Affiliate marketing is a program between a seller/advertiser and an affiliate. This selling concept is characterized by a success-based commission that is paid by the seller. The amount of the commission is agreed between the seller and his partner. The affiliate is responsible for the affiliate portal and manages the advertising space. Affiliate marketing can be implemented online, but also offline.
How it works
Affiliate marketing is a method of online marketing which allows companies
to promote their products and services. Therefore, companies can look for
affiliates - business partners - who place advertising on their own sites in
the form of links or banners advertisers. The advertising is carried out by the seller, so the
affiliate is in fact the intermediary medium. The partner is paid in different
ways, which are detailed below under the cost per action model. Affiliate
programs can be created with the vendor itself and in cooperation with the
chosen affiliate. Alternatively, affiliate networks offer a wide choice of
affiliates for sellers (against payment). Such networks often support both
partners, with the creation of the campaign and the payment of commissions.
Seller and Affiliate
The seller, also called merchant or advertiser, is one of the two
stakeholders in the partnership program that is affiliate marketing, which is
concretely a cooperation between sellers and network partners. It is the seller
who provides the program and advertising material. As an online merchant, he
cooperates with a website provider, also called publisher or affiliate, who
offers his website as an advertising medium for banners or the like.
Thanks to this cooperation, the seller knows that his product is
presented to a wider range of potential customers, which increases the scope.
To make the
partnership as effective as possible, the seller should choose an advertising
partner that has high popularity. Furthermore, the interests of the target
groups must be similar, in order to achieve a high advertising effect. The
affiliate is a counterpart for the seller, as well as a sales partner for the
campaign that the seller will benefit from. The affiliate is paid for the
advertising space that he makes available to the seller.
Payment models
There are many payment models, to name a few Pay Per Click, Pay Per Lead, Pay Per Sale, Pay Per Click Out, Pay Per Link, Pay Per Print out, Pay Per View, Pay Per Sign Up, Pay Per Install, lifetime payment or airtime payment. Payis often replaced by "cost". The most used models are:
Cost per click (CPC )
With Cost Per Click or Pay Per Click, the seller does not pay the affiliate at a flat rate, but pays a certain amount if a user clicks on the advertisement. Thus, a payment is only made if a user reacts to the advertisement by clicking on it and being led to the advertiser's website. With this model, the company only has to pay if the user has actually recognized the advertisement.
Cost per lead
With this method, the payment is calculated with the payment per lead. Each lead represents a won contact. This model is mainly used in fields where it is not common to sell something directly to anonymous customers, such as in the insurance industry. Leads can also be obtained through catalog requests or newsletter subscriptions.
Cost per sale
This model calculates the payment on the number of times a customer buys something by clicking on the banner. With the Unique Identifiers, the actions of a user can be identified, so that it is possible to ensure that a purchase has actually been made directly after clicking on the banner. This system is also called the cost per order, but it incurs a fee for each order. Other models that do not track cost per action are for example cost per thousand (CPM) or cost per impression.
Conclusion
Affiliate marketing includes benefits for both parties. The seller's business can acquire customers at a low cost and experience an increase in its acknowledgement , because the partner can develop sales through the affiliate system. If the web presence is used correctly and the affiliate is selected wisely, significant sales can really be developed. In order to use affiliate marketing effectively, patience, good planning and creativity are required because the better the ad placement, the more clicks can be generated.
Affiliate marketing can also be useful for blogging if favorable
arbitrage deals are used to drive traffic.