All great things must come to an end. Some of the most interesting television series, highly educational books, songs, penance, and more. Everything has to come to an end at one point of time so the human mind could proceed to the next step of applying in real life what it has learnt.
Similarly, this super-resourceful series on Retail and Ecommerce Guide is coming to an end with this last write up as well. For us, personally, this journey has been highly rewarding as we got to interact with some really interesting people through messages and queries on the business models we discussed.
We had ideas pouring in from all corners of the country asking how they could grow their businesses in a testing time like this through our expertise. We feel really grateful that our years of expertise and experience is really helping someone get clarity.
We discussed a myriad of business models in the series, shedding light on some intricate and subjective challenges faced by businesses implementing these business models. We also mentioned the tech-based solutions that could ideally fix any and all problems stemming out of these models.
In this last post of the series, we are going to talk about another business model of contemporary origin that has become popular with the rise of the internet – affiliate marketing.
Let’s get started.
What Is Affiliate Marketing?
Like data science, analytics, artificial intelligence, blue ocean strategies and more, affiliate marketing is still seen as a buzzword in the market. Even after digital marketing spreading its wings across the globe, this business or revenue-generating model has been widely misunderstood. There are several misconceptions and rumors surrounding affiliate marketing that we decided to put an end to them by sharing details on what it really is.
In simple words, the word affiliate means an official attachment to an entity, company or a firm. We are sure you would have come across the term affiliation with respect to schools, colleges and educational institutions. In retailing, affiliation refers to the attachment or association of one business with another bigger business.
This bigger business has a well-established brand or a website, where the smaller business can become an affiliate to and sell its products or services. Amazon is a good example of affiliate, where several affiliates called Amazon Associates attach their business with Amazon and sell through the portal. For every sale made, Amazon takes a cut.
In a digital marketing perspective, affiliate marketing also refers to the use of one’s network to promote another business and get paid for it. If it sounds too complicated, understand that you are a means of a lead generation system to another business you are associating with.
For instance, if you have a blog on parenting and have a solid count of loyal monthly visitors, you can choose to monetize your website traffic through affiliate marketing. All you have to do is associate yourself with a relevant brand such as baby powder or baby-care products and promote them on your blog.
You could do this through banner ads, writeups with links, images, videos and other creative mediums. When your visitors read that article and find it useful, they would click on one of the links you have added and buy from the website they are redirected to. Whenever a purchase happens through your blog or affiliate link, you get paid a commission.
To generate a substantial revenue, you should have a larger network and reach.
Some Important Numbers on Affiliate Marketing
- Affiliate marketing is anticipated to reach a value of $6.82bn by the end of 2020.
- In 2016 alone, over 81% of the businesses used affiliate marketing to drive their sales.
- Over 38% of the marketeers believe that affiliate marketing is one of the best sources of customer acquisition.
- The most popular affiliate marketing category is fashion and apparel.
- Over 50% of affiliate marketers make around $20,000 a year.
- Affiliate marketing is anticipated to grow by 10.1% every year in the US.
How Does Affiliate Marketing Work?
- It all starts with you joining an affiliate program. Depending on what your network and medium are all about, you could choose a niche or a market niche you feel would resonate with your network.
- You decide on the product you want to promote through your mediums. Once you select, you will receive a unique affiliate link for that product.
- On your mediums such as your blog, YouTube channel, podcast avenues, websites and more, you share this specific link.
- When your visitors buy that product by clicking on your link, you get a commission for the sales.
Advantages of Affiliate Marketing
Affiliate marketing sounds intriguing right? So far, it has helped several aspiring solopreneurs and entrepreneurs generate a steady source of income and make the best use of their network and website traffic. The statistics back this statement as well. But apart from this, there are several advantages affiliate marketing offers.
Let’s find out what they are.
- It allows sellers and businesses to reach out to customers through affiliates they wouldn’t be able to otherwise.
- It allows sellers to increase their sales and targets.
- You don’t require a substantial investment to begin an affiliate business.
- As an affiliate, you don’t have to worry about factors like inventory, book keeping, delivery, operations and more.
- It is a profitable source of revenue.
- It allows you to work on flexible timings and from wherever you are.
- With data and analytics, an affiliate can make smarter decisions by tapping on online trends for more traction.
Challenges In Affiliate Marketing
By now, we’re sure you are interested in affiliate marketing. We could sense that you intend to look for options on how to get started. But before you proceed, it is vital that you get to know the challenges involved in affiliate marketing as well. While advantages would tell you to go ahead, understanding the challenges involved in running an affiliate business will tell you how to go ahead.
So, let’s look at some of the most prominent challenges in affiliate marketing.
Multi-channel Marketing : where there are different avenues that serve dedicated purposes and you have to implement trial and error methodologies to see what approach for marketing and campaigns works better for which medium based on your product.
Real-world Scenario : If you are an affiliate, you should know that there are diverse avenues like Instagram, WhatsApp, Facebook, Pinterest, blogs, LinkedIn and more. The approach, messaging and tone that work on Instagram will not work on LinkedIn or your blog. So, each approach should be tailored according to your medium and then promoted for more traction.
Customer Acquisition : is one of the most plaguing concerns sellers face. With the market being cluttered, it is hard to not only retain customers but find new customers as well.
Real-world Scenario : in a competitive environment, what matters to customers is their purchasing experience. This involves the seamlessness of the website or brand, their reputation, interaction, reviews, discounts or deals and more. Even if one aspect is lacking in your business or if your competitor steps up one aspect, you are bound to lose a customer and the chance of getting a new one.
Product Showcasing : is what brings credibility to your business. Unlike an in-store experience, where customers can touch and feel a product, online shopping is all about how you showcase your products. The looser it is, the lesser the traction.
Real-world Scenario : So, let’s assume you have an amazing product. It seamlessly solves a real-world concern quickly but when you present that product online, you don’t care about the aesthetics of your product or its presentability. Your website is loosely designed, the photographs are amateurish, the website UI/UX is poor and more. All these offer a below-average experience to your customers and make them suspect the legitimacy of your business. So, this fails even if your product is best in the world.
Multiple Creatives : Like we mentioned in multi-channel marketing, coming up with creatives is a set of tedious tasks. Technically and creatively, your creatives and marketing collateral should be dependent on the medium you wish to use them on.
Real-world Scenario : the dimensions specification of Facebook creatives are different from that of Instagram’s. Likewise, each medium has its own specifications. And the creativity involved varies as well. Copies for each medium differs, one-liners differ, product descriptions differ and more.
Commission Calculation : where it becomes difficult to calculate the commission for each depending on the quantity and volume of sales generated. When there are multiple affiliate links you promote, this becomes all the more difficult.
Real-world Scenario : commissions are why your business exists. If there are errors in commission calculations, it doesn’t make sense to dedicate your time and effort into promoting a product. This is a loss not just for you but the business you associate yourself with, too.
Overcoming The Challenges In Affiliate Marketing
Though there are challenges in affiliate marketing, these can be solved through tech implementations. Let’s look at how we can fix some of the challenges we mentioned above.
Price Comparison : where you could explore multiple products of a same genre in detail, analyse the pros and cons of each, compare for features and specifications, prices and more and make better buying choices.
Real-world Scenario : Your affiliates would find your links more helpful and feel empowered when you offer them the liberty to compare their preferred products and let them decide by themselves. Restricting this would only limit your conversions and commissions.
Genuine Reviews And Feedbacks : ideal ways to acquire new customers. Statistics reveal that customer reviews are one of the major influencers for someone to click that checkout button. With authentic reviews and feedback systems incorporated in your affiliate website or page, you would pave the way for better conversions as your visitors would know that the product you promote is legitimate and actually solves concerns. It also adds a layer of credibility to your affiliate business.
Tracking Mechanism : is ideal for commission calculations, where you just have to use UTM parameters and similar attributes to list out all the sales made through one particular affiliate link. Based on that the commission can be calculated for an affiliate based on the terms and rates guaranteed.
Ecommerce Store : is inevitable for an affiliate business as it allows you to promote products in style and aesthetic appeal you wouldn’t find in your niche or market. A well-designed and developed Ecommerce store has a solid UI/UX that makes looking at products seamless and offers optimum shopping experience to customers.
Blogging Platform : where a professionally designed and deployed platform allows you to handle traffic in a better way, tailor your content, improve its performance and load-time, offer you visitor insights, heat maps and anything you need to maximize revenue and engagement.
Case Study
Pat from Smart Passive Income has one of the most inspirational instances affiliate marketers look for. Through consistent efforts and strategic planning, Pat was able to make close to $315,000 between the years 2015 and 2017. He promoted Convertkit as part of his strategies and implemented creative affiliate techniques and strategies to make way for such revenues.
Some of the pillars of his success include not promoting more than one product of the same kind, offering demos of products, interviewing founders and more.
Future of Affiliate Marketing
The future of affiliate marketing looks solid with statistics backing this statement. In the coming months and years, Ecommerce businesses and bigger ventures will resort more to affiliate marketing for not just customer acquisition but to optimize their brand visibility as well.
Voice searches will seep in further and strategies will be reinvented to keep up with the newer demands and changes in customer behavior. As this changes, affiliates will also be required to develop mobile-friendly content. Videos and podcasts will be more prominent as they are super-consumable.
Influencer marketing will also come into the limelight as they epitomize affiliate marketing.
Wrapping Up
Affiliate Marketing is here to stay just like the on-demand economy. Going forward, we could also witness crossovers of the business models we discussed. All these can be used for complementary purposes for profits and revenue.
And if you are someone who is looking to make money through affiliate marketing, you need a solid website, an Ecommerce store or a blog. The more professional and custom-built it is, the better your chances of earning.
We recommend getting in touch with us for any of your affiliate marketing setup needs and we will set up a business for you that yields nothing but profits.
Reach out today.
Series Wrap Up
It has been an overwhelming experience for us, sharing our knowledge and years of experience through the Retail and Ecommerce Guide series. We believe this series has been an enriching experience to you as readers and you have substantial points to take away from each of the posts.
We are sure you have a better clarity on business models and that you have identified your niche, specialization or skills to match an appropriate business model for proper growth.
Amidst these testing times, it is essential to introspect, retrospect and make our venture and businesses future-proof. Let’s prepare for anything the world has to throw at us through meticulous planning and strategizing.
This series is a small effort from our side to keep your business afloat and profitable.
We wish you good luck for all your ventures and do share the series with anyone who deserves to grow.
Also, you could reach out to us from here and share your ideas and concerns. We would help you out in ways we could and together, we could develop and rollout game-changing businesses and products.
Here’s to better days!