Why Affiliate Marketing Works: And How to Implement It Effectively

Affiliate marketing is one of the best ways for eCommerce brands and online retailers to generate traffic and leads, build brand recognition, and drive sales. Currently, affiliate marketing efforts account for an estimated 16% of all online sales. Speaking to both the current value and future potential of affiliate marketing, a whopping 81% of brands have already adopted this approach. 

As one of the most profitable forms of marketing, affiliate marketing is on the rise across many eCommerce industries — each year, the market grows by about 10% with spending expected to rise to €12 billion in 2020. The top sectors for affiliate marketing include fashion, beauty, sports and outdoors, travel, and health/wellness. 

The popularity and success of affiliate marketing indicate that it’s here to stay, but how can you get in on this growing trend? Getting started can be daunting, but fortunately, we’ve got answers. Here, we’re going to explain why affiliate marketing works and provide a crash course on how your business can harness this lucrative marketing channel. 

What is affiliate marketing?

First, let’s define affiliate marketing. An affiliate marketing programme harnesses the power of content marketing and social media by enabling brands and businesses to incentivise third-party publishers, known as affiliates, to promote and sell their products or services. 

So how does it work? Simple: your affiliates are given a unique link or code and earn a commission when they direct sales or leads to your website. When customers click on an affiliate link, they’re taken to a landing page. Landing pages can employ a wide variety of techniques, such as single-use promotion codes, email and banners. The ultimate goal, of course, is for customers to take action — which usually means making a purchase. 

Here are the most common affiliate marketing strategies:

• Coupon/Voucher platforms 

• Employee Rewards

• Loyalty Programmes

• Online Communities

• Content

• ‘Digital personalities’ — podcasts, social media influencers, YouTubers, etc.  

Why affiliate marketing works

So now that we know how affiliate marketing works, let’s look at why it works. There are a variety of reasons why brands use affiliate marketing strategies to increase sales and boost brand awareness. Here are some of the top reasons:

• It’s cost-effective: Essentially, affiliate marketing enables you to grow your sales and marketing team with minimal upfront cost. Of course, you’re responsible for the initial setup, but with affiliate marketing, there are no salaries or overhead — your ‘sales team’ of affiliates are only paid following successful sales. Minimal upfront investment virtually guarantees your ROI.

• It saves time: With affiliate marketing, many brands find that they don’t need to be actively involved in marketing efforts, enabling a ‘hands-off’ approach to what can often be a time-consuming area of business. The benefit of convenience holds particularly true if you use an analytics platform that facilitates easy affiliate management and enables secure third-party access to relevant campaign data.

• It helps build and grow brand awareness: Affiliate marketing allows brands of all sizes to increase exposure to audiences they might not have had access to before. Working with a carefully chosen affiliate network can expose your products or services to new audiences and build long-term awareness that can potentially expand beyond a single-product promotion.

• It allows you to reach a targeted audience: Most affiliates have a specific or niche audience. For instance, partnering with coupon platforms means your product or service is being put before an audience of customers eager for great deals. Essentially, driving traffic via carefully selected affiliates will help you target the customers you want, who will be most likely to act on your promotion and drive sales to your brand.

• It benefits from being more ‘organic’: Organic content drives sales — when something doesn’t look like an ad, it’s often more likely to pique customers interest. Affiliate marketing strives to meet customers where they are, whether they’re searching for a solution to a problem, shopping around for a product or simply living their lives.

• It builds upon established trust: More than 80% of global consumers trust product recommendations from family and friends. And in the digital age, most consumers similarly trust people they follow on social media, podcasts they listen to, YouTubers they watch, blogs they enjoy reading and more. As an example, 40% of millennials believe that their favourite YouTubers understand them better than their real-life friends. For brands, this translates into a lot of potential — after all, customers who have been referred to a brand have a 16% higher lifetime value than those who haven’t. 

How to create a successful affiliate marketing campaign

Convinced that affiliate marketing is the right choice for your brand? In this section, we’ll look at how to create a successful affiliate marketing program that pays dividends. Here are our top tips for building a competitive strategy:

Target specific outcomes

At its core, targeting specific outcomes means knowing what you want for the campaign. Before you start, it’s vital that you set achievable goals and decide upon your desired outcomes. In addition to asking the simple, ‘What do I hope to achieve’ question, here are some further strategy-building questions you might ask yourself:

• What are you selling, and how might that play into your strategy? There’s no one-size-fits-all approach to affiliate marketing. Some affiliates and strategies might be better for awareness campaigns, whereas others might be more appropriate to deploy further down the funnel or for launching a new product. For personalised or niche offerings, utilising channels such as social media and email marketing are usually smart choices. 

• What are your values and what image are you trying to project? If you’re working with influencers or publications, you’ll want to ensure that you pick the most appropriate ambassadors for your brand. This means ensuring your values are aligned and that their audience contains your potential customers. 

• What potentially valuable markets are you currently not reaching? Look for affiliates who will help you reach untapped markets. Introducing your offer through a ‘trusted’ company or individual can help engage potentially valuable customers who would not have otherwise known about your brand.

Automate and track

To deploy a successful affiliate marketing campaign, you need to make sure you have a clear-cut, easy-to-use way to engage with affiliates and track the success of your campaigns. After all, internal analytics are vital to affiliate marketing. At the bare minimum, you must be able to see how many leads convert to sales. 

There are many affiliate marketing platforms that are already achieving this, such as AWIN, Impact, Tradedoubler and Adtraction. 

To find what’s right for your business, here’s what you should look for in an affiliate management platform:

• Intelligent tracking and analytics functions: With the right solution, you can manage your affiliate marketing campaigns through a detailed dashboard that provides sales reports, granular data and valuable insights. You’ll need this information to track how your affiliates are performing, make informed decisions and rethink your strategies as you go. Being responsive is a huge part of any eCommerce brand’s ability to deliver what their customers want.

• Simple integration: Seamless integration of your affiliate platform with your existing CRM system is a highly valuable feature, and you don’t want to waste time and resources trying to get a completely new system up and running. One of the key benefits of affiliate marketing is the ability to save time and money — you don’t want to negate your cost savings with impossible-to-use tech tools.

• A unique code generating system: Promotions are essential for affiliate partner marketing — they incentivise participation for customers and increase reach. Although static promo codes get the basic job done, they’re simply not up to the task of more advanced, creative or responsive campaigns. They also pose a considerable risk to a brand’s bottom line due to the potential of misuse, leaks and codes unintentionally going viral. Unique, single-use codes solve these problems — they help individually attribute sales and allow brands deeper insight into campaign performance. In addition, unique codes make costs more predictable, as brands can see exactly how many codes have been generated and how much those codes will cost to redeem. 

• Third-party access capabilities: Straightforward and secure third-party access alleviates administrative burden and helps make affiliate campaigns more successful. By using an analytics tool with third-party access, you can allow your affiliates to access your system and generate unique codes on demand (within the confines of specific, pre-set, permission settings). 

From discovery to redemption

When it comes to curating your affiliate journey, you need to do so smoothly from discovery of a promotion through to redemption. It’s all about providing a promotional experience for customers that communicates the promotion from partner or channel all the way through their journey to remind and confirm the offer they want to use. What should be considered in order to smoothly achieve this? 

• Landing pages: Delivering an optimal customer experience is all about displaying the right, most relevant information. Your link should lead directly to a landing page (or stage of the buying funnel) that features the promotional content advertised, not just your home page. 

• Co-branded journeys: When two brands team up, it can bring in all the more customers, boost awareness and help businesses reach new markets — if done right. Your customers expect a great customer experience from each of their favourite brands, so curating the transition between brands and marketing the shared proposition from start to finish creates both confidence and trust in the promotion for maximum conversion. 

• Overlaid or inline messaging on webpages: Providing the right messaging to your customers when they’re on your website is vital. But you have to strike the right balance — an overlaid message that pops up too quickly will put off potential customers, and one that takes too long may not lure them in on time. 

• Content gates: Content gates can simplify the promotional experience for customers in two ways. First, it ensures that the offer is curated in one place, making it easy for the customer to find and use. Second, it helps customers feel a sense of exclusivity with the promotion, or as if they are getting VIP treatment that only select people can access, which leads to a higher chance of conversion.

Review, refresh and think longer-term

The right platform can deliver the data and insights you need, but you still need to make sure that you use this information wisely. As we discussed earlier, a dashboard will help you monitor your performance data and make any necessary adjustments to your campaign. For instance, over time, you might notice that most of your revenue comes from a small percentage of affiliates. Or you might notice that the same audience is responding well to one promotion and poorly to another. You can use the information you glean from your dashboard to hone your current campaigns and make smarter choices about which affiliates or strategies to deploy in the future.

In the end, it’s all about ensuring that your campaigns serve both your short-term and long-term business goals. Targeting specific outcomes from the very beginning will help ensure campaign success, deploying technology will help simplify campaign management and responding to the data will help you sharpen your strategy as you go.

Remember: there’s no doubt that affiliate marketing works — taking the right strategic approach and using cutting-edge tools can make it work even better.

If you want to find out more about affiliate marketing and how you can make this easier with the right tech, a platform like Uniqodo aids in enabling partnerships.