Understanding Affiliate Marketing
The advent of the internet has enhanced the popularity that affiliate marketing has gained. Amazon ( AMZN) promoted the idea by coming up with an affiliate marketing plan which allows blogs and websites to put hyperlinks to an Amazon site for a review or discussed item to earn the cost of advertising for each purchase. In this way, affiliate marketing is an incentive-based marketing system in which the selling of the product is contracted out over a wide network.
Marketing through affiliates predates the Internet however, in the age of digital marketing analytics, analytics, as well as cookies, made it into an industry worth billions of dollars. Companies that have an affiliate marketing program can track links that generate leads, and, with internal analysis, find out how many of them convert into sales.
An online retailer looking to expand their reach to an even larger number of Internet customers and users could employ an affiliate. Affiliates could have numerous websites or even mailing lists for marketing; the more email lists or websites the affiliate owns more extensive its reach. The affiliate hired then can promote and market the items available on the platform to its network. This is done through the use of advertisements in banners as well as text-based ads and posting links on their websites or by sending email messages to customers. Advertisements are used by companies through video, text, and images to draw people’s focus on a particular item or service.
People who visit the advertisements or hyperlinks are directed to an e-commerce website. When they buy the item or services, then the merchant credit affiliate’s accounts with the stipulated commission that could range from up to 10% of the sales cost.
Based on Business Insider, 15% of online sales is due to affiliate-based marketing. 1
Special Considerations
The purpose of this system is to improve the sales of affiliates and to create an ideal win-win situation for both associates and merchants. This model is distinctive and lucrative and is becoming more popular.