Affiliate Marketing guide| Pros and cons of Affiliate marketing

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Definition

Affiliate marketing is a marketing arrangement by which an online retailer pays a commission to an external website for traffic or sales generated from its referrals.

How does Affiliate Marketing work?

Advertisers will employ an Affiliate platform i.e Expertnaire to administer the tracking of their affiliate campaign. The network will provide a set of tracking links to the affiliates that sit behind the banners and text links on the affiliates’ websites. When the customer clicks on that link a cookie is dropped onto their computer and that click is registered by the Affiliate Network. When that customer then completes a purchase and reaches the advertiser’s confirmation page, the Affiliate Network’s tracking tag is fired. That tag checks for the relevant cookie and if the customer has come from one of the Affiliate Network’s publishers, the sale is recorded by the Affiliate Network in their platform. Via that platform both the advertiser and affiliate should be able to see that the sale has been tracked and a commission can be awarded. 

To understand the role of Affiliate Marketing in the marketing mix, it is important to understand where the channel fits in the wider digital landscape. Affiliate Marketing can be considered a microcosm of the digital universe. The digital universe comprises different channels like Content, PPC, SEO, Display, Social, Email, Affiliate Marketing, and so on. However, Affiliate Marketing by itself consists of publishers who run activity across all these channels. Publishers usually earn a commission when they are the last touchpoint in a customer’s purchase journey. To maximize the likelihood of conversion via their efforts, publishers run campaigns on their website, blog, social channels, and customer database. As such, they provide a diverse reach at different touch points across all stages of the purchase funnel.

Advantages of being an Affiliate marketer

1. Low startup cost. Most programs let you join for free, so costs are typically tied to how you build your audience and get referrals.

2. You don’t have to make your own product or service.

3. When someone buys, your merchant ships for you.

4. Work anywhere with a WIFI connection.

5. If set up correctly, income can be passive. 

6. Adds an extra revenue source for home-based businesses or anyone with a website.

Disadvantages of being an Affiliate marketer

1. Building traffic for referrals can take time.

2. It’s possible for poor tracking systems not to attribute your sales properly (you lose money).

3. Bad customers to the merchant can damage your reputation and relationships.

4. Zero input on the product you promote.

5. The potential for a company to ‘go ghost’ and not pay. 

6. You have a lot of competition.

7. The customer is ultimately the merchant’s, not yours.