Business and Finance

What is Affiliate Marketing and How does it Work?

Affiliate Marketing

Affiliate Marketing

Affiliate Marketing refers to the process of promoting or marketing a product and hence earning a commission for every sale made. It basically includes 4 aspects which are as follows:

  • Vendor/Retailer
  • The network
  • Publisher
  • Customer

 

Let’s talk about these terms one by one and try to understand the concept of Affiliate Marketing.

Vendor/Retailer

The vendor/retailer refers to the seller or basically the one who creates the product. It can be any company which produces something or even a start up or independent entrepreneurs! All you need is to have a product which you need to sell. They take help of affiliates to market their product and pay them commissions as per the number of customers brought by the affiliate.

Publisher/Affiliate

The publisher/Affiliate refers to the one who actually does the marketing. He/she tries to convince others to buy the product. The compensation is received as per the performance and number of customers brought by him/her. Various techniques can be used for marketing of the product such as using social media, SEO, Pay per click, etc. He/she brings in more consumers to the vendor’s website.

Customer

Customers are the one to whom marketing is done, by the affiliate. Without them, profit earning is not possible. It is not necessary that the customer always know about being part of such a network. It depends on the affiliate according to the strategy he has planned.

The network

An affiliate network is also a part of affiliate marketing. The affiliate can choose from the various offers or the methods he/she wants to adopt and takes care of payments as well. ClickBank and Commission Junction are few of the popular networks. They basically manage payments made to the affiliates. It is the affiliate’s own independent decision to choose the affiliate network to implement his/her strategy. The affiliate can choose to work with multiple networks as well depending on his/her choice.

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How Does Affiliate Marketing Work?

Let us understand how does affiliate marketing work through the following:

  • Firstly, you need to Sign up for Merchant/Vendor Affiliate program
  • A link will be used by the affiliate to mention about the vendor’s website.
  • If Someone will visit affiliate’s website and click on the link provided by the affiliate to go to the vendor’s website, a cookie will be dropped on the visitor’s PC
  • The visitor buys something from the vendor’s website
  • The vendor will be notified after the visitor completes the checkout process. The vendor will check for the affiliate cookie on his/her computer. As the customer has bought something using the affiliate’s link, the credit is given to him/her through commissions or whatever payment terms are decided as per the agreement.
  • Payments are made to the affiliate according to the sales made through the affiliate link. They are usually made monthly or as per the affiliate program.

Pros of Affiliate Marketing

Affiliate marketing can be advantageous to  both the merchant as well as the affiliate in a numerous ways. It will require your time and efforts as well for earning profits in the long run.

Wider reach

Affiliate marketing can be useful to the merchant as he will be able to reach a wider audience through different networks. As the affiliates have deeper knowledge of markets, they can prove to be very beneficial to the merchant.

Increase in sales

Affiliate marketing can help the merchant in increasing sales and bringing in more customers without putting in much effort apart from hiring affiliates. There is no burden to broaden your sales team as well and hence saves money.

Cost effective

It is cost effective as the payment is made to the affiliates as per the terms of the agreement and number of customers brought by the affiliate. It prevents wastage of money in this case. The payment is made on the basis of performance. So, it is worth it in the end.

Brand recognition

Brand recognition is also one of the benefit of affiliate marketing to merchants. Their brand gets more exposure and customer base. People get to know more about it eventually.

Advantages of Affiliate Marketing to the Affiliate

Earnings

The more the number of visits to the website, the more will be earned by the affiliate. It is a great way to earn with a  little effort.

Free of cost

One of the main advantage is that it is free of cost and just needs registration and knowledge of such field. It doesn’t require any qualifications of expertise in any field as such.

International markets

You can even reach international markets as everything is done online and increase your reach

Growth opportunities

You can grow as a marketer and improve your skills and growth opportunities.

Cons of Affiliate Marketing

No quick results

Nothing comes easy.it takes a little time and to get settled. You start earning after a while. A long term strategy is required to get into this field and start earning.

Competition

There is a lot of competition in this field. It is necessary to choose a right platform to get started. Since, it is easy to start with it, there are a lot of persons into this field. You need to be out of the crowd to actually start growing quickly.

False advertising

False advertising can also be a bane  which can destroy the brand’s image and also destroy customer’s loyalty. Smart decisions must be taken keeping in mind what products or services you are choosing as an affiliate to market

Frauds

You must choose the affiliate program smartly as there are a lot of frauds as well and the merchant might leave you in between.

Performance based payments

The payments are made to the affiliate on the basis of their performance. Hence, if you are not able to make a sale, you don’t get to earn anything which is a disadvantage

No control

The affiliate does not have any control over the affiliate program. The terms of the affiliate program are set by the merchant and cannot be changed by him or her. It also limits the growth opportunities for the affiliate

However, the pros outweigh the cons and affiliate marketing is indeed a great way to excel. Just be careful with the strategy you adopt . As we all know that E commerce is emerging as a huge business and the use of internet is also increasing day by day, affiliate marketing can prove to be the best way to earn money online.

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