Affiliate Marketing 101: Your Guide to What It Is, How It Works and What to Consider Before Getting Started
So what is affiliate marketing?
Affiliate marketing, at its core, is about partnerships. In essence, websites promoting offers (or “affiliates” as we’ll learn in the next section) want to work with merchants to promote their products and services, and in return they get a commission for the value they drive for those merchants (typically sales or leads). Because these affiliates have audiences and untapped consumers that the merchants want to reach, this provides a win for all parties involved.
The affiliate gets paid, the merchant gets more new customers or sales, and the customer makes a purchase or completes an action that benefits them. Additionally, the affiliate invests in the marketing campaign upfront, and the merchant only pays on the desired actions once they have already happened … the beauty of performance marketing!
How does it work and where does PartnerCentric come in?
Key players in affiliate marketing:
The advertiser: Also known as a merchant, retailer or brand. This is you. The advertiser can manage their program and affiliate partnerships on their own, or with an outsourced program management agency (like PartnerCentric) to start and grow their affiliate program. Some networks offer a certain degree of managed services but an OPM agency will give you the most strategic and hands-on, independent approach that is tailored to grow your business.
The affiliate: Also known as a publisher or influencer. Anyone that can reach new or returning customers on behalf of an advertiser to drive a desired action. This is achieved through various strategies including blogging, social shares and mentions, reviews, email campaigns, mobile, loyalty programs, discounts and special offers among many others. What’s in it for them? Affiliates earn a commission from the advertiser, to compensate them for the value (typically a sale or a lead) that they drive.
The customer: Makes a purchase, fills out a form or completes an action after interacting with an affiliate. The affiliate gets paid once the action is successfully completed.
The networks and SaaS solutions: How do these partnerships work? They have to be tracked, reported on, and then paid. A network or a tracking SaaS solution is the foundation of an affiliate program. Relevant affiliates (because you certainly don’t want a heavy metal blog promoting Tommy Hilfiger apparel) are recruited to an advertiser's program (and receive an invitation from their network/platform to join the program). The managing team lives and breathes in these technology solutions, updating links, banner ads, text ads and creative, product catalogues, and everything that affiliates will need to successfully promote you. In addition to being a management portal, these technologies track the consumer journey, offer affiliate and advertiser reporting, and disperse the commissions to all of the affiliate partners.
The OPM agency: This is us. Think strategy, expertise, and execution. Agencies offer a full-service and strategic approach to program management, properly setting up and leveraging the network technology, recruiting and optimizing the right affiliate partnerships, and ultimately ensuring your affiliate program is a success. They can work directly with an advertiser’s in-house staff or fully manage the program. Additionally, agencies can work with multiple networks, which gives them more reach and ensures that the advertiser’s program is successful.
What are the benefits of working with PartnerCentric as my OPM agency?
Our team aims to be the affiliate marketing extension of your company. We take a hands-on approach with our full-service clients and our tenured account managers dive in fully from day one. Because we have cultivated over 60,000 relationships and take a network and platform agnostic approach, our clients are getting strategic support to grow their programs without the need to play favorites. If one technology is more successful with a specific vertical than another, we will always choose the best option for our clients. Additionally, our full-service clients get an entire team of dedicated experts in account management, compliance and technical services to their account, not just one person. At least five team members are touching the program in a significant way every day, with your lead account manager spearheading strategy and acting as quarterback internally.
What should I think about before I start an affiliate program?
Before you start an affiliate program, it’s important to have an understanding of the budget that must be allocated, and who is paid for what.
Technology: You’ll need a solution to track, manage and grow your program. Networks typically charge a percentage of revenue or commissions paid to affiliates. SaaS solutions charge a flat fee based on the volume that goes through the solution.
Affiliate commissions: You’re paying the affiliates on performance. Build a cost effective program with a strategic commission structure based on competitive Intel and publisher benchmarking, and proactive technology, which an agency like ours can guide you through. Commissions vary based on the value a partner drives for you, for example, you’d want to pay a content partner differently than a coupon partner.
Agency Investment: Think of this like an in-house hire, except instead of one junior “head” you get a team of seasoned industry experts and no ramp up or training required. Our team never learns on your dime. We are the trusted advisor, the confidante, the manpower, and the extension of your team you've been looking for to help you meet and exceed goals.
While we hope this provided a high-level overview of affiliate marketing, please reach out to our team to learn more about how this channel can help grow your business. We’re always here to help.
In our next post, we will cover what is needed to start a new affiliate program from a technical perspective. Stay tuned!