In this era of digitisation, a large number of our population is familiar with the internet and trying to gain the best of it.
By using this platform one can do a number of activities like exploring social media, get yourself updated with the new ideas and trends, sharing your knowledge with others, E-Commerce etc. Affiliate Marketing is also an important part of E-Commerce. We can divide the term affiliate marketing into two parts:
Marketing industry has four core players, which are:
- The Merchant (who is also known as ‘Retailer’ or ‘Brand’)
- The Network (that contains offers for the affiliate to choose from and also takes care of the payments)
- The publisher (also known as ‘the affiliate’), and
- The customer OR consumer/end user Sometimes other online marketing methods like Organic Search Engine Optimization (SEO), Paid Search Engine Marketing (e.g. PPC- Pay per Click), E-Mail Marketing, Content Marketing and Display Advertising overlaps with affiliate marketing.
Often, people get confused between Referral Marketing and Affiliate Marketing as both forms of marketing use third parties to drive sales to the retailer. However, both are distinct forms of marketing and the main difference between them is that affiliate marketing relies purely on financial motivations to drive sales while referral marketing relies on trust and personal relationships to drive sales.
Importance of E-commerce Affiliate Marketing
In current scenario as well as in the coming future; if you are going to be well versed with AFFILIATE MARKETING and know how it works then definitely you can be assure that you are good-enough to earn that extra income on regular basis ,which you are looking for. We listed down a number of reasons, why it is important for you.
It helps Affiliates to get a chance to promote your product online, and get an opportunity to earn commission by sending the customer to visit your website. On the other hand, it also helps the merchants to expand their market reach and results as an increase of sales.
- In this process you pay to the affiliate only for the performance.
- The merchant gets the benefit to earn 24*7 as the customers visit your site and purchase the products according to their convenience without any time restriction unlike other offline marketing.
- It requires a little or no investment
- It is profitable to both advertiser as well as the publisher.
- The cost of advertising is also less as compared to other E-Commerce online marketing strategies.
- It rapidly increases trafficking to your website.
- The merchant or the advertiser gets extra attention by the customers due to the affiliates.
Types of Affiliate Marketing
There are three types of affiliate marketing:
- Pay Per Click (PPC) – It helps you to get paid for all valid clicks that you generate regardless of leads/sales.
- Pay Per Lead (PPL) – In this, the advertiser pays you a commission (a fixed amount) for a qualified action which can be a short survey, free trial, install, sign up, online form submission etc. A perfect example of Pay Per Lead programs would be dating web sites which usually pays for a free trial.
- Pay Per Sale (PPS) – In this, the advertiser pays you a percentage of all qualified sales. The most popular Pay Per Sale affiliate program is Amazon Associates where you can earn up to 15% depending upon the category of products.Therefore, right approach will help both the advertiser and the publisher to earn more revenues or profits and it can be done only by helping each other with the marketing process. You may get lot of competitors also; in this case you have to follow your online marketing strategies very well. It is also important to follow some safety measures to avoid fraudulent leads or affiliates.
The four main components of affiliate marketing are represented in the above diagram are interdependent to each other. When a Merchant wants to increase the volume of his sales he offers Commission to the Affiliate Marketers who in turn provide Targeted Traffic to the merchant with the help of his Affiliate Network.
How Affiliate Marketing Works
The affiliate marketing program provides an easy way to create an additional source of income for website publishers and owners. Marketing banners of merchant’s products generate instant sales wherein they get a commission. With the help of affiliate marketing merchants get a wider place to sell their products and services, resulting in more customers and more sales. They can gain more customers without spending valuable time in searching for them. In order to get that extra income you have to log in into the affiliate network and promote the products of merchant who in-turn pay you the fair amount of your commission.
Programs that track compile statistics from affiliate sites provide reliable and current client behavior on trends and demands at no extra cost. It does not require a sizeable investment on the part of the affiliate. The affiliate does not have to worry about customer support, book keeping, and e-commerce related headaches since in affiliate marketing, the merchant handles it all; all the affiliate needs to do is, promote and resell the product. An affiliate marketer enjoys the luxury of being his own boss and work on his own time. He can work only for a few hours or more and generate income 24*7, wherever he may be located in the world. An affiliate marketer can still maintain his present work or business and have the affiliate marketing income to supplement his financial position. With a laptop and an internet connection, anybody can work almost anywhere even while enjoying a vacation. It also helps the clients, as they do not have to drive all the way to the merchant’s store or retailer, to physically buy the product or engage the services of a service provider.
Steps included in the Process of Generating Income from Affiliate Marketing:
We will describe you how this Affiliate marketing works for you step by step for your better understanding about this topic. We can divide this whole process into 10 steps and all these steps are mentioned below:
- Like any other thing it also poses some disadvantages which are mentioned below:
- There is the possibility that some merchants may incur high commission costs and costly set up and maintenance fees due to affiliate facilitators/brokers.
- The affiliates may engage in false and misleading advertising in order to get sales commissions.
- Unscrupulous affiliates may make claims and promises regarding the product and services, which are completely wrong or extremely exaggerated. In cases like these, the merchant usually receives complaints and lose any potential consumer.
- Unscrupulous and dishonest merchants may arbitrarily close down programs without informing the affiliates and without paying commissions.
- Merchants may promise high commissions to attract new affiliates then drop commission rates after a week or two.
- Link hijackers can hijack affiliate links and get paid for the commissions instead.
- There are also false advertising, unlawful use of trade names, logos, or brands.
No matter the disadvantages, affiliate marketing still remains as one of the best ways to make money online. Marketers simply have to understand that by doing their homework and research before hand and by implementing simple security measures, they can easily negate all these disadvantages in order to enjoy the advantages of the affiliate marketing program.
We hope this article will help you to get an idea about what Affiliate marketing is, how its functions, its importance and drawbacks. For more details you can connect with us on the below mentioned URL: