Affiliate marketing is one of the most cost-efficient ways to market a product, service, or business. This video lesson looks into the nature of affiliate marketing, its history, size, projections, and how it really works.
- Let's begin this course, by discussing what Affiliate Marketing really is, and briefly look into its history, size, projections, and the key players involved in making it possible. Sometimes referred to as performance-based marketing, Affiliate marketing is a context within which independent marketers called affiliates or publishers, promote an advertisers product or service, and get paid for every qualified customer referral.
The most common end-user actions for which affiliates get compensated are sales and leads. According to a 2016 study by Forrester Consulting, the affiliate marketing spent in the US will reach 4.8 billion dollars in 2016. Essentially twice the economy of Belize, and it is set to reach nearly seven billion by 2020. More than 15,000 advertisers rely on affiliate marketing for a part of their revenue.
According to a recent study commissioned by the Internet Advertising Bureau in Britain alone, affiliates contribute to some four billion clicks a year. That's 120 per second, which in 2015 converted into 125 million sales and leads. Affiliate marketing accounts for 10% of the UK's online market spend, driving nearly 1% of the countries GDP, exceeding that of the whole industry of agriculture, and yielding 15 British pounds per every pound spent, touching four out of five Britons.
Affiliate marketing owes its birth and first developments to William J. Tobin. In 1994, he founded PC Flowers and Gifts, and the first company to offer an affiliate marketing program. Later, in July 1996, Amazon continued this pattern with its associates program. The world's largest online retailer now has over a million affiliates worldwide. There are different ways to run, manage, and promote affiliate programs, which may involve multiple parties, but the two main participants are the party that has the product or service, and the party that knows how to sell it.
Without these two parties, this type of marketing would have not been possible. The party that has the product or service, is the advertiser, sometimes also called merchant, while the party that knows how to sell it, is the affiliate, sometimes called publisher. In this course, we will focus on the advertiser. An affiliate program is a business arrangement, whereby one party, the advertiser, agrees to pay another party, the affiliate, for referrals of sales, leads, subscriptions, or other qualified actions.
Payment is remitted for all the actions that occur when the customer collects the affiliate link, which leads to the merchants website, resulting in an action that the advertiser desires. For the sake of clarity, it is important to emphasize that the money is paid on all confirmed and valid leads or orders. To circle back, do not think of affiliate marketing as a single channel, but rather as a marketing model or context that allows advertisers to leverage affiliates who employ a wide variety of marketing channels to target shoppers and get results.
- Affiliate marketing concepts and compensation models
- Creating marketing collateral
- Writing terms and conditions and a program description
- Announcing the affiliate program
- Recruiting via email
- Using different recruitment methods
- Ensuring compliance
- Communicating with affiliates
- Optimizing the program