What is Affiliate Marketing: Beginners Guide

In affiliate marketing, affiliates advertise the products and services of other companies on their websites and receive a commission for this. Affiliate marketing is a tool with which performance marketing, i.e. data-driven marketing, can be carried out. 

It has firmly established itself in the advertising landscape on the Internet. There are different remuneration models.

What they all have in common is that the remuneration is only paid in the event of success. This can be, for example, a click on an advertising medium or a purchase made.

William J. Tobin is known to some as the father of affiliate marketing whne he was granted a patent for the marketing technique in 1989. The popularity of affiliate marketing in some peoples opinion started with Amazon Associates account. Amazon is still one of the big players in affiliate marketing today. 

Affiliate marketing is playing an increasingly central role in the marketing mix. In 2019, despite various hurdles associated with the topic of e-privacy, 74 per cent of affiliates, 61 per cent of merchants and 90 per cent of agencies and networks were able to enjoy increasing sales.

How Affiliate Marketing Works

how affiliate marketing works

Many companies rely on affiliate marketing for the online marketing of their products and services.

With affiliate marketing, publishers link to content from partner sites and receive a predetermined commission. Advertisers only have to pay these if a specific action has taken place. This may involve clicking on a banner or ordering a product on their website.

Be honest: Affiliate marketing is about money. For affiliates, these are the most important factors when looking for suitable partner programs:

  • Commission amount
  • Timeliness
  • Advertising subsidy

In any case, it makes sense to check the commissions of your competitors regularly. 

The partner program search engine 100partnerprogramme.de serves as first aid. But be careful: commissions are entered here manually and can be out of date. 

Therefore, you should also always look in the program description for the respective networks. Concerning browser regulations and the increasing importance of data protection, affiliates can be unsettled when it comes to assigning orders. 

That is why an advertising subsidy is a viable option for many. Regarding advertising subsidies, however, the following remains to be noted: Large affiliates have a very high reach, often with hundreds of thousands to millions of newsletter recipients or followers on social media. 

Due to this enormous reach and the associated advertising performance, these affiliates often require an advertising grant (WKZ) as a fixed contribution, This can open up two sources of error: a tool should not be paid blindly at every point without the prospect of success. On the other hand, prominent advertising spaces should not be underestimated – paying a tool can often be worthwhile.

Affiliate Programs and Affiliate Networks 

Many website operators offer a partner program. To understand which publisher a prospect came to an advertiser’s website, the links in the advertiser’s advertising material are provided with a code. 

When you click on an advertising medium, the user is also set cookies that can be used to track the process. Affiliate marketing can also be carried out via professional affiliate networks. 

These are platforms that bring advertisers and publishers together and bundle functions such as the delivery of the advertising material, tracking and success measurement, as well as the distribution of commission. Well-known networks for affiliate marketing include Awin, Digistore24 and Belboon. 

PartnerNet from Amazon is a popular and widespread partner program. Here, affiliates can build their partner business through the online giant.

Advantages for Advertisers

affiliates can be hard to manage

The goal of advertisers is to lead potential customers to their website, for example, so that they can make a purchase there. By integrating their content on suitable publisher pages, advertisers have the chance that more interested parties will get to their website and can thus increase their sales. 

Affiliate marketing is an inexpensive advertising opportunity for advertisers, because only in the event of success will remuneration be due. With this form of performance marketing, advertisers have a very low risk. In addition to the possibility of higher sales, advertisers benefit from branding effects by integrating their content on external websites.

Advantages for Publishers

Publishers can earn money by marketing foreign products on their website. To do this, they embed an advertising medium (e.g. a banner) on their website that advertises a third-party offer. The publishers act as partners (affiliates). 

Depending on the agreed remuneration model, the partners receive a commission for clicks, leads or sales, for example.

Finding Niches: Success Factors for Affiliate Marketing

For the US market, it is forecast that a full 8.2 billion euros will be spent on affiliate marketing in 2022 – compared to 5.4 billion in 2017. If you want to get into the billion-dollar affiliate business, the best thing to do is to search for go to a lucrative niche and create a corresponding page. However, other factors could drive affiliate marketing success.

Mobile-First Affiliate Marketing

The use of mobile devices is also becoming increasingly important in affiliate marketing.

Already in 2016, there was more affiliate traffic from mobile devices than from desktops, and since 2018 the speed of the mobile pages has also been a ranking factor. In the meantime, many companies and affiliates have adjusted to this and adapted their websites and shops or developed their apps. 

However, an online shop should not only be responsive, but the ordering process should also be simple and as simple as possible using a smart device.

Affiliate as Sales Partners at Eye Level 

The relevance of open communication in affiliate marketing is often underestimated. Affiliates expect personal contact for questions and suggestions about the partner program. 

Therefore, contacts and contact details should be communicated in all channels, i.e. in the program description, newsletters or partner program search engines. 

The mistake is often made to inform affiliates last or not at all about changes to the partner program or the shop. Changes in the URL structure can lead to links suddenly leading to nowhere. 

The bounce rate increases dramatically, and sales are no longer generated. 

Communication should also not be a one-way street: When talking to affiliates, you often receive a lot of useful information and suggestions for improvement. 

What makes the competition better? Are additional commissions paid? What does the affiliate need to advertise the shop better? With this input, the partner program and cooperation can be actively developed.

Focus on the Customer Journey 

affiliate marketing tips

The topic of customer journey tracking and the associated analysis of online marketing channels also represent a central aspect of affiliate marketing. 

To draw meaningful conclusions from online marketing activities and to uncover important touchpoints, merchants need to find one another take the time and provide the necessary resources to deal intensively with the topic of the customer journey. 

This is the only way to document and analyze the journey of a customer from the first contact to the conclusion of the purchase and finally to invest the marketing budget in the relevant online marketing channels. 

Besides, a clean customer journey analysis opens up opportunities to reward high-quality affiliates appropriately or fairly.