Affiliate marketing has been an integral part of online marketing for a long time. Affiliate marketing is about a partnership between a publisher and an advertiser. The publisher embeds advertising material of the advertiser on his website to navigate users to the advertiser’s website. This creates a win-win situation for both sides. The advertiser generates new customers and the publisher receives a corresponding commission in the event of a successful referral.
How affiliate marketing works exactly, what an affiliate marketing network has to do with it and what affiliate marketing is important for, will be explained in the following.
The most important things in a nutshell
- In affiliate marketing there are different commission models that define the service for which a commission is paid.
- An affiliate network serves as an interface between advertisers and publishers, and the network also takes on important tasks.
- A company, regardless of size and budget, can use affiliate marketing.
Background: What is affiliate marketing?
Affiliate marketing is a tool used for data-driven marketing. In affiliate marketing, publishers advertise the products or services of other companies on their own website or account in social media. Publishers receive a commission for promoting products and services.
The idea of affiliate marketing is said to have come up at a party in 1997. The founder of Amazon was talking to a woman who offered to market books on her website for a commission. Gradually, more and more partners came along who wanted to do exactly the same thing, and affiliate marketing was born.
24 years later, Amazon is still one of the big players in affiliate marketing.
How does affiliate marketing work?
Numerous companies rely on affiliate marketing to market their products or services online. Affiliate marketing is an integral part of online marketing and has become firmly established on the Internet with its various remuneration models.
In affiliate marketing, publishers (affiliates) link content from partner sites on their own website and receive a commission. The advertising material (images, videos, text, etc.) is provided to the publisher by the company or the affiliate network.
Payment is only made if the product or service is successfully advertised, for example, if it results in a sale. The remuneration is paid by the advertiser (merchant).
In a nutshell: Publishers are sales partners of the respective companies and receive a performance-based payment.
Who is involved in affiliate marketing?
Affiliate marketing is nothing more than a partnership between a seller (advertiser) and a website operator (publisher). These partnerships are connected through an affiliate marketing network.
What is an affiliate marketing network and how does it work?
An affiliate marketing network serves as an interface for advertisers and publishers. The affiliate network also provides the advertisers’ advertising materials to the publishers to advertise the products and services accordingly.
The publishers integrate the advertising material provided into their website. If this results in success, for example in a sale, the publisher receives a corresponding commission from the advertiser. The network provides the technology and is also responsible for billing.
In an affiliate marketing network, a broad mass of potential affiliate partners is offered. The advantage is that many campaigns are bundled and you can do everything through one platform.
The affiliate network offers an overview of campaigns and actions and provides settlements, as well as reportings of the progress of switched campaigns or commissions.
What are the commission models in affiliate marketing?
The most commonly used methods are “pay per sale”, “pay per lead”, “pay per install” and “lifetime commission”. In contrast to traditional banner and display advertising, affiliate marketing does not charge for clicks or views.
Pay per Sale (PPS): The publisher receives his commission if the referred user actually buys a product. A distinction is made between whether the publisher receives e.g. €5 per purchase or 5% of the total purchase value.
Pay per Lead (PPL): The payment of the commission depends on whether a contact between the potential customer and the company was established via the publisher. This works for products or services that require discussions or an assignment, e.g., management consulting or agencies.
Pay per Install (PPI): In this case, the publisher receives his commission when a customer referred to by him installs an app.
Lifetime commission: The publisher receives a commission for as long as the customer generates revenue for the company. For example, this is the case with a purchased software package.
What does an affiliate marketing manager do?
An affiliate marketing manager is primarily responsible for planning, managing and controlling affiliate marketing. This includes the conceptualization of measures and campaigns, the support and acquisition of affiliates, as well as the planning of associated projects.
In addition, the affiliate manager’s tasks include constant monitoring of the success of ongoing measures. The affiliate manager continuously adjusts the strategy together with the customer.
The professional field of the affiliate marketing manager is very broad and technically not easy. It requires a comprehensive understanding of all parties involved. Accordingly, an affiliate marketing manager is responsible not only for communicating with customers, but also for communicating with networks and publishers.
Why is affiliate marketing important?
Affiliate marketing is important for companies of all sizes because it is an extension of their marketing strategy. You gain the following benefits from affiliate marketing as an advertiser:
- increase of brand awareness
- targeted selection of partners
- targeted traffic
- payment only in case of success (e.g. sale)
- low risk
- time saving
- detailed reporting
- broad mass of potential publishers
Affiliate marketing offers many advantages to a company. Targeted traffic is possible. You can choose the affiliates that suit your company best. In addition, you can increase brand awareness with little effort and a small budget.
Affiliate marketing networks provide an interface between advertisers and publishers. The networks provide an important platform and take over key functions such as the provision of advertising materials and reporting.
There is also the option of hiring affiliate marketing managers. They take over affiliate marketing and deal with planning, management and control. In addition, affiliate marketing managers are responsible for communication between merchants, affiliates and networks.