What is affiliate marketing? Tips for businesses looking to drive extra revenue in 2024
How does affiliate marketing work?
The affiliate marketing industry is worth more than USD 16.2 billion – how can your business be a part of that? In this advertising model, companies incentivise third-party partners to drive traffic, leads, or conversions to their products and services. These incentives boost the company's promotion efforts, whether to create a brand presence or generate buzz for their products and services.
Here are the relationships involved in a successful affiliate marketing campaign:
Businesses
Any business that create products and/or services can benefit from affiliate marketing. In such a programme, affiliates help drive traffic, leads, or conversions for their products and services. In return, businesses pay affiliates a percentage cut or a fixed fee, such as 20% of revenue or $10 per conversion.
The Affiliates
Third-party partners with high traffic or a target audience relevant to the business can act as affiliates. These partners can also be content creators like influencers and key opinion leaders (KOLs), content publishers such as media outlets or blogs, or even aggregators and online marketplaces. Using their social media accounts or websites, they can drive traffic to the business's product or service page. Affiliates earn a revenue share or an agreed-upon amount from the affiliate programme once they drive traffic, leads, or conversions to the business.
For further reading, check out our take on how influencer marketing can help small businesses and startups drive growth, along with some tips on building a good social content calendar.
Consumers
Audiences familiar with the affiliate can be encouraged to visit the business’s website to discover goods and services they haven't encountered before. In some cases, they can even purchase these goods and services at a discount by clicking through the affiliate’s link. Consumers should be aware that affiliates receive a commission from these products, often disclosed through “sponsored” posts.
3 types of affiliate marketing
1. Unattached affiliate marketing
The affiliate marketer typically has no connection to the product or service and lacks expertise or authority in the niche, so they cannot make claims about product use. They run PPC (pay-per-click) marketing campaigns and use affiliate links to drive purchases from their blog, website, or social media platforms. This approach is attractive to affiliate marketers because it requires no commitment, making it ideal for generating income without investing in the product or customer relationships.
For instance, media publishers like the South China Morning Post collaborate with affiliates to earn revenue through unattached affiliate marketing. They may cover a story about a product, provide detailed information and insights, and embed affiliate links within the content. This approach allows them to monetise their articles by driving traffic and potential sales without having a direct connection to the product or service being promoted.
Source: South China Morning Post
2. Involved affiliate marketing
In contrast, involved affiliate marketing partners have a direct connection to the product or service. They often have firsthand experience with the product, having tried it themselves, and trust that it will provide a positive experience for customers. These affiliates have enough influence to make claims about product use based on their personal experiences. As such, they are perceived as reliable sources of information, leading to a significant impact on purchasing decisions. This authenticity resonates deeply with consumers, with research indicating that 58% of customers are more inclined to purchase from brands that align with their values.
Source: Edelman
To show the full experience of trying out a product, KOLs often do product walk-throughs or use products within a narrative. The example below shows how @Sherlynchanwp enjoys Starbucks breakfast with her family and how that fits into her lifestyle as a mother.
Source: Instagram
3. Related affiliate marketing
In related affiliate marketing, the affiliate does not necessarily use the product or service but targets a niche audience. They often possess influence within that niche and have built an established following over time. While they may offer some level of authority, there's a risk involved in recommending products that might not meet the quality expectations of their audience. Despite this, they leverage their influence and following to promote products or services to their audience, even if they don't personally use them.
In the example below, IJustTryLah.com promotes affiliate links to various credit card promotions and giveaways. While the publisher may or may not own the card they are promoting, the product sits well in their content niche. Audiences who trust their opinion would still be interested in what they have to share about the featured product.
Source: ijusttrylah.com
Benefits of affiliate marketing for businesses
Scalable according to how you see fit
Expanding through affiliate marketing allows businesses to boost earnings by tapping into new distribution channels, all without the need for additional employees or resources. The flexibility of this approach means that depending on your business’ credentials and influence, you can negotiate favourable commissions with affiliate partners. This broadens your reach and maximises profitability by leveraging existing strengths and relationships in the market.
Low risk and low upfront cost
By utilising affiliate marketing, businesses can increase earnings by accessing new audiences that may have been previously untapped. This model allows businesses to promote their products and compensate affiliates solely based on their ability to generate new leads or purchases. It's particularly advantageous for new businesses aiming to establish themselves, as it provides valuable outreach opportunities to connect with potential customers and expand their presence in the market.
“In the initial years driving growth for Foodpanda when they were 2-3 years old, I witnessed how revenue attributed from affiliates accounted for more than 20% of the entire revenue for the Singapore business.”
Builds trust with new audiences
Collaborating through affiliate marketing offers the opportunity to partner with individuals or organisations that share similar values, fostering a more aligned and meaningful partnership. This synergy not only enhances brand credibility but also amplifies exposure to the right audiences. This strategic approach not only expands your reach but also strengthens brand affinity among your target audience.
Cons of affiliate marketing for businesses
It takes time and effort
Implementing an affiliate marketing strategy involves a process of trial and error to identify the right partners and effectively reach your target audience. While some partners may initially appear promising based on inflated website or app statistics, you can only gauge their true potential through an affiliate marketing structure. However, this process may consume significant time and effort, potentially resulting in wasted resources if the partnership doesn't yield the desired results.
Additionally, determining the most effective content format to resonate with audiences may also require trial and error. Despite these challenges, refining your approach through trial and error is essential for optimising the effectiveness of your affiliate marketing efforts in the long run.
Access to influential partners may be limited initially
Securing prominent partners depends on brand recognition, yet establishing brand recognition relies on collaborating with influential partners. Moreover, established partners may prefer working with well-established brands. To overcome these obstacles, emerging businesses must proactively network and allocate resources towards reaching out to influential partners with significant reach potential that aligns with their brand ethos.
3 steps on getting started with affiliate marketing
Find your niche, and craft an outreach message that would get their attention
When embarking on affiliate marketing, start by identifying the products you wish to promote and defining your target audience. Then, seek out partners who cater to the same demographic. To broaden your reach, think creatively and explore partnerships with affiliates in complementary niches.
For instance, if your business operates in the fitness niche, consider collaborating with affiliates in the self-help sector to access new audiences. Audiences who listen to self-help podcasts or watch videos about improving productivity could share similar values as those who prioritise leading a healthy lifestyle. Collaborating with other brands that share similar values can give you new opportunities to find audiences you may not have considered initially.
While finding partners with shared target audiences is essential, crafting a compelling outreach message highlighting the mutual benefits of collaboration is equally crucial. This persuasive communication can entice potential partners to join forces with you, amplifying the impact of your affiliate marketing endeavours.
Prioritise affiliates’ distribution channels that appeal to the right audience
When strategising your marketing approach, it's essential to consider common distribution channels such as:
Website banners
App features
Email
Various social media platforms like Instagram, Facebook, TikTok, and YouTube
These channels offer diverse opportunities to reach your audience effectively. Additionally, exploring popular content formats such as product reviews, listicles, comparisons, and day-in-the-life content integrated with products can enhance engagement and resonate with your target audience.
To optimise your strategy, analyse which distribution channels are most utilised by your audience and prioritise formats that drive higher engagement. By focusing your efforts on a select few distribution channels and evaluating their performance, you can refine your approach and concentrate on channels that yield the best conversion rates, ensuring a more efficient and effective marketing campaign.
Product-audience alignment
In affiliate marketing, relevance is key. Promotions that lack relevance can impede success and undermine credibility. Therefore, it's crucial to strategically select affiliates and the types of content disseminated through them. By aligning your affiliate partnerships and content with the interests and needs of your audience, you build trust and increase the likelihood of conversions.
4 Tips for success in your business’s affiliate marketing efforts
1. Build trust with your audience
When selecting affiliates, prioritise trustworthiness and safeguard your brand image. It's essential to partner with affiliates who align with your values rather than solely considering their level of influence or following. Trust is paramount across all facets of affiliate marketing, particularly for high-investment products and services.
For instance, promoting a $1,000 online course requires a higher level of trust compared to selling cheaper products. By prioritising trust and aligning with affiliates who share your values, you can enhance the credibility of your brand and foster stronger relationships with your audience, ultimately leading to more successful marketing endeavours.
2. Your users and clients are your best ambassadors — leverage this access
Consider incorporating user interviews into your promotional strategy for the product or service you're endorsing. Research indicates that 7 out of 10 consumers are inclined to recommend brands or purchases they trust to their friends, highlighting the importance of establishing trust in marketing efforts. This principle is also a driving force behind companies launching affiliate programmes, leveraging their existing network of users and clients to serve as affiliates. By engaging users directly and harnessing their positive experiences, businesses can strengthen brand credibility and expand their reach through affiliate partnerships.
3. Keep a lookout for trends
Source: SocialPilot
In the competitive world of affiliate marketing, it's important to stay abreast of emerging trends. When new marketing techniques come up, give them a try to see if they work better for you. Regularly updating your strategies helps to optimise conversion rates and drive revenue. By remaining proactive and adaptable in response to industry shifts, affiliate marketers can stay ahead of the curve and secure success in this fast-paced arena.
4. Research relevant search terms, and identify categories of affiliates or partners to work with
When promoting blog posts, conduct keyword research to improve search visibility. Tools like Google Ads Keyword Planner can be valuable resources for identifying the right keywords to reach your target audience effectively. Collaborating with your partners is also beneficial; informing them about the keywords to incorporate into their titles or descriptors can help ensure alignment and consistency in your marketing efforts. By integrating relevant keywords into your content and coordinating with partners, you can enhance the visibility of your blog posts and attract the right audience to your website.
Get started on affiliate marketing today!
Partnering with the right affiliates can be a game-changer for your business, propelling your growth to new heights. We've successfully assisted businesses such as Refash and Lendela in accelerating their growth through strategic partnerships and affiliate marketing initiatives, working alongside them to exceed our partner acquisition targets.
From developing comprehensive affiliate programmes, to finalising contracts, our work is done at the contract sign stage, where we will then hand over the partnership to our clients to execute.
Unsure about how to identify the right affiliates for your business? Reach out to us, and we'll leverage our expertise to help you work with your identified target partners as best as we can.