Has your business thought about other ways to engage users, grow traffic to your site, and increase sales online? Unlike other online marketing efforts, Affiliate marketing has a unique way of engaging and potentially increasing sales on your site, which in turn helps out with your bottom line! We are going to take a closer look at Affiliate Marketing, using RedShelf as a prime example.
The first part of this Affiliate Marketing series is understanding this avenue and how it works.
What is Affiliate Marketing and is it right for you or your business to invest in?
First things first, it is important to know what an affiliate marketing program is. Affiliate marketing is defined as "a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate's own marketing efforts."
There are four key players in this type of program which consist of:
1) The Merchant
2) The Network
3) The Affiliate
4) The Customer
In order to speak in depth about affiliate marketing, we will use RedShelf's affiliate program as example. The Merchant, or RedShelf, plays the role as the actual retailer or brand. The Network consists of the actual affiliate program that contains the offers for the affiliate to choose and generally takes care of payments. We use Share-A-Sale for the management and engagement of our affiliate program. The Affiliate is essentially the person, or person's who sign up for your program. And finally, the Customer is the individual who comes to your brand's site from the affiliate's own marketing efforts and makes a purchase.
So how does it work?
Because the strategy is typically more often than not performance based, the Merchant will set up a specific commission structure to reward an affiliate when a sale is made from their own marketing initiatives. This is an advantage to using an affiliate program because an affiliate program allows you as a merchant to use a sales force that is only paid when they sell.
Affiliates will link to a merchant's products through various creative banners or text links, drawing consumers to click on the link or ad (which will typically bring them to a product page or other landing page) to entice them to make a purchase of the Merchant's product or service. The Network, for us is Share-A-Sale, will then track that consumer, if they decide to make a purchase, the affiliate that lead them to make a purchase on the brand's site will then receive the structured commission percentage.
Advantages of Affiliate Marketing
1. You, as the Merchant, determine the value-add for affiliates to enter your program, like deciding how much the commission structure will be for sales.
2. An affiliate program can create brand awareness for your business. You might gain new traffic to your site that may have otherwise been overlooked.
3. If you are in a competitive industry, there is a good chance your competitors are already playing this game. Make sure you are playing too!
4. A new revenue stream! By engaging in an Affiliate Marketing program, there is a great amount of potential to increase sales made on your site.
5. More effective use of your marketing budget. If you are only paying out a commission to affiliates when a view of your site results in a sale, then essentially you have already made a return on your investment.
Determining if Affiliate Marketing is Right for You
A real simple and quick way to determine if affiliate marketing is right for you is to look to your competitors: are they running an affiliate program? If the answer is yes, then you may also want to take a look at what their commission rate is that they are offering individuals. Can you afford to compete with their commission structure? If so, then adding an affiliate program could be a great option to add to your online-sales.
Are you part of a small business? Don't be intimidated and think that affiliate marketing only is available or works for large merchants. In more ways than not, affiliate marketing is a great solution for small businesses.
Remember it is fairly easy to determine and track your ROI on this type of marketing initiative because you will automatically be updated of sales coming from your affiliate program, the commissions they received, and if there were any up-start costs you will need to factor those in as well.