Affiliate marketing is a way for businesses (usually known as ‘merchants’ or ‘advertisers’) to generate sales, leads or brand exposure online by receiving web traffic from third-party websites (usually known as ‘publishers’ or ‘affiliates’).
Affiliates attract visitors to their own sites by offering valuable content, advertising and promotion. They then direct their visitors towards the merchant’s site in return for a commission. In effect, the merchant subcontracts the role of attracting web visitors to the affiliate.
Affiliate sites often include comparison sites, product review sites, sites devoted to particular niches or topics and online directories.
Unlike traditional advertising, most affiliate marketing works on a CPA (cost-per-acquisition) basis, with affiliates receiving a reward for each validated sale that they generate for the advertiser.
What is an affiliate network?
Affiliate marketing campaigns initiated by merchants are known as ‘affiliate programmes’. In traditional affiliate marketing, merchants had to contact affiliates to promote their programmes directly, and encourage affiliates to get involved, while affiliates had to seek out suitable programmes for their sites.
An affiliate network acts as an intermediary between merchants and affiliates. By bringing together large numbers of merchants and affiliates in one place, it allows merchants to reach the widest possible target audience and also helps affiliates to access suitable programmes.
Many affiliate networks offer tracking software that allows merchants to monitor the success of their programmes, streamlined application processes for affiliates who want to join a particular programme, and other benefits.
In return for the benefits they offer, affiliate networks receive a percentage of the commission paid by merchants to affiliates.
The opportunity
In 2007, 61% of UK households had internet access, an increase of 7% over the previous year. Around four million households have gained access to the Internet since 2002.
Online shopping continues to grow in popularity, and it’s expanding into new areas all the time. In addition to traditionally strong areas such as books and CDs, many of us now turn to the Internet to buy holidays, financial products, household goods, clothes and accessories, groceries and much more. The value of internet sales by UK businesses rose to £130.4bn in 2006, an increase of 29% from 2005.
From its first steps in the late 1990s, UK affiliate marketing has grown into a £3 billion industry today, having almost doubled in size during 2007. Large firms and SMEs alike continue to view affiliate marketing as a key part of their e-marketing strategies, with new developments such as cashback sites attracting more and more consumers to buy through affiliates.
Overall, affiliate marketing remains one of the most effective, flexible and risk-free ways to gain new customers and boost sales volumes in the online space.
How can I benefit?
If you want to advertise your products or services online, working with an affiliate network can offer:
- a performance-based payment model - you pay commission only in return for sales or leads
- targeted coverage; the opportunity to reach specific market segments through carefully selected affiliate sites, or to promote particular products to particular groups
- the flexibility to make changes when you want, for example to promote special offers or highlight specific products
- feedback to help you retain what works and discard what doesn’t.
Since affiliate marketing is a growing industry, there are a number of affiliate networks you can choose from. To discover the reasons why OMG is the right choice, now read Why OMG?
