If you’ve heard of affiliate marketing at all it was likely a fleeting mention – one that let you know there was something to think about without giving you any real detail. We’re here to shed some light on what affiliate marketing is, and why you should consider utilising it as part of your business.

Affiliate marketing definition

The basic concept behind affiliate marketing is simple. Businesses with a product or service to sell approach affiliates who advertise those products or services. The businesses benefit from an increase in traffic and sales, paying the affiliate commission based on the performance of their advertising.

The key terms you need to know

There are four key players in affiliate marketing and you’ll need to be familiar with all of them, regardless of which role you envision yourself or your business playing.

• The merchant – you might see the merchant referred to elsewhere as the ‘retailer’ or ‘brand’, but there is no practical difference in the terms. The merchant refers to the business with a product or service to sell.

• The network – most affiliate marketing is now run through a network that connects the merchants and publishers. Networks allow for new opportunities to be found and make payment and performance tracking easier.

• The publisher – sometimes simply called the ‘affiliate’, the publisher is any site that publishes merchant ads. Most models of affiliate marketing now mean that the publisher is paid based on the performance of their ads, so they are incentivised to build high-quality content sites that drive traffic.

• The consumer – describes the users who visit the affiliate’s media and responds to the merchant’s ad.

Payment structures

Newcomers to affiliate marketing should also be aware of the different payment structures that could be involved, some of which are outdated and generally unhelpful.

• CPM (cost per mile) – This form of payment, where the merchant pays a set amount for every 1000 ad impressions, does nothing to incentivise publishers to promote products that are useful to their audience. All they need to do is keep traffic high, which has no bearing on whether or not the merchant is making any money.

• CPC (cost per click) – While slightly more constructive than CPM, CPC ads on publisher sites still don’t have any incentive to drive consumers to the product, they just need to get consumers to click on the ad, which is an important distinction to make. CPC is also vulnerable to click fraud, where bots or low-paid staff are used to click on an ad multiple times to drive revenue.

• Revenue share or PPS (pay per sale) – By far the most common and helpful payment structure, revenue share involves merchants paying publishers commission based on sales made on an advertised product within a certain time frame of the customer clicking on the ad (usually around 60 days). With this method, publishers are incentivised to make the product itself relevant and attractive to consumers, as it’s the sale, not the click or impression, that makes them money.

Why use affiliate marketing at all?

Hopefully the concepts behind affiliate marketing are becoming clearer, but you still might not know whether or not affiliate marketing is for you. At this point, it is helpful to distinguish between the merchant and the publisher, and to answer that question for both.

Should I become a merchant?

Affiliate marketing is, in theory, viable for any business whose audience consumes online content in known places. This is a somewhat vague statement, but these two examples will help to illustrate it:

• A home furniture retailer could use affiliate marketing to advertise their sofas on lifestyle and home improvement sites.
• An insurance provider could use affiliate marketing to gain visibility on money advice or price comparison sites.

The only way that affiliate marketing wouldn’t work is if there are no content areas that would attract a sizeable portion of your audience. However, most retailers will sell products with enough of a niche appeal that there are relevant content sites. Amazon is a great example, because although their audience is broad, they’re still able to advertise specific products to more targeted audiences through affiliate marketing.

Should I become a publisher?

Some people would say yes unreservedly, arguing that anyone can make money from affiliate marketing, but that is a simplistic answer. In theory, anyone can make money, but in order to do so you need some combination of these things:

• Your own site with high traffic or a specific, committed audience.
• Skill in crafting content that draws people towards products.
• Skill in knowing what kind of products will work for your site.
• A willingness to use your site for advertising.

That last point is commonly ignored, but the fact is that not all content creators want their site to display lots of ads for different products. Ads do change the aesthetic of a site, and this might cause a content creator to decide that this type of marketing is not for them.

With effort and a desire to succeed, however, it is possible for many content sites to make some money from affiliate marketing, and many individuals have succeeded in making easily enough to live off.

Affiliate marketing networks and third party platforms

Should you decide that affiliate marketing is for you, the easiest way to get started is to find a good network and some software that can help you keep track of performance, whether you’re a publisher or an advertiser. We don’t have space to list all of the options here, but there are some great articles out there that go through the top ranked software and networks.

When it comes to finding networks, big online retailers like Amazon and eBay are easy go-tos for new publishers. They are big name brands with established marketing schemes that will help you get started. Merchants don’t quite have the same easy ins, but if you take a look around, there are big networks out there that will give you a similar starting boost.

Finding the right partners

This final section is more of a ‘level-up’ than a tip for complete newcomers. Again, we’ll look at both publishers and merchants separately.

Publishers

Once you’ve got a feel for affiliate marketing, you might want to start looking a little further than the big players like Amazon and eBay. Perhaps you have a popular tabletop gaming review site and you want to start finding some more niche retailers, or you have a cooking blog and you want to start advertising food delivery services – looking further afield than the ecommerce giants will help you to bring something new and exciting to your readership.

The difficulty at this stage is knowing what makes a good partner and fostering that relationship. The tools that we offer here at Company Check can help you to start this process. By looking at a business’s current and historical finances, you can see what trajectory the business is on, and whether their goals are likely to tie in with yours.

For example, you might find that you want to partner with a small company that has shown great signs of growth, and looks like it’s going to be very successful in the near future, or you might decide not to partner with a bigger company that is on a downward spiral, and could even hurt you by association.

The bottom line is that knowing as much as possible about the merchants in advance will help you to develop a clear and successful affiliate marketing strategy.

Merchants

On the merchant side of things, you will eventually want to broaden your brand’s network and look for content sites beyond what you got started with. You might want to aim for more specific niches, or go for bigger sites with more reach. Just as publishers want to partner with merchants that suit their site, merchants should partner with publishers who have the type of content and the audience that they want to reach.

Tools like SEMRush have free to use functionality that merchants can use to see the approximate levels of traffic that a prospective publisher receives, as well as showing competitors to that publisher who might also make good partners.

The PPS model of most affiliate marketing means that partnerships tend to be fairly low risk for merchants; the onus is really on the publisher to perform well. Even so, there’s no point wasting time on a relationship that isn’t going to get you more sales.

A possibility worth exploring

Affiliate marketing is a possibility worth exploring for most businesses and many publishers. To be sure, it won’t work for everyone, but when it does work it can be very lucrative for both publishers and merchants. Why not take a look at an affiliate network and try it out today?