A TO Z of Affiliate Marketing for Small Business

Gone are the days when selling a product meant just between 9AM to 9PM. Today, your products are up for sale 24/7! Due to the E-commerce boom, anyone living anywhere in the world can buy your products. And if marketing your product, or services for that matter, and the huge costs that it comes along is what keeping you up in the night, then say hello to affiliate marketing!

No, affiliate program is not just for the large companies. Even small businesses can very much utilise this revenue sharing marketing model to reach those additional pockets. And who says you need to manufacture a product to sell it? You can even earn without having a manufacturing unit or going through other hassles of logistics and marketing. How you ask? By becoming an affiliate marketer. Small companies establish themselves through affiliate marketing.

Affiliate Marketing explained: What is Affiliate marketing and how it works?

Online shopping has become the trend. You prefer to check various websites for the same thing to get better prices.  You no longer have to make a buying decision just based on the promises of the seller.

In the modern world, people check customer reviews regarding an interesting product or service for security and authenticity. Here enters the concept of affiliate marketing.

In short, it refers to getting paid for promoting someone else’s business. The definition that best describes it is-

“Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make.”

Some explain it as a relationship between four different parties – the merchant, the affiliate, the network, and the customer.

The merchant:

He is the creator of the products or the services and is also referred as the seller, the brand, the retailer or the vendor. Anyone who has a product to sell – a solo entrepreneur, a startup or a large enterprise like those of Fortune 500 – can be a merchant.

The affiliate:

This party, also known as the publisher, tries to attract and convince potential customers of the value of the merchant’s product so that they actually end up buying it. An affiliate can be an individual to large companies doing affiliate marketing business producing a few hundreds in commissions each month or tens of millions of revenues.

The network:

A network is as an intermediary between the affiliate and the merchant by handling the payment and the product delivery in an affiliate marketing program. It is not necessary to have a network as part of an affiliate relationship but important enough for explanation.

Some merchants prefer enrolling an affiliate marketer only through a network which is when it becomes mandatory. The network cannot be ignored if the number of transactions and affiliates involved are huge. An example of a network are the online marketplaces like Amazon, eBay, Flipkart etc. Under Amazon Associates affiliate program, one can choose a product that they are interested to promote and earn commissions by selling them.

The customer:

The customer or consumer is the important party of this relationship as without sales there won’t be any revenue to be shared! They may be aware or unaware of being part of this cycle. Some affiliate marketers choose to be transparent and reach the customers through whichever channel they find suitable to lead to a transaction like a social network, search engines, digital billboards or even through content marketing on a blog. The sale is tracked down to the affiliate marketer through an unique tracking URL dedicated to the marketer in order to capture the commission to be given. The consumer does not pay additional price to be part of the program. They pay the retail price and the revenue is shared between the merchant and the publisher.

The main two parties in affiliate marketing are the affiliate and the merchant. 

Affiliate marketing, therefore, is a process in which the parties will share the product creation and marketing and receive the share of revenue according to their contribution. 

How can small businesses benefit from affiliate marketing?

Affiliate marketing is not only for the large companies to increase their profits but also for the small businesses. On the contrary, it can particularly benefit the small businesses for multiple reasons. Here are few ways in which affiliate marketing can help you:

1. Low cost:

The budget involved to get a word across about your product or service is not much compared to other marketing channels. This type of marketing especially works better for small businesses who do not have large marketing budgets.

2. Low risk:

In most of the marketing campaigns, you need to first spend and then work towards reaping the benefits from it. It might become a successful campaign, getting you good ROI or sometimes prove as a wrong investment altogether. In affiliate program, you share a part of the revenue which already comes to you from the sale. That means, you first make a sale and then spend the money as a commission to the marketer for their contribution to that particular sale.

3. Brand awareness:

Affiliate marketing can be helpful in increasing traffic and growing your online audience.

4. Build trust:

As the sale that happens through what someone else has to say about your product or service, customers trust that your brand will prove value for their money.

5. Brand loyalty: 

It’s also a great way to create brand loyalty, as your affiliate marketers will have a vested interest in your success.

6. Control:

You can set your own commission levels and supply whatever marketing materials you want to your affiliates in order to help them push sales.

What are the different types of affiliate marketing available for your business?

It is ideal to have your own website to showcase your products and services and facilitate their sale. Some types of affiliate programs also work without the need for you having your own website. Here are different types of affiliate programs that you can associate with.

1. Search Affiliates: 

These are people who actually spend their own money to try and leverage the search engines, Facebook advertising and many other paid advertising models so as to generate an RIO for affiliate offers as well as themselves. These types of affiliates are very entrepreneurial and business minded and test very many different things. They are the best to work with as long as they are following the rules and use the recommended procedures as they can generate a lot of traffic for you as well as revenue.

2. Webmasters: 

These are people who own their own sites and those who are also building websites. The number of webmasters available is mind-blowing and they all have different levels of expertise. You can directly contact them on their website and give them a proposal.

3. Coupon Sites: 

Most people are on the search for coupons from various merchants. This makes coupon sites a really important affiliate for your business. These sites tend to have an established member base which can benefit your business by giving improved conversion rate and revenue.

These sites can sort of behave like a double edged sword as it has equal parts advantages and disadvantages. Your traffic will increase to our website, thus increasing your revenue. However, these sites capitalize on the organic rankings associated to your company’s name and the word coupon code. But, the benefit is very high so you can overlook this negative.

4. Review Sites: 

These type of affiliates will build a website that will review up to six different advertises in a particular niche. These review sites are quite popular with affiliate marketers. This type of hosting is mostly used by hosts dealing with dating companies, flower companies, phone companies and all others that require taking about 5 different advertisers, putting them in one site and running an organic search or a paid search through all those pages that feature different reviews.

5. Loyalty Portal: 

Loyalty portals are basically companies which have a very large membership base and are able to expose your offer as an advertiser to its members and sometimes may even contain a cash back policy. Choose a good loyalty portal which work on performance basis and help improve business. 

6. Incentive Programs: 

This is where you are running into volume, but you are also running into possible issues because people taking actions when they are being awarded points can tend to skew down quality of leads certainly and then possibly sales and possibly increase the return rate. Virtual currency is another — it’s a quickly growing industry that kind of was born out the social networking.

7. Email Marketing:

Email Marketing has been around for many years now and has gone through a couple of changes. It’s all about getting into the inbox. Don’t use everyone but pick maybe four or five email vendors that can blast your offer on a performance basis and just make sure everything is CAN-SPAM compliant

 

8. Bloggers: 

Bloggers are great for posting content about your company, reviewing new products, you can send them samples and request them to review it which can be very effective at spreading the word. Also, anything bloggers write about tends to rank organically in the search engine. So it’s always good to have a blogger on your team as an affiliate. 

9. Partnerships and Business Development: 

This method of affiliate marketing will require you to reach out to as many affiliates as possible so you can get just a handful of reliable business partners. When you get that perfect partnership the benefits tend to be good and the partnership also lasts for a long time.

10. Traditional Media: 

These include TV, radio and print media which can be contracted on a CPA basis on a rev share. All you have to do is make a proposal to each of these media outlets and individual stations. This is quite effective which has been used before and will continue being used. 

11. Big Web Properties: 

Big Web Properties are great. What is better than a site that gets a couple a million visitors a month with your banner on it. You have several large websites in the affiliate networks. They are definitely more receptive to CPA deals and rev share deals than they ever have been. The more inventory they have, the more they need to fill that inventory with something that converts for them to make the money, hence affiliate offers.

12. Phone Calls: 

Generating phone calls on performance basis, usually done on a per call basis or a warm transfer basis or live transfer where you are paying extra amount for that transfer to the call centers. But there are companies out there who will do it on a strictly per sale basis. So just, find a company and run a campaign with them. 

These are some of the various different types of affiliate marketers you can work with on a performance-basis. Use the try and error method to figure out which suits you the best. 

What are the possible disadvantages of having an affiliate marketing?

Affiliate marketing be quite daunting especially if it is a new concept for you. While it offers so many advantages, it has it’s own disadvantages. These are few that you need to consider.

1. Affiliates are not your long term friends: 

When you are a new discovery in the affiliate space, there might be some initial curiosity about your offering. But after the initial spike in sales,it won’t be long until another business takes over your proportion of your affiliates. Also, affiliates monitor their earnings reports quite closely, often multiple times a day. As a result, they get nervous if earnings slow down even for a short period. And you can be sure that sales and affiliates will occasionally slow down. 

2. Affiliate commissions and network commissions will affect your bottom-line: 

In the best case, you will notice that you are able to increase sales with the help of affiliates. But that growth in top line will be at the cost of your bottom line. Affiliate commissions of 5 – 10% are common. In addition there is the overhead of paying commissions to affiliate networks if you choose to join them.

3. Your profits might decrease as your usual sales get routed through affiliates: 

This is one serious disadvantage that is usually beyond the imagination of hapless ecommerce merchants. Affiliates can get your direct customers to visit you after clicking a link that had their affiliate code. As a result, what should clearly have been a direct sale, cost you affiliate commissions. This can be done through SEO, SEM, creation of fake coupon codes, offering fake promotions, and an affiliate marketer could end up compelling your customer to visit your ecommerce website only by clicking their link.

4. Affiliates may not treat your brand with the respect and care it deserves: 

Affiliate marketers as a class are not unethical. But the short-term orientation of affiliates will cause some of them to use dodgy methods which could vary from smaller crimes such as affiliates distorting your brand imagery, to serious offenses such as misrepresenting your offering.

In spite of these disadvantages, affiliate marketing is still worth your effort and money. It is a great tool for marketing your products and services. However, like in all other aspects of business, you need to be careful of the pitfalls in this industry.

If you are interested in learning more about how to improve small businesses, you can checkout “Social Media Tips for Small Businesses and How to use it effectively?” 

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