Demystifying Affiliate Marketing – An Introduction

Affiliate marketing is regularly being touted as one of the more effective marketing strategies for contemporary digital advertisers.

Despite some recent bad press from a well-known Australian online retailer, ‘affiliate marketing’ is nevertheless regarded as a less risky alternative to expensive pay-per-click (PPC) networks.

So what really is affiliate marketing and how do you ensure an optimum result from this channel?

Whether you’re a rookie or a pro in the digital landscape, these articles will help you to enhance your knowledge and develop your skills in the continuously evolving affiliate marketing space and help you to constantly optimise results.

Put simply: affiliate marketing is an online advertising channel connecting digital advertisers with a network of publisher websites. A publisher site is much like a traditional newspaper or magazine where advertiser(s) pay to be featured.

Affiliate marketing infographic
This infographic explains the basics of how affiliate marketing works.

The internet has enabled the creation of a ‘newspaper on steroids’ and eliminates all inefficiencies associated with traditional advertising. Digital Publishers are typically website and database owners with high traffic volumes. Publishers promote ads through multiple different methods which include but are not limited to:

  • Onsite Banners
  • Feature Articles
  • Email Newsletters
  • Social Media
  • Interactive XML Feed
  • Co-registration

Publishers make money simply by sharing an ad with their audience and typically benefit in the following ways:

  • Generating Sales via a CPS campaign (Cost Per Sale)
  • Generating Traffic via a CPC campaign (Cost Per Click)
  • Generating Leads via a Lead-Gen campaign (also referred to as a CPL-Cost Per Lead or CPA- Cost Per Acquisition)

The advertiser benefits by using a ‘pay for performance’ model, which costs the advertiser only on the basis of results…it is essentially what all advertisers could ever hope for, as nothing comes out of their pocket without a customer action occurring first. It’s a genius model that represents low-risk and high- rewards to both parties, and is dependent upon only traceable results.

Before any digital advertiser starts an affiliate campaign you need to ensure they know your metrics. Some important metrics to know include:

  • What is the life time value of a new member?
  • What is the conversion rate of your site?
  • What is your highest converting demographic?
  • What is your best ‘Call to Action’

Other things to keep in mind before launching an affiliate campaign include:

  • Which network(s) should you use?
  • What campaign type(s) should you use?
  • What type of publisher(s) will drive you the best traffic?
  • How do you intend to optimise the affiliate campaign?
  • How to avoid the pitfalls associated with affiliate marketing?

The affiliate marketing space is certainly a hot ticket item in today’s media landscape. As such, you can look forward to a wealth of coverage appearing in the coming weeks and months. Stay tuned for more best practice info to ensure you’re using the channel effectively.

Are you looking for more details on the mechanics of affiliate marketing? Download Power Retail‘s FREE Special Report on the topic – available now.

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