the disadvantage will be that the people taking action on your advertisement because they are being given points tend to skew down the quality of the leads and sales while increasing the return rates.

There is also the problem of virtual currency which is still a new development in the business industry.

Users will earn virtual currency through their social networking and then you get some companies leveraging their affiliate advertisers to allow these users to redeem their virtual cash to make their purchases and thus making a saving. This is both good and bad as you may get very few sales while your volume increases.

6. Email Marketing

This type of marketing has been around for many years now and has gone through a couple of changes.

Ensure that if you choose to use email marketing, you choose maximum five email vendors to work with on a performance basis.

Ensure that everything they do is CAN-SPAM compliant and you won’t experience any issues. This should actually be an additional source of income for you.

7. Digital assets

Digital assets are long-form content such as e-books, buyer guides and research whitepapers. Such content may get limited users when compared to a typical organic traffic on a blog page, but they are highly intent-driven and may contribute to high conversions. The readers of such assets have already had to fill in details and download them or consume on browser, which are verifiers of purchase-readiness when the asset is contextual to the product/ service being marketed via the affiliate program.

8. Traditional Media

These include TV, radio and print media which can be contracted on a CPA basis on a rev share. All you have to do is make a proposal to each of these media outlets and individual stations.

This form of affiliate market is quite effective and has been used for a long time and will be used for a longer period still.

Affiliate marketing best practices for 2021

1. Leverage existing and related organic- traffic pages

The biggest leverage for content marketers and webmasters is already ranking articles and pages in search engines. These pages can be easily identified using Google Analytics. Assuming at least some of them are contextual and related to the product to be marketed via affiliate, you can use them as a reliable and continuous source of leads.

2. Avoid intermediate pages

When users click and jump to pages, every page filters out some users. While this may be a natural process based on user intent, it also contributes to user fatigue. As a rule of thumb for affiliate marketing strategies, when it comes to affiliate marketing on blogs and content pages, it is advisable to link directly to the final product page and avoid any intermediate landing pages. Ideally the product page of the vendor should contain all the required information to facilitate a smooth conversion.

In rare affiliate programs, there may be a requirement to educate the reader on the product before sending them off to the page. In such cases, the affiliate marketer is always free to bargain for a better revenue share deal pertaining to the additional efforts needed for facilitating successful purchases.

3. Market on related social media groups

Apart from informative blogs and articles, the next most contextual source of intent-driven users are social media groups dedicated to discussing a specific topic. The balancing act here is to use a mix of direct product promos and informative content, so as to not get thrown out by the admin. Alternatively, you can simply post the informative content page containing the affiliate link. It is still risky if you post the same article multiple times in a row and are advised to use a mix of articles. It is always a best practice to be part of multiple such groups across multiple social media platforms.

4. Native marketing for non-ad looking promos

Native marketing is the best form of promotion today, where a promo is carefully injected within a natural flowing informative content piece. The appearance of this link may be in simple text format or can be HTMLized for more attention-grab within the content’s flow. Please avoid any side banners that may give it a-type look, which users have learned to avoid (even if ad-blockers block them).

5. Invest in advertising for high-value deals

Some high-value deals may be worth additional spending from the affiliate marketers. As a benchmark, one needs to check the existing cost-per-click (CPC) or the keywords most directly linked to the product/ service to be promoted and correlate that to your profit margin.

6. A/B test multiple sources for ROI

One of the best ways to ensure long-term program success with any brand is to test pages and channels for least effort and maximum outcomes. For example, you should test promo pitch lines, locations to hyperlink from, email lists etc. Remember, even if your promo doesn't cost you money directly in additional advertising, time is always a cost incurred and minimizing it is key for long-term sustainable success.