Affiliate marketing has been around for a while but with the contiuned growth of the social media sector we are going to see the affiliate marketing industry skyrocket over the coming years. Already a multibillion-dollar industry with exciting professional opportunities for creators and businesses alike, the affiliate marketing industry is fast becoming a common way for ecommerce brands to market their products and services.
Statista reports that in 2020 alone, over two billion people purchased goods or services online and e-retail sales surpassed $4.2 trillion dollars worldwide. Amongst those billions of people now buying things online, Awin’s review of affiliate marketing in 2021 showed that by April, 37% of people were buying products through affiliate links.
So what is Affiliate Marketing and how does it work?
Affiliate marketing is a sales model where a company pays a third-party to sell their product or service. Unless you have been living in 1950 I'm sure you have listened to a podcast or seen a social media influencer promote a product, they are affiliate marketers. In exchange for promoting your products or services to their often massive audiences, they get a commission off of any sales that result in their referral.
How it works
After you carefully vet potential affiliates to work alongside and an affiliate marketing program, you’ll provide them with a unique link or code that will allow the you to track every customer the affiliate marketer sends your way. When a customer purchases the product through the affiliate link, they earn a commission.
Here’s how the standard affiliate program works:
- Influencer promotes Store A on their website, blog, or social network.
- Someone clicks their unique link.
- They make a purchase in Store A.
- The company records the transaction.
- The purchase is confirmed by Store A.
- The Influencer receives a commission.
For example, during the holiday season, Instagrammer @caullenfit promoted MVMT accessories on his page with his unique link in the description. If you click on his link, you’ll get redirected to the MVMT website and a cookie will be stored on your device. So even if you have to exit out of the browser and go walk the dog in the middle of shopping, when you come back that day, the cookie is still tracking your activity. If you then decide that you want to buy three MVMT watches as gifts, when you check out, 10% of that $700 purchase will go into @caullenfit’s pocket.
Should you be working with an Affiliate Marketer
The short answer, yes. Regardless of your company size you can reach a far wider audience by working with an affiliate marketer. Not only are you reaching a wider range of people the people you are reaching will be invested in the affiliate marketer so are far more likley to purchase your product than a general member of the public.
Expanding your audience is only one of the benefits, affiliate marketing allows you to effectively market a product with a low budget, low effort and time, and at a well-contained risk level while guaranteeing a high return on your investment, increase in brand awareness, and business growth.
Affiliate marketing is low cost and low effort, you can depend on your affiliates to come up with their marketing content. Other than the initial effort of selecting and vetting affiliates, there’s little effort required from you to market your products, which is one of the reasons it’s become such a popular method of marketing. Since most of your marketing activities are done by affiliates, they’ll also bear the chunk of the cost attached. And since it’s a commission-based program, it means that you’ll only pay affiliates from sales they bring in. This marketing model makes cost easy to manage and does not interrupt your cash flow, unlike other marketing models such as PPC advertising that requires you to pay for every click leading to your website. But affiliate marketing ensures that you only part ways with your money when sales are made.
If you are interested in setting up affiliate marketing, want to know how to generate links for influencers to use then get in touch with SPF today.