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Getting started in affiliate marketing: What you need to know          

If you’re a marketing professional considering some form of marketing part nership as part of yourdigital marketing strategy, you may have heard of affiliate marketing, and most likely in a B2C context.

Many marketers and entrepreneurs mistakenly believe that affiliate marketing is a technique reserved exclusively for web giants or businesses operating within the B2C arena. In fact, it’s not. With the right resources, any business enterprise regardless of its size can choose affiliate marketing as part of their strategy to find customers and boost sales. 

.   What is it and who is it for?

Like other forms of marketing partnerships, it’s where two or more businesses collaborate to help each other achieve their strategic objectives. Specifically, affiliate marketing is where a business looks for a partner (referred to as an affiliate) to help it promote and sell its products/services in return for a monetary reward or commission. It’s essentially a ‘performance marketing’ technique. A key advantage is that you only pay your affiliate partner when you receive a lead or a sale. Affiliate marketing is easily quantifiable and measured. Return on investment (ROI) can be precisely calculated.

In the B2B world, this sounds very much like referral sales. In many ways affiliate marketing is an extension of a referral program, but better.  If you’re running a referral program, you’re limited to the advocacy efforts of your existing customers. In affiliate marketing, you can expand your network of customers to include third-parties who operate on digital platforms and can generate leads and drive sales for your brand. You can build partnerships with established blogs and online companies and publishers. You can set up referral (digital) links to bring audiences from an affiliate’s site directly to your website with a simple click.

For example, a few years ago a large international payments and foreign exchange company operating in the B2B space set up an affiliate program with the objective of increasing the volume and quality of leads and new business customers. One of the most successful affiliates turned out to be a small niche one-man-band website providing online advice and language services to European import/export businesses trading with China. The marketing department provided the affiliate with an online banner ad which directed traffic to the company’s website. The affiliate was incentivised with a commission on the leads that it generated and the target audience was attracted by a discount offered on fees.

As straightforward and simple as this example may sound, before starting an affiliate marketing program, there are some basic things that you‘ll need to consider and prepare for.

2.   What am I promoting and what resources do I need?

You need to think about what exactly it is you want to promote and how to do it. Will you be promoting your brand or company in general or a specific product or service? You need to think about the requirements of the affiliate(s). What kind of reward payout systems will incentivise affiliates to promote your products/services? And, you need to think about the needs of the target audiences, the end users of your products/services. How are you going to entice your target customers to click on your ad? Will it be end user discounts, special offers, special products, demos?

An important process for both your business and the affiliate partner is the reward payout system. The most successful affiliate marketing programs have seamless, automated reward payout systems. You may want to pay out differently based on the number of leads, sales, clicks, impressions or revenue thresholds, so ensure your affiliate marketing software can integrate different compensation models – which I will review in the next section.

Other key features of your affiliate tracking solution should be to provide your affiliates with analytical reports on their progress, and allow you and your business to link affiliates to specific campaigns. Looking at the reporting, diving into the analytics and making decisions based on intelligent information will help you and your affiliate to optimise future campaigns. 

Choosing the right affiliate tracking solution/software is not easy. There are many technologies to choose from in the market. You will need to allocate your time and budget to find a suitable solution that can be integrated into your existing IT/marketing systems, and then train your staff to use it.

4.   Choosing the right compensation model

It’s important to choose the right compensation model, one that will both fulfil the objectives of your affiliation strategy and incentivise the affiliate(s) to promote your products/services.                              

There are several types of compensation models:

• Cost per lead (CPL)

• Cost per acquisition (CPA)

• Cost per click (CPC)

• Cost per thousand impression (CPM)

• Revenue sharing

There are many sorts of deals and agreements between businesses and their affiliates. Affiliates can receive commission on leads, sales, clicks, impressions. There are deals based on revenue share (percentage of the revenue a sale generates), or a fixed fee per ad-spot. There are also agreements that include combinations of these.

If your main objective is to generate leads and sales, you may want to choose a CPL or CPA model. If your objective is to raise the visibility of your business/brand, you may prefer a CPC or CPM model. The overall cost of an affiliate marketing program will depend on the model you choose. The CPL model will likely be more expensive than a CPM because its aim, to directly generate leads, will bring you further along the sales pipeline to conversions and sales.

5.   Finding the right affiliate for your business

Finding the right affiliate partner is not easy. Many affiliate websites and networks have a B2C focus that doesn’t suit B2B. So be prepared to invest enough time in finding the right affiliate(s) for your B2B market. This means more research and a more personalised approach. Contact potential partners directly. The real key to success in affiliate marketing is choosing the right partners.

Choose affiliates who can effectively promote your brand and attract leads/customers from the right target segment, preferably affiliates that are well established in that segment or niche. Review their websites and check that their content is relevant to your target audience. See which other brands they’re promoting and in what manner. Preferably, they should not be competing with your existing marketing and sales channels. But if you choose affiliates that promote in the same channel you currently have in place (e.g. search or email), ensure your agreement clearly defines their limitations so that affiliates’ efforts don’t cannibalise your internal efforts.

Like all good business partnerships, the goal should be on building a strong relationship through collaboration and regular communication. It’s important to have the right conversations with your affiliate(s) from the start.

Think about what incentives and compensation model you will offer to your affiliates and why they should promote your products/services instead of the products of your competitors.  Ensure that your affiliates understand your business, especially your sales cycle.

A good affiliate program has to evolve. Keep affiliates motivated by offering compensation boosts or challenges to improve their compensation.

Choose your affiliate partners carefully. Without proper care you risk ending up on websites of little interest to you and generating payment for meager results.

6.   Conclusion – Is it really worth it?

Affiliate marketing can be a very effective marketing strategy for generating leads and driving sales. Given time, money, resources, the right technology, efficient processes and strong partnership management, it can deliver exceptional results.

The great thing about affiliate marketing is that it can take many forms. It adapts to the needs and requirements of businesses of all sizes. And thanks to its pay-for-performance system, you’re not likely to lose money.

With these basic components in place, you’re ready to get started with affiliate marketing. As you begin to build your affiliate channel, ensure your messages are consistent with those in your other channels and that your partnerships make sense in the context of those messages and target audiences. Continually evaluate the effectiveness of your campaigns and your partnerships and you’ll be well on your way to a successful and profitable affiliate marketing program. click her

By Laura Zamarian | October 2020