What Is Affiliate Marketing and How Does Affiliate Marketing Work?

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Before we delve into what affiliate marketing is and how it works, it is important to have some context and perspective.

You see, the different actors that make up this marketing model are involved differently.

For example, if you are someone who wants to become an affiliate – also called a partner or publisher – you may want to know what it means to join a brand affiliate program, best practices for promoting a product or a service, how you get paid for it, etc.

What Is Affiliate Marketing?

what is affiliate marketing what is affiliate marketing and how does it work affiliate marketing for beginners

Affiliate marketing, although often called “channels”, is actually a model or framework that allows brands to partner with individuals or businesses (called “affiliates”, “publishers” and “partners” ), to monitor and measure their performance and do so. in an efficient, measurable and profitable way.

For example, suppose you are a direct-to-consumer sales company that sells engagement and wedding rings. Through your affiliate program, you could partner with :

  • Website focuses on economic weddings
  • Engagement / Alliance Review Site
  • Publishers who can promote registrations for your “free ring calibrator,” directing you to high-value leads.

Everything you want this partner to do – generate sales, leads, new customers, etc. – You pay them after performing the desired action.

In other words, you are paying for the actual results.

Who Are The Players In The Affiliate Marketing Model?

Brand (advertiser / merchant)

Companies that sell products or services. Industries include retail, direct to consumer, subscription services, financial services, travel, telecommunications, broadband, games, e-commerce, markets, B2B and more.

Affiliation (publisher, partner)

Marketing partner of the brand. They can be bloggers, active social media posters, niche content sites, personal website owners, product review websites, shopping sites, mobile apps, marketing platforms from application to application, mass media sites, loyalty websites, coupons and prices, and even other brands.

Affiliate network

In affiliate programs, the affiliate network typically handles all affiliate tracking, reporting, and payments. In addition to providing tracking technology, some affiliate networks also offer full service management or self-service program management. The affiliate network also allows brands to access applicable affiliate networks to join their network, which also allows these affiliates to access hundreds, if not thousands, of affiliate programs.

Software platform as a service (SaaS)

In the affiliate program, the SaaS platform also allows companies to track performance, reports and payments, but they do not manage the affiliate program or give companies access to the affiliate network. They only focus on the technological aspects of the affiliate program.

Brands choose affiliate networks or SaaS platforms as technology partners, not both.

Agency (see Management of affiliate programs below)

Oversee and manage day-to-day operations and program strategies on behalf of the brand, including partner relationships, partner recruitment, activation and optimization. They work directly with affiliates and with affiliate networks or SaaS platforms that meet the technological needs of the program.

The customer

An audience that wants to be influenced by affiliates to make a purchase, send a prospect form, sign up for a newsletter, test a service, become a new customer, etc.

How Does Affiliate Marketing Work?

For those outside, the operation of affiliate marketing can be mysterious and confusing. Some marketers even consider it as a channel that you can activate and deactivate as you can with paid search or paid social networks (spoilers: no).

Although affiliate partnerships have many facets, it is a structure built on transparency and real relationships, not one-off transactions.

The overall objective of the affiliate program is to create a mutually beneficial framework for both brands and their affiliate partners – a structure which, when well managed and strategically, can form a significant part of the brand’s online income , with a high ROAS and a low CPA.

what is affiliate marketing what is affiliate marketing and how does it work affiliate marketing for beginners
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  1. Affiliate partners promote branded products or services on their site.
  2. Consumer clicks on brand promotions on affiliate sites and cookies are then stored in the consumer’s browser (see the following section below for more information on cookies); this is what allows the affiliate network or the SaaS platform to monitor consumer progress from affiliated websites to the brand’s shopping carts.
  3. Consumers are transferred to the brand’s website.
  4. Consumers buy products / services from brands.
  5. The SaaS network or platform then automatically pays affiliate commissions (according to the rules defined by the brand) to conduct this sale.

Tracking Performance In Affiliate Marketing

Affiliate marketing uses tracking cookies and pixels placed on brand sites to track and measure the marketing activities of their partners. The metrics generated from this tracking structure tend to be more tangible than other forms of marketing and can produce very reliable ROI calculations for brands, including:

  • Registrations, email sign-ups, giveaway entries
  • Sales, orders, subscriptions
  • Conversion Rate
  • New vs Returning customer
  • Average Order Value
  • Cost Per Action (CPA)
  • Customer Lifetime Value (CLV)

Affiliate Program Management

On average, businesses run their own affiliate programs or partner with an affiliate management agent (sometimes called OPM) to manage the day-to-day needs of the programs that are run efficiently. There are also brands, especially corporate brands, that take a “hybrid” approach to managing their programs, where they oversee these items at home and partner with agents to manage aspects of daily life.

In-House program management tends to work best for

  • The company deliberately decided to run a small personal affiliate marketing program with only a few selected partners. Internal managers can usually manage this type of affiliate program without much difficulty.
  • Companies that do not wish to develop their programs. Partnership with a subsidiary is an investment; if a business does not invest in its program, the expenses may not be profitable.

Agency program management tends to work best for:

  • Companies (generally on the growth track and making over $ 8 million in online sales) that do not have internal resources, operational and industrial expertise, platforms and affiliate partnerships to manage effectively their affiliate programs.

Hybrid program management (in-house + agency) tends to work best for:

  • Corporate brands that need large teams to run their programs.
  • Brands that want to use an agency for a specific purpose or strategically expand their geographic footprint.

When managed properly, with the right partners, affiliate marketing is arguably one of the most effective and profitable marketing models for generating new revenue, new customers, and high value prospects. and additional sales.

The growth of affiliate marketing, which is now more than 20 years old, testifies to the adaptability and flexibility of the model. This is also the reason why it is an integral part of the marketing and acquisition strategy of the main brands in the global industry.