To people outside the marketing industry, affiliate marketing seems like a mystery. There are even people in the marketing industry who do not really understand the mechanism of affiliate marketing. They judge it by its ‘spammy’ reputation of the early 2000s.
Although it is true that spammers sometimes utilize the framework of affiliate marketing, it is also true that if affiliate marketing is managed effectively, it can be a good source of online revenue generation. There are marketers who have realized how useful affiliate marketing is and are integrating it into their major marketing strategies.
This article will explain in detail what affiliate marketing is and show you exactly how it works.
What is affiliate marketing?
Affiliate marketing is simply a process whereby merchants pay a particular amount of money to a 3rd party for referring new business to their website. The amount of money paid is known as a commission and it is paid based on the number of new business the 3rd party refers.
Who is an affiliate?
Affiliates can be any online entity but they are usually bloggers or websites that produce content related to the merchant’s focus. Affiliates utilize many methods in order to drive traffic to the merchant’s website. They can write blog posts about the goods and services the merchant provides or they can advertise the merchant’s website on their own website.
For every visitor that purchases goods or services from the merchant’s website through a referral from the affiliate, the affiliate gets paid.
Affiliate marketing is more effective than other methods of marketing such as Pay per click (PPC) because the merchants actually get value for their money. In PPC for instance, it is possible to have a high number of clicks that do not result in conversions.
It is important for merchants to ensure that affiliates that bring in more customers get paid the most.
Merchants can choose to use a consolidated network or multiple networks for their affiliate marketing. Whatever network is chosen utilizes cookies to monitor the customer. If the customer follows through on the referral and purchases a product on the merchant’s website, the affiliate automatically gets paid.
Some merchants manage the entire process of affiliate marketing themselves while other merchants outsource the process of management. The onus is on the manager of the affiliate program to ensure that they get more customers that convert.
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