Affiliate marketing is a partnership arrangement involving merchants, affiliates, networks and customers. A merchant (the producer of a product or service) markets their goods or services through someone else, known as the affiliate or publisher, paying commission on sales. The affiliate may be, for example, a blog owner, a reviewer, or a social media influencer. They market the product in some way—for example, by mentioning it in a blog or review—and provide a dedicated link to the merchant’s site. Any purchases via that link earn commission for the affiliate. 

Affiliate marketing is therefore very good value for money for a merchant. Unlike advertising, it is directly linked to performance, and only sales receive commission. It is also very easy to track the success rate of your affiliate programme, because the links are specific to each affiliate. What’s more, the merchant only has to market to potential affiliates—and this may be easier than marketing to consumers.

Networks in affiliate marketing

Affiliate marketing sounds a bit like influencer marketing, which makes sense, because influencer marketing is a form of affiliate marketing. However, affiliate marketing can go further. It is possible for merchants to form their own relationships with affiliates, approaching them or being approached directly to suggest a collaboration. However, merchants can also use an affiliate network, such as Amazon Associates. 

In a network, any affiliate can sign up to the network, and start promoting any products within the network using a dedicated link. This means that merchants don’t have to spend time finding the right affiliates. Instead, the affiliates find them. The match may not be quite as good, but it’s a bit of a numbers game: more affiliates = more sales. 

There is, of course, one important final part of the equation: the customers. 

As with any marketing, there is an element of consent involved. The customers have to want the product or service being endorsed, or it has to provide them with some value. If it doesn’t, then there will be no clicks on the link, no sales and no commission. However, if both the merchant and affiliate get it right—that is, the affiliate’s audience are interested in the merchant’s goods, and the affiliate is able to highlight the value that customers will gain—then it is a win-win-win situation. 

Getting value from affiliate marketing

The concept of affiliate marketing, therefore, is simple. However, getting value from it requires some work, and particularly some thought. Merchants considering an affiliate programme need, for example, to consider whether they plan to approach individual affiliates directly, or join a network. 

There are advantages to both. Finding the right affiliates means locating businesses or people who are already targeting your potential customers. Locating and contacting potential affiliates directly is easier with a more niche product—but of course the potential sales are also smaller. Using an affiliate network can be a good way to find potential affiliates when your product range is broader, or when you have fewer resources. 

Once that decision is made, the next step is to decide on the ‘offer’: that is, what you want your affiliates to promote, what marketing materials you will provide, and how you plan to reward them for sales. For example, software company HubSpot offers two options to affiliates: a recurring commission of 15% per month for the first year or a flat rate of 100% of the first month’s revenue. The company also provides marketing materials. Its affiliate program is only valid for content producers, can cannot be used for referring clients. The customers also cannot already be partway through a sale with HubSpot.

Deciding on the rate of commission can be tricky. However, as a general rule, it may be best to err on the generous side. It is apparently not unusual to see commission rates of 50% on digital products, where there is no cost of replication. These rates are more attractive to potential affiliates, which means that you are likely to find more people willing to market your product. Audience matters, but as we said before, this is also something of a numbers game. 

Take your time

Finally, it is important to remember that it may take time to build up an affiliate marketing programme. There is no need to rush things, and you can also correct as you go along. However, over time, an affiliate programme could become a strong part of your marketing mix.