How to use Affiliate Marketing to boost your business

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In our regular lives, most of us won’t mind a gym trainer recommending a specific whey protein brand or a mechanic suggesting that we use a certain brand of tyres. After all, they’re the experts and surely know best. Dig a little deeper however, and we may recognize what’s going on. More often than not, these experts turn out to be affiliates of the particular brand they promote and recommend to their customers. It’s hard not to have come across affiliate marketing in this day and age when every social media video ends along the lines of “you can find the link in my bio/ description”. All those links are affiliate links. But again, what exactly is the purpose of these affiliate links and why should you, as a business owner or manager, care?

What is Affiliate Marketing?

An affiliate marketing program is a performance-based online marketing strategy in which an industry professional or content creator endorses the products of a business to their customers or audience. For that reason, it’s a spectacular way to generate word of mouth when a business is in its initial stages and doesn’t have a substantial customer base as people now put a considerable amount of faith in influencers’ recommendations before making a purchase.

For endorsing these products, the affiliate earns a commission when a user clicks on the affiliate link on their website/social media and makes a purchase. In the offline world, a direct purchase does the job.

Affiliate marketing programs were dubbed “the holy grail of online advertising” at first because the pay-per-sale mechanism on which they are based promised to free brands from blindly investing resources in advertising via the older pay-per-thousands mechanism. This was back in the day when affiliates were small publishers who posted affiliate links on websites, discussion forums, or blogs to redirect users to the merchants’ websites.   

Today, affiliates may broadly be classified into two groups: (1) content creators, who run popular blogs, social media or YouTube channels, or communities like Reddit or WhatsApp groups, and (2) professionals who are experts in low-interest product categories such as automotive oil or cement.

In the case of content creators, these affiliates have built a following on the back of regularly publishing useful or entertaining content, and their audience trusts them to recommend products they have personally used and benefited from. In the case of professionals like mechanics or building contractors, their customers often turn to them to recommend a brand or product as the average person may not have much knowledge about it. 

On the surface level, the affiliate marketing process involves three parties: the affiliate, the merchant, and the consumer. The affiliates endorse and sell the merchant’s products -which can range from electronics to clothing to even insurance policies- to their audience. Merchants effectively tap into the affiliate’s already existing audience pool and get them to enter their sales funnel. This means that individuals who have never seen a single advertisement of your brand or product may become a consumer of your brand within seconds of first coming to hear of it.

It’s a win-win situation for all three: businesses increase their reach and sales, affiliates earn money for their promotional efforts, and consumers get exposure to potentially useful products.

How Does Affiliate Marketing Work?

When we talk about how affiliate marketing works, another party comes into play: a payouts partner. We’ll discuss it more in detail later in this article.

The process begins when an affiliate chooses to promote your product or service. In the case of online affiliate marketing, the content creator uses a unique link provided by you to direct their audience to your product. This link’s clicks can be tracked using cookies to determine if the person who clicked the link ultimately makes a purchase. If a customer does make a purchase, the affiliate earns a commission instantly. Offline affiliate marketing works a little differently, and we will delve into it further in upcoming articles.

Benefits of Affiliate Marketing for Businesses

Multiple studies have shown that merchants and advertisers consider affiliate marketing to be an important part of their overall marketing strategy. And why not, when e-WOM is one of the key factors that affect buying decisions of online buyers, especially millennials? 

Undoubtedly, affiliate marketing is an efficient method of acquiring new clients. It can help you reach new audiences you might not be able to reach otherwise. Also, it enhances other marketing channels such as email marketing and paid advertising. On top of that, you can use it to get insightful information about your consumers’ purchasing patterns as well, which is not always the case with other marketing options.

In addition to that, affiliate marketing is:

Cost-effective: You only pay when a sale is made, making it a low-risk, high-reward marketing strategy.

Increases reach: Affiliates can help you reach new audiences that you might not have access to otherwise.

Enhances credibility: Recommendations from trusted affiliates can enhance your brand’s credibility.

Scalable: As your affiliate network grows, so does your promotional power and potential revenue.