Even before the pandemic had consumers shifting to online shopping, yoga on demand, and virtual home tours, e-commerce was booming. So it makes sense that the affiliate marketing industry would experience parallel growth, as brands saw new opportunities to reach their target audience with an affordable, low-risk tool. In the United States alone, spending on affiliate marketing has soared from only $2.5 billion in 2012 to an estimated $8.2 billion by the end of 2022, Statistica reports. With such rapid growth, brands can’t afford to overlook affiliate marketing. To help, here’s a guide to affiliate marketing for brands:
What is affiliate marketing?
In simple terms, affiliate marketing is a method of reaching potential customers by paying a website, blog, or social media account holder a commission for sales generated from its referrals.
What are the benefits of affiliate marketing?
Although there are numerous benefits to affiliate marketing for both the content creator and the brand, three in particular rise to the top.
Greater return on investment
By paying only for results, a brand’s marketing spend is essentially whittled down to only cost-per-conversion. Whether your brand’s goal is to sell makeup, get users to download a mobile app, or sign up for a credit card, your only expenditure in affiliate marketing is based on the end goal: a measurable action performed by your target market.
Working with an omnichannel partner doesn’t mean you need to run your campaign on all their platforms. Instead, you can hyperfocus on your ideal audience and platform. A target approach likely nets better results.
Thanks to automated solutions that can track, analyze, and even pay out commissions on each sale, an affiliate marketing partnership can often be tasked to just one person. Regardless of the industry, time saved translates to money saved. IZEA itself has a method of tracking the effectiveness of working with influencers with enhanced tracking links.
How are affiliate marketers paid?
There are three payment structures you may want to consider when partnering with an affiliate.
- Pay only for results. With no upfront fee, this option is a truly low-risk investment.
- Pay a small fee upfront, plus your usual commission rate on results.
- Pay a higher fee upfront, plus a lower commission rate on results.
According to Referral Rock, the average affiliate commission runs anywhere from 5% to 30%. But how do you determine your brand’s particular rate? Start by calculating your average Customer Lifetime Value (CLV). Your affiliate commission should be well below your average CLV to be sustainable, but brands with higher customer retention rates have some wiggle room to raise affiliate commissions.
When it doubt, start with a low affiliate commission rate. You can always raise it or offer bonuses later.
What’s the difference between affiliates and influencers?
While influencer marketing campaigns are about brand exposure, affiliate marketing is performance-based. That’s not to say influencers can’t be affiliates; but you’ll need to be clear about your fees, expectations and campaign goals. Consider the following:
While we tend to associate influencers with one or more social media platforms, affiliate marketers tend to also have a strong blog or website presence as well. Using these in combination with social sites helps affiliates reach a broader audience with your brand’s campaign and affiliate links.
Because influencers are focused on promotion rather than direct sales, the pay is different. Affiliates get a commission from each sale; influencers typically receive a set fee, although many receive both.
The end campaign’s end goal
With affiliate marketing, the end goal is for your brand to make a sale. Affiliate links are often paired with promo codes, which when shared by influencers offer their followers an incentive to shop and bring them closer to purchasing. Tracked affiliate links make it easier to measure the success of the sponsored post.
How to set up a successful affiliate marketing campaign
Although you may have to make adjustments to commissions or bonuses over time, this basic plan of action can help you create a baseline approach to your an affiliate marketing campaign:
Your goals need to be defined and measurable. Determine the following even before you start looking for affiliates:
- How much revenue are you expecting affiliates to bring in per month, quarter, or year?
- What would you consider to be a good conversation rate on click-throughs?
- What would be a realistic goal for average order value (AOV)?
Define the campaign
To motivate affiliates, you’ll start with a high AOV product. This will not only increase your brand’s revenue but also the affiliate’s earnings per click. After all, earning 10% commission on a $100 pair of running shoes is far more enticing than earning 10% on a pair of $10 socks.
Determine which customer incentives might help boost sales, such as free shipping over a defined spend; buy more, save more discounts; or first-time buyer discounts.
Crunch the numbers to calculate your initial offering to affiliates. This may include a percentage commission, flat-rate commission, bonuses, or a free sample product. Remember, you’re paying for sales, not clicks or impressions.
Ready to find affiliates? Consider one of the following options:
- Approach brand ambassadors who already love and promote your products or services.
- Place an affiliate program application on your website to encourage potential affiliates to take the initiative.
- Scout for potential affiliates based on their audience, platforms, and history of working to promote other brands.
Once you find your affiliates, be sure to review your program’s terms and conditions and get a signed contract that covers everything from commissions and bonuses and where and when they’ll post, to the length of the campaign and how frequently they’ll post.
Don’t assume that the details laid out in the contract are enough to let your affiliate hit the ground running. Teach them about the brand, clarify what you want created, and explain any relevant goals and timelines that your brand hopes to reach. Be sure to provide text with unique affiliate links, images or videos, and review how commissions will be tracked and paid out.
You need to track your campaign’s success. Note which affiliates are providing the biggest return on investment.
Be sure to look beyond just click-throughs to conversions. An affiliate who has fewer sales but whose followers make higher value purchases or more frequent purchases may be worth a higher commission, bigger bonuses, or more affiliate marketing partnerships.
IZEA’s tracking links
We just launched tracking links in IZEAx Discovery and Unity Suite to give marketers a better and more reliable way to track traffic from creators’ content. Brands are seeking more useful ways to gauge the effectiveness of working with creators, and tracking links can help with that.
Tracking links provide validity and quality scoring, so marketers know they are actually reaching their intended audience and working with the right creators on the right platforms.
Not using IZEAx Discovery? Now’s the time to start. Sign up today.