At a glance, affiliate marketing is a simple concept: “advertisers” (someone with a product to sell) ask independent “affiliates” to promote their product for them. When affiliates cause a sale, generate a “lead” (contact information for a potential client), or cause an action desired by the advertiser, the affiliate will receive a payout for his/her effort.
Consider a real estate agent. They don’t own the houses they sell, but they know how to get people interested in the house, allowing them to sell it at a higher price than the owner could. The homeowner is willing to give the real estate agent a percentage of the sale because they will still end up with more money. This is the fundamental principle behind affiliate marketing, and it’s why it works: the real estate agent (affiliate) earns commission for their skill in acquiring a quality sale; the homeowner (advertiser) earns a higher price for their home; the buyer (customer) gets their dream house at a great price because the affiliate was able to connect them to it. Everyone involved in an affiliate sale will benefit from the affiliate’s involvement.
With the rise of the internet (and, most importantly, reliable systems to track referrals), affiliate marketing has exploded and is now one of the biggest sources of revenue online. There are many methods to promote advertisers’ products, but they all come down to generating traffic (users who view a website, social media profile or advertisement). Some affiliates purchase traffic, usually via banner advertisements on popular websites or social media; others are more creative and use organic methods, such as SEO and content marketing.
At its core, affiliate marketing is performance-based marketing. That means that the advertiser only pays for the results they get. Unlike traditional branded marketing, in which messages are delivered to large audiences in hopes that they will convince a sale, affiliate marketing takes advantage of modern techniques such as audience segmentation (identifying the people who will be most interested in a product, then advertising directly – and only – to them) and advanced data analysis (reviewing the effectiveness of an advertisement to optimize budgeting and placement).
Affiliate marketing is a learned skill. Talent, motivation and creativity are all useful, but the beauty of our industry is that anyone can learn to become an affiliate. It requires an initial investment, but anyone can become successful with enough practice and dedication. Our partners range from single mothers and university students to large international teams.
The value of an affiliate marketing skillset will grow in coming years. Many businesses are noticing their traditional advertising methods have become outdated and ineffective. Paying for performance – especially in a world where purchase decisions are increasingly being made online – is the “new way” for advertisers to maximize ROI on their growth budget.
The industry as we know it is relatively new, but it has already become a part of online culture. It’s all around you – you just need to know how to spot it. Instagram and YouTube stars are prime examples, while Amazon has the biggest affiliate program in the world. If you didn’t know what affiliate marketing was before reading this, prepare to start noticing it everywhere!