Introduction to Affiliate Marketing
The era of internet has seen a massive change in the way business is being done. The effortless reach of the medium has ensured that the business owners can access the customers more easily, across geographical obstacles and distances. No country is too far and no product is out of reach of the customers. Affiliate marketing is one of such trends wherein a massive customer base can be reached without any increase in sales/marketing costs and without any elaborate marketing plans. Brands collaborate with various affiliates to promote products or services. The scale of business and reach is such that the U.S. affiliate marketing spend is due to reach 8.2 billion U.S. dollars by 2022, up from 5.4 billion recorded in 2017.
What is Affiliate marketing
Affiliate marketing is also known as performance-based marketing. It is a business method wherein a business owner makes sales through affiliates who recommend the products through blogs or through their web pages and earn commission when sales happens. It’s a win win situation for both as the seller does not have to set up an extensive marketing strategy and the affiliates do not necessarily have to create a product of their own and earn passive income in the form of affiliate commission.
Advantages of Affiliate marketing
The affiliate marketing model has a major benefit in that
- The seller does not have to spend more to reach a bigger market
- The marketing costs are reduced
- Significant increase in sales without additional burden of manpower costs
- Better feedback on quality of products
The affiliate enjoys benefits in that
- He does not have to pay to join the affiliate program
- He can sell an established product without upfront investments
- After the initial proactive efforts, the affiliate links generate a regular passive income.
Affiliate marketing strategy
Affiliate marketing has the following players/ network
- The merchant. Could be a firm or an Individual with a product or a dream to sell.
- The Affiliate. Could be an individual or an entire company
- The product. Could be physical like a book to a virtual coaching programme.
- The customer. The main cog in the whole process who makes the affiliate system work.
- Medium. The product has to be advertised and sold for which the medium is to be selected and affiliate marketing strategy worked out. The medium could be social media like instagram or facebook, blogging pages or a dedicated website.
The product has to be selected wisely. The affiliate platforms are aplenty with many a product to sell. The criteria to be kept in mind while selecting the affiliate product is whether the product is aligned with your niche or area of expertise and whether there is a market for it. Niche or area of expertise is basically your passion or the expertise gained by working in the related field for years, gaining knowledge and experience which makes you somewhat of an expert and one who could understand the nuances, the advantages and disadvantages of the product. Somebody in the logistics field will have an advantage in selling a logistics related solution as he would have a better idea of how to market the same. A food blogger trying to sell an engineering product would be like fitting a square peg in a round hole.
The platform too would be important as beauty related products would be well served in instagram or facebook whereas an engineering product could be through a dedicated website or a blog where the product description could be done in detail.
Affiliate marketing as an end result could result in steady passive income or even source of enormous riches but it needs dedication and extensive efforts in the beginning till you make a name for yourself and you are well respected in the market. Your quality of work would speak in a world of cut throat competition. One has to develop trust in the eyes of the user. One wrong move or a short cut would spell disaster.
Further be selective about the products you promote. Limit the number of affiliate products you endorse or advertise those which you have used yourself. A product tutorial explaining about the product and how it works would be a major force multiplier. And, if the video features you using the product, well, that would certainly increase the trust factor in the affiliate product you are endorsing.
Affiliate Marketing Disadvantages
Like any other business, Affiliate marketing suffers from a few disadvantages mainly:
There is no control over the affiliate program. You cannot control it as you do not own the program. The merchant decides the terms and conditions and as competition gets tougher the terms get less attractive. The merchants do tend to give a raw deal once the product is well established.
There is no guaranteed income. It is an opportunity combined with risk. There is no guarantee that you will earn a particular sum or the time it would take for you to achieve desired level of sales. The expected passive income could well turn out to be a business venture needing constant active participation.
Customer Base. Once referred generally the same customer will not buy from you. The need is to generate new leads on a consistent basis. And with growing competition of ever expanding affiliates, it gets more difficult to gain new leads
Some statistics pertaining to affiliate marketing (AM) reveal the following:
- Affiliate marketing spending is bound to grow by 10% in the next few years.
- Worth $12 billion, the AM sector is growing rapidly.
- AM accounts for 15% of all digital media revenue.
- Well-crafted affiliate marketing programs can boost revenue by a staggering 30%.
- That boost amounts to 15%-30% of all sales being generated by AM.
- Together with email marketing, AM is one of the largest sources of online income, accounting for over 16% of all ecommerce orders in the USA and Canada.
(courtesy: hosting tribunal.com)
Affiliate Marketing conclusion
Affiliate marketing is apparently the easiest online business model to start earning passive income online. It’s low-cost, high-profit industry. On the other hand, it also might happen to be a tough one. All the challenges are on you and performance relies on your determination, approach and the affiliate strategy you choose to follow. Affiliate marketing seems to be an easy and exciting way to earn money. The key for the same would be find a top performing affiliate platform.