Join Evgenii "Geno" Prussakov for an in-depth discussion in this video Introduction to affiliate marketing, part of Affiliate Marketing Foundations.
What is affiliate marketing? Simply put, it's performance-based marketing. Whereby affiliates promote a merchant's product or service and get compensated for every sale, visit, or subscription they send to the merchant. The most frequently used payment arrangements include pay-per-sale and pay-per-lead models. We'll cover these in a later movie. Let's look at the size of the industry now. Per Forester Consulting, the affiliate marketing spending in the USA is nearing 3.4 billion in 2014 and is set to reach $4.5 billion by 2016.
More than 10,000 online business rely on affiliate marketing for a part of their revenue. Also, according to a recent price water house Cooper study in the UK, which was commissioned by the Internet Advertising Bureau UK. In Britain alone, in 2013 affiliates contributed to some 4 billion clicks, which resulted in 100 million transactions. Those were sales and leads.
Affiliate marketing, also called performance marketing there accounts for 8 to 10% of UK's online marketing span and 0.8% of country's GDP. That's nearly as much as agriculture. Affiliate marketing owes its birth and first developments to William J Tobin. In 1994, he founded PC Flowers and Gifts. The first company to offer an affiliate marketing program. Later on, in July of 1996, Amazon continued this pattern with its Associates Program.
The world's largest online retailer now has nearly a million affiliates world wide. There are different ways you can run, manage, and promote an affiliate program and this may involve multiple parties in the relationship. But there are two, two main participants without which the existence of the very type of marketing as such as affiliate marketing would have not been possible. And these are the party that has the product or service and the party that knows how to sell it. The former is the merchant, sometimes also called advertiser, while the latter is the affiliate, sometimes also called publisher.
In this video course we will focus on the latter on affiliates. An affiliate program is a business arrangement whereby one party, the merchant, agrees to pay another party, the affiliate, for referrals of sales, leads, subscriptions, or other qualified actions. The payment is remitted for all the actions that occur in the event of the end consumer clicking the affiliate link, which leads to the merchant's website, and results in an action that the advertiser desires.
For example, an online purchase. For the sake of clarity, it is important to emphasize that the money is being payed on all confirmed and valid leads or orders. In rare instances, affiliate programs may also be called associate programs, as is the case with Amazon, reseller programs, commission, revenue-sharing, bounty or partnership programs. Years ago, I ran an online contest for the best definition of affiliate marketing. A friend and veteran affiliate marketer, Chris Sanderson, who ended up winning the first prize in that competition, summarized things, both eloquently and beautifully.
He defined affiliate marketing as the art of doing a merchant's marketing better than they can, and profiting from it. Many successful affiliates, also frequently called super affiliates, in the U.S., are truly better experts at what they do than most of the merchants that they promote. Consequently, they can market an online merchant's product or service in such a way that the merchant's receive incremental business while they themselves make a good living off the affiliate payouts that they receive in return.
The rest of the videos in this course, will walk you through the key affiliate marketing notions, will tackle the most important areas and equip you with the information and tools that you need in order to chart your own road map for affiliate success.
- Define an affiliate in terms of online marketing.
- Identify the most widely-used affiliate payment model.
- Describe ten types of affiliates.
- Recall the two types of affiliate platforms.
- Explain three considerations to take into account before building an affiliate website.
- Recognize three kinds of leaks.
- Define monetization.
- Summarize the characteristics of pay-per-call marketing.