How Affiliate Marketing Works

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Within the broader concept of affiliate marketing, there is a fairly common mistake: thinking that affiliation and conversion are synonymous. Although they are very close to each other, they are different concepts. As the experienced SEO agency we are, allow us, in this article, to explain what affiliate marketing is and how it works.

What is affiliate marketing, and how does it work?

What is affiliate marketing, and how does it work?

It is a strategy based on products’ recommendations to third parties, from which compensation is usually obtained, usually economic. For this reason, affiliation and conversion are very close because a good affiliate strategy allows you to get many profitable conversions.

 For product recommendations, advertisers attract new customers with less marketing effort. This is because advertisers are generally public figures or influencers.

Who are those involved in affiliate marketing?

For affiliate marketing to be successful, it requires the action of different parties, which have specific roles within the process:

Affiliates

They are the ones who create the ads from their media, intending to attract new customers for the company that hires their services. In exchange, they receive compensation, usually of a financial nature. Advertisers are usually public figures or influencers, but they can also be other companies, as part of a business alliance that benefits both organizations.

 Advertisers

They are the ones who look to affiliates to get more marketing for their brand, making use of less marketing effort. The advertiser makes the necessary tools available to the affiliate (free samples, discount coupons, etc.) to carry out a marketing campaign.

Affiliate platforms

Within affiliate marketing, this figure may or may not exist. They are intermediaries between advertisers and affiliates, who offer affiliate programs, infrastructure, and software where communication is generated, commission payment systems, and so on.

Consumer

Suppose the advertiser and the affiliate well manage the marketing. In that case, the consumer receives a personalized recommendation and suggestions for the use of the product and provides a sense of status for its use.

How does affiliate marketing work?

If you have an e-commerce, affiliate marketing is an opportunity to generate income without having to invest large amounts of time and money. The affiliate is responsible for delivering the message to its audience and the advertiser, for its part, provides the means that will allow the affiliate to transmit the message, for which free samples, discount coupons, or gifts for potential customers can be used and, in some cases, for the affiliate.

 If the campaign is successful, the visitor will reach the website and, if the site is attractive and optimized, it is most likely that that user will convert. The conversion quality will determine if customer loyalty to the brand and recommend it to people within their social circle.

Forms of remuneration

As mentioned previously, the affiliate receives remuneration from the advertiser, which can be:

Pay per Click (PPC)

This scheme works the same as the campaigns in Google Adwords that are handled in pay per click. The affiliate makes a profit each time a user enters the advertiser’s website.

Payment for Call Tracking

This method consists of getting potential customers to register their phone number, requesting that said registration be made from the affiliate’s link.

Pay per Sale

This is a reasonably clear criterion for setting a commission. The payment will be proportional to the conversion capacity of the advertiser.

Pay per Lead

When this form of retribution is chosen, payment is awarded to the affiliate for the number of users who enter the advertiser’s website and fill out the requested form.

Pay per share

This modality is ideal for businesses such as the sale of insurance. The affiliate gets potential customers to quote insurance at the insurer’s pricing so that the company obtains valuable user data. In this way, you can access two possible actions: the quotation and obtaining data, or getting data and buying insurance. For each step taken, the affiliate will receive a commission.

Types of affiliate marketing

Within the “advertiser – affiliate – final consumer” scheme, there are different affiliate marketing types. Among the most common are:

Email marketing databases

The affiliate makes profitable the database of users it has. The advertiser must check that the interests of said database coincide with the theme, product, or service offered, that is, carry out a good targeting so that affiliate marketing is successful.

Co-registration databases

The affiliate brings together different companies in the same newsletter, giving subscribers/users/consumers the possibility to subscribe to obtain more information on a specific topic. In this way, the consumer consents that the data provided be sent to those companies they have expressed interest in.

Search engines

The affiliate achieves a more significant number of conversions for the advertiser by using search engine ads, based on the pay-per-click (PPC) method. To achieve this, the affiliate buys keywords on sites like Google Ads. This model is profitable when the affiliate’s payment is less than the commission received by the advertiser.

Cash Back

This model is based on those sites that share income with users. In this way, advertisers return part of the commission for purchases made, which can be directly in cash, redeemable points, discounts on subsequent purchases, and special promotions. In this way, the user is benefited in such a way that customer loyalty is achieved.

Affiliate marketing can be successful if you structure a strategy appropriate to the needs of your company.

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