Affiliate marketing is performance-based marketing where customers or partners, known as “affiliates”, are rewarded for designated actions that help market the brand. This can be a productive way for a company to expand its reach and marketing efforts. There are two ways affiliate marketing is approached: companies offer affiliate programs directly to other companies/individuals, or they can sign up to be an affiliate through another organization. The company that is offering or controlling the affiliate program will pay a commission for every lead or sale the affiliate delivers to the company’s website.
Let’s take an example to illustrate the idea. An individual might mention in a social media post that he or she purchased a product and gain a certain number of reward points for the post. The affiliate marketing program may be structured in such a way that the individual earns certain reward points for every ten likes or comments on that post. The affiliate can then redeem these points against the company’s products.
Affiliate marketing helps widen a company’s reach exponentially using the most credible medium—existing customers. Websites offering price comparison services, coupons, shopping directories, and virtual currency platforms are the most popular affiliate marketing websites. One of the main advantages of affiliate marketing is that companies can gain more customers with limited budget, since the approach is commission or reward points based. However, there is the possibility that some merchants may incur high commission, maintenance, and initial setup costs, depending on the nature of the business.
Affiliate marketing is different from referral marketing in the way that it uses online marketing platforms—social media, blogs, search engine marketing, and more—to market the product while referral marketing is primarily based on word-of-mouth and relies heavily on trust and personal relationships between existing customers and prospects.
Attracting the right partners is very crucial for the affiliate program to be successfull and in determining the volume that can be expected from the program. Common-place brands, even consumer packaged goods brands, can benefit greatly from affiliate marketing with the help of the right offers and efficient partners. Getting products onto as many sites as possible is not necessarily the most important goal. Marketers must also consider the relevance, value, and traffic of the sites and platforms that one is able to reach.
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