Introduction into Affiliate Marketing

So this is my virgin post and therefore thought the best way to start this was to give an overview of affiliate marketing and what it is.

Starting with the very basics, here are the definitions;

Affiliate Marketing also known as CPA advertising

Affiliate marketing is an online advertising channel in which advertisers pay affiliates to fulfill a “Desired Action”.

This model is today's online version of the “reseller/commission model", where affiliates who introduce new clients / consumers to a business are compensated, as a result of a sale or a lead, making it a low-risk, high-reward environment for both parties.


What is an Affiliate?

“A website owner that has a business relationship or agreement with an online business.

An affiliate provides advertising and hosts links on their website directing traffic to the merchant in exchange for a commission of a pre-defined action.”

In my diagram below you can see the relationship and how this works in the most simplistic form, where we assume the affiliate is commissioned on driving sales.

How it works?

1. Affiliate places banners / creative or a text link on their website
2. Customers are directed to the Advertiser website when they click on the link
3. If the desired action is fulfiled e.g. A Sale, then the Advertiser rewards the Affiliate a commission for referring the customer.


The Online Marketing Mix

The affiliate channel is just another route to deliver traffic and more importantly customer acquistion to an Advertiser's site.

Looking at the three main channels we have

(1) Display Media - typically bought on a cost per thousands impressions and used by Advertisers for branding.

(2) PPC - typically brought on a cost per click basis and used to drive traffic to your site through the search engines or the content networks.

(3) Affiliate Channel - typically operates on a cost per action basis and used to drive customer acquistion.

As the affiliate channels operates on a pure CPA model, it is one the most cost effective routes online to deliver acquistion to your site.

The affiliate channel provides advertisers with low risk advertising as they only ever pay when the desired action has occured. There is no spend on the number of clicks delivered to your site or the number of impressions that are served on a website.

The affiliate channel is entirely performance based, your affiliates are only paid when they fulfil your desired action. Therefore in order for affiliates to increase the amount of commission that they earn they need to continure delivering acquisitions to the Advertiser's site.

Advertisers define their desired action, dependent on the goal and objective of the advertiser, the channel can be tailored to deliver a particular acquistion. This ranges from delivering online sales for retail clients, hotel reservations, flight bookings, subscriptions, e-mail registrations, application forms, surveys, leads etc to name just a few.

Advertisers are able to expand their reach online, tens to hundreds of affiliates (website owners) can place banners / text links on their site driving traffic to your site in order to deliver customer acquistion which in return they will be rewarded for.

Hopefully, this gives you a basic oversight into the affiliate channel and how it works for advertisers who are looking for another route to market and target their online customers. I will continue to share more insight into the affiliate channel and how it works and in my next post add in the network and where they fit into the model.

If you have any specific topics or questions you would like me to answer or write about please e-mail me sheenuaggarwal@hotmail.com and I will try my best to answer them.

Stayed Tuned,

Sheenu