What is affiliate marketing and how does it work?

Affiliate marketing  is a results-based marketing, where the merchant pays for the realized goals to the advertising network, and through that, the publisher also benefits from the advertising. Goals in affiliate marketing can be, for example, an e-commerce purchase, an appointment, a newsletter subscription, a contact request, or a visit to a website.

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In order to achieve affiliate marketing for e-commerce, we need the followings:

An eCommerce site whose website directs traffic through affiliate marketing.

Publisher (s) that maintain one or more media. The publisher’s media advertises the advertiser’s online store. For example, a publisher can be the administrator of a blog, mailing list, website, or Facebook page.

An affiliate network that acts as an actor connecting e-commerce and the publisher. The affiliate network handles marketing tracking and handles money from the online merchant to the publisher. There are several affiliate networks in Finland, one of the most popular of which is Adservice.

A customer, i.e. a consumer, who moves from a publisher’s media to an online store and makes a purchase.

Publishers then join the eCommerce campaign and offer to showcase the eCommerce products. An online merchant can either accept or disapprove a publisher for a campaign.

Once approved, the publications will produce content that will link directly to the online store through text links or image ads. When the customer clicks on the above link and ends up making a purchase or, for example, joins the e-mail list within the time limit agreed in the online store, the online merchant pays the affiliate network for the agreed goals.

This requires tracking technology from the affiliate network so that all purchases and desired actions are recorded. In this way, the affiliate network can bill the e-commerce correctly and can pay the agreed amount for purchases to the publisher.

Where are the affiliate marketing publishers?

Almost anyone today can act as an affiliate marketer. This requires that you have your own media to which you can link to the advertiser’s website. Certainly, the best known are the various fashion, lifestyle, and fitness blogs. Some of these operate under different media houses and some independently. In addition, there are various price comparison and discount code sites as well as other content-producing websites that are involved in affiliate marketing.

In addition to traditional websites, Facebook site administrators and celebrities are able to post ad links on their own walls in their Facebook updates. In fact, affiliate marketing can be done on any media from which a customer can be linked to an eCommerce site.

Affiliate marketing pricing

There are many pricing models and they are always agreed with the chosen affiliate network. Thus, different affiliate networks have different pricing models and different websites have different pricing models.

CPS  Cost per Sale

Cost per Sale means that the advertiser pays the agreed amount for each purchase. The amount can consist of a certain percentage or an amount in euros and different products can also be priced differently because the tracking tools are very effective. This pricing model is the most common of all.

CPA or Cost per Action

The cost per action pricing model is used when, in addition to or in addition to a purchase, some other measure is sought on the website. These other steps include downloading a guide, requesting a contact, or joining a mailing list. A price has been agreed in advance for the events (action) and the agreed amount is paid to the affiliate network for each completed event.

CPC or Cost per Click

Cost per Click means that the advertiser pays for each click on the ad on the publisher’s site. This pricing model can be used if there is nothing meaningful to measure on the advertiser’s site. I personally do not recommend using this pricing model. If your site does not have any measurable event, create one for your site.

Does affiliate marketing make sense?

There is a very high probability that a website will convert well anyway. Depending on the ad network, start-up costs are very low or non-existent. After the start-up costs and measures, only the results are paid for. As a result, you get your ads in the media of the approved publishers and you pay only for the results. Also, when you think about 2017 when referral marketing is justified and researched to work, what better way than for popular bloggers and influencers to advertise and praise your products and, in addition to all this, encourage you to buy them!

That is, in terms of cost, affiliate marketing is very profitable, but of course, the cost is not the only thing that affects the effectiveness of marketing. Because of this, the important thing in affiliate marketing is that you choose the right ad network. Affiliate networks are diverse and some have significantly better popularity and reputation than others. In addition, reporting and pricing vary between affiliate networks – at least it’s not worth compromising on good reporting!

So be sure to compare affiliate-networks before you start marketing. With the right ad network and publishers, it is possible to achieve great results. Thus, it serves as one good marketing tool for e-commerce.

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