What is affiliate marketing and how does it work?

Affiliate Marketing or Influencer Marketing is a term that you most likely have heard before. But what is affiliate marketing and how does it work exactly? That is what will be reviewed in this blog, the topics that we will discuss are:

  1. What is affiliate marketing?
  2. What parties are required for affiliate marketing?
  3. How does it exactly work?
  4. What types of affiliate marketing are available?

What is affiliate marketing?

Affiliate marketing is basically nothing less than the digital version of the well-known word-of-mouth advertising, the difference is that with affiliate marketing you can promote a product or service in exchange for a commission. This can be a one-time commission or based on generated sales.

Your environment in general has a lot of influence on your purchasing behavior. If friends or family advise you to purchase a specific product because they also have it themselves, you are more likely to purchase this product if it meets your requirements. The advice of people around you gains confidence in the product and therefore may direct you towards a specific purchase.

With affiliate marketing you can build your own network of customers, partners and much more to promote your product to external companies and/or consumers. In this way you reach a larger audience, An additional advantage apart from extra turnover is that this also creates much more brand awareness.

In short: Affiliate Marketing is a digital marketing tool where partners/affiliates promote your product or service in exchange for a pre-discussed commission.

What parties are required for affiliate marketing?

Affiliate Marketing is not something you only do as an individual as more parties are involved to get started. To start with, you have a company that is looking for increased orders or revenue by use of Affiliate Marketing, this party is also known as the merchant or advertiser. A second party is needed for the actual promotion to the outside world and thereby show his followers/readers/friends why your product or service is so interesting. This is an individual person and is also known as the affiliate or publisher. Finally, there is of course the consumer who actually visits your website and makes a purchase. The focus of affiliate marketing is ultimately on this group because the extra turnover is realized here. As a company you are therefore not always in direct contact with your customers because they are connected with your brand through a much wider channel (your affiliates).

What is affiliate marketing and how does it work?

Your affiliate network can consist of a very diverse team, it may be that an existing customer is very satisfied with your product and is willing to promote it to other companies where he thinks this adds value. As an affiliate, your customer can basically earn back his purchase value by introducing new customers. It can also be the case that someone with a blog website publishes many articles about your industry, promoting your product or service can easily be incorporated into a blog article in which the writer can also earn commission. Even an enthusiastic family member or friend can reach a wide audience through promotion via Social Media and earn some extra money.

How does it exactly work?

The digital variant of word-of-mouth advertising sounds nice, but how does that work exactly? A unique link is required for each affiliate you work with, this is important to identify which affiliate generated the sale. Affiliate platforms regularly offer the possibility to automatically generate this unique link, it is important that you share it with the affiliate. The moment the affiliate uses the standard website link, his sale cannot be recognized and therefore no commission is paid. The link for example could look like this:

https://www.sirfiliate.com/?ref=01FNY7VFQ85S62AAATB746E7E4

The unique string of characters behind your website link are assigned to the affiliate and are recognized when a product is purchased. The disadvantage of the example link as displayed above is that it does not look very charming, luckily there are ways to adjust this so that the link looks more natural to the consumer. Our platform for example offers the option to assign an alias to your affiliate, this result will look like this:

https://www.sirfiliate.com/?ref=affiliate1

It is possible that a consumer clicks on the affiliate link but does not immediately make a purchase. The affiliate link that the visitor uses during his first visit is remembered by means of cookies. This ensures that an order is also allocated to the affiliate if the actual purchase takes place 14 days after a first visit. The term for the validity of the cookies is often adjustable so that you can determine when an affiliate still earns his/her commission.

What types of affiliate marketing are available?

Affiliate marketing is a broad term and can be applied in various ways by different companies and industries. The different forms of promotion are explained below in more detail.

  • Blog post
    You have most likely noticed that a blog article regularly contains external links to the website of a product or service. In some cases, a single blog article may contain up to ten or more links, the writer in many cases will receive a commission for each purchase from one of the links. This method allows blog websites to generate an impressive passive income without the need of having their own product or service. Writing the blog article is a one-time activity and can generate revenue for a longer period of time.
  • Email Marketing
    Email marketing to your own network is a well-known method of sharing more information about your product or pricing to attract new customers. However, this method can be extended by sending promotion of your product to a mailing list of your affiliate. in this way you reach a wider network and increase the chance of more orders.
  • Social media
    You have probably seen it before, a celebrity who shares a post on Instagram or Facebook and promotes a product such as a table or mattress. Often a link or discount code is included in the post to track the generated sales. Social media is a strong channel to reach a large audience, it however is important to carefully review whom you want to collaborate with in advance. It is key that your affiliate’s followers or network also have a direct link with the product you are selling in order to actually generate conversion. Promotion via social media can be widely applied and can therefore also be used on LinkedIn, for example, among people who have many connections.
  • Network
    Your own network such as prospects, customers or partners is of course also an important form of affiliate marketing. It is possible that a satisfied customer directly promotes your product or service to another party without actively posting a blog article or social media post for it. With a broad network and many satisfied customers, this can be a very strong method to bring in new customers as the direct advice of a network works convincingly in steering towards a purchase.