How Does Affiliate Marketing Work?
Are you familiar with the term “referral” marketing? Surely you are; it’s such an age-old practice. Well, affiliate marketing is based on that timeless philosophy of referral business in its own way.
So, how does affiliate marketing work? It’s a system where a business (say an online retailer) gets its offerings promoted by another website/s. In exchange for that promotion, the online retailer pays a commission to the site/s that promotes it. Online affiliate marketing runs on CPA (Cost Per Action) principles. It means the advertiser (the brand) would only pay the publisher if an action has occurred on its link (or advertisement) on the publisher’s site. Benefits of affiliate marketing are wide ranging, including, performance-based sales campaign, wider visibility before target niche, higher flow of leads and so on.
Though Amazon gets credit for popularizing the concept of Affiliate Marketing in the digital world since 1996 yet the practice was first pioneered by William Topin. A visionary entrepreneur, Topin was the founder of gift store PC Flower & Gifts. Affiliate marketing dawned in a remarkable chapter in the sales history of Topin’s company and by 1993, the gift company was garnering a whopping over $6 million annual revenue
The post below offers insight on why your business can’t ignore affiliate marketing. But before that, let’s have an overview of affiliate marketing.
1. Pay if you see results – otherwise, don’t
Why Your Business Can’t Ignore Affiliate Marketing
The most important benefit of affiliate marketing is that it assures a performance-based sales campaign. The advertiser or merchant only needs to pay when something positive has been observed with his link (or advertisement) on the affiliate site. It could be a query from a potential lead or purchase or a sign-up with your website. In simple words, with affiliate marketing, you would only be paying when you can see the actual results. It is way better than splurging money on generic advertisement where you still have to pay even if it cannot produce any tangible result. Thus, affiliate marketing assures an extremely cost-effective campaign.
2. Better ROI
This point is in alignment with the concept discussed above. Affiliate marketing assures better ROI compared to other marketing practices. It’s because you will only need to pay when an action has taken place. There is no compulsion to pay when the campaign is not getting you any lead. Thus, affiliate marketing guarantees a more meaningful and functional return on your investment.
3. No risk of unworthy referrals
Moreover, affiliate marketing enables you to mitigate the risks of inadequate or unworthy referrals. You can always decline publisher’s payment if his promotional tactics did not suit you. The advertiser gets complete control on how the entire campaign works, even when it is running on somebody else’s site. You can decide on which link to refer on the publisher’s website for promotion. The merchant will also get to see which of his affiliate links are sending traffic to his site.
4. Wider visibility before actual target
Why Your Business Can’t Ignore Affiliate Marketing
Reputed publisher sites are bustling with established visitor niche. When your link is promoted on those sites, it invariably boosts up the visibility of your business to a wider target base out there. It’s especially helpful for new and small businesses who have a hard time reaching out for the leads otherwise.
