Term

What is Affiliate Marketing?

3 MIN READ

Affiliate Marketing

Affiliate marketing is an approach of product owners (individuals or companies) to increase sales by letting other people (i.e affiliates) earn a commission from recommending their products. Affiliates receive commissions each time someone makes a purchase with the help of a unique link or promo code associated with a certain affiliate. Usually, the usage of such links allows customers to get a certain discount for the product or special rewards (free shipping, gift cards, etc.)

How does affiliate marketing work?

Affiliate marketing consists of 4 groups with their specific roles:

  1. A retailer (also known as an “advertiser”), who provides a certain product  to promote
  2. A network, where retailers post an offer for their potential affiliates and process payments to them. Popular examples include such networks as AffiliateNetwork, ClickBank, ShareASale, and others.
  3. An affiliate, or a publisher, who agrees to provide information regarding the company’s product or service to his/her audience through their personal blogs, social media, or websites.
  4. Customers or target audience, to whom affiliates reach out.

Depending on the brand and the influence of affiliates on social platforms, commissions may vary from 5% to even 40%. Also, there are different types of compensations, which are tied directly to actions, which are performed by customers. Almost 80% of affiliate programs today use pay-per-sale (PPS) as their compensation method, which generates a share of an affiliate based on the number of purchases made with the help of his/her link or promo code. Other 19% use such compensation methods as cost per action (when, for example, a customer doesn’t necessarily buy products, but instead installs a widget for his browser or submits a form) and the cost per mile, when the compensation is measured through the number of views brought by an affiliate.

Issues of affiliate marketing

Despite the fact that modern affiliate marketing became more advanced and have more thorough terms and conditions, there are still some obstacles that put affiliate marketing in bad light:

Email spam

From the very beginning of affiliate marketing, many users were receiving repetitious emails from affiliates, who were promoting the programs they were enrolled in. Although many companies have reconsidered their terms and policies regarding spam abuse and the number of spam attempts has been declined, affiliates still find a way to dodge spam filters.

Cookie stuffing

One of the affiliate marketing techniques is cookie stuffing (also known as cookie dropping), which is when a user receives third-party cookies during web-browsing usually without being aware of it. Since this technique doesn’t encourage users to visit the target or make a purchase, it is considered illegitimate.

Compensation disclosure

Many affiliate programs follow specific guidelines set forth by the Federal Trade Commission, which affects bloggers and celebrities, who become affiliates and can be unaware of these guidelines.

 

You may also like:

Ecommerce Marketing Costs — Creating a Budget From Scratch

Top 9 Ecommerce Metrics To Grow Your Ecommerce Business

How Technology Is Changing Ecommerce