Affiliate Marketing Basics

Affiliate Marketing is the practice whereby a digital publisher or website promotes an online retailer and earns a commission based on the sales or leads that the advertising generates  or that online retailer. We term this payment metric CPA – Cost Per Action.

Typically an ‘Action’ is a sale of an online good or service, but it can also be a lead or registration, a call, a download or any other trackable action that is desired of the end customer. In recent years this has grown to even include offline sales — provided they can be tracked back by a coupon or barcode.

There are two ways the CPA are set. Flat Rate and Revenue Share.

Flat rate

For every action a fixed fee is paid. This is typically used for registration type actions with no cost, such as a credit card sign-up or for a fixed price product like a mobile phone contract.

Revenue Share

The price of the item purchased is tracked and a percentage of that price is then paid to the affiliate. This is generally favoured by advertisers selling a range of tangible goods at varying prices,
such as fashion retailers.

Affiliate Marketing is part of the performance marketing family, meaning the return on investment is guaranteed and the advertiser is only paying for advertising that has succeeded.

It’s a versatile channel and is very effective at driving actions for merchants selling consumer products or services across a wide range of verticals, including apparel, travel, electronics, health and beauty, telecommunications, finance and groceries.

It should be considered as a key part of an advertiser’s marketing mix in an integrated campaign, specializing in turning brand awareness and interest into conversions towards the end-of-purchase funnel.

We use the terms ‘Affiliate’ or ‘Publisher’ to define the website that is promoting the brand or products. Let’s now dispel a common misconception about Affiliate Marketing. Affiliate Marketing isn’t just banner advertising, in fact, most campaigns will get less than 10% of their sales as a result of banner advertising.

Consumers have learned to ignore these banners, so successful affiliates employ smarter, more engaging tactics to generate sales for the advertisers they work with, with most sales coming from ‘text links’ often hidden behind ‘Buy Now’ or ‘Shop Here’ type buttons.

‘text Link’ in the affiliate world is just a trackable URL that redirects to the relevant page of the advertiser’s website.

Whilst the majority of affiliates still generate actions for their advertisers by promoting on their own website or blog, there’s now many other ways they generate customers. This includes email marketing, mobile apps, paid search, re-marketing widgets or campaigns, Offline promotions and social campaigns.

The scope is almost unlimited. Any publisher or partner paid to promote on a CPA metric could be considered an affiliate. Start affiliate marketing by creating your very own WordPress website or blog here.

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