What are affiliate programs, and how do they drive sales?

What are affiliate programs? It depends on how you look at it.

If you’re just getting started in the world of digital marketing representing a brand, you’d want to know how they drive sales. More than that, you’d want to explore how they can bring in new leads and convert.

If you’re looking to make good money by writing on your blog, then affiliate marketing can play a significant role in that, too. Both publishers and companies can benefit from affiliate marketing if done right.

So, where do you start if you’re a company? What are the best affiliate programs for beginners if you’re just starting out with your blog?

Let’s take it step by step.

What are affiliate programs in digital marketing?

According to Wikipedia, affiliate programs or affiliate marketing is a marketing framework or model based on performance. That means a company pays one or more affiliates for delivering a particular desired action. It could be a sale, a new customer, a lead, or simply a site visitor.

We owe much of the popularity of affiliate marketing today to Jeff Bezos and Amazon.com. The Amazon Associates program is, to this day, a resounding success. At first, Bezos decided to convince publishers to post the links to their books on Amazon.com. How did he do that? He promised them a percentage of the sale. The affiliate will make the customer buy, and Amazon will do everything else. They would take the order, collect the money, package the product and send it to the customer’s address.

There are four major players in an affiliate marketing model:

1. The Brands (the company or advertisers working for the company)

They are usually retail companies selling direct-to-consumer goods or subscription services. You could also find brands from the travel industry,  marketplaces, some B2B, or gaming.

2. The affiliates (partners, usually publishers)

The affiliate partners can be bloggers or influencers with an active social media fan base. They can be niche content sites, website owners, or product review websites. Even prominent mass-media newspapers do affiliate marketing.

3. The affiliate networks

The affiliate networks provide tracking technology. Companies need to measure the performance of their affiliate links and pay their partners accordingly. Some affiliate networks will offer full-service management. They could collaborate with a list of given affiliates they promote to companies, with approximates of conversion rates.

Partners will keep close to affiliate networks knowing they can get access to thousands of affiliate programs.

4. Software as a service platform (Saas)

Much like affiliate networks, they provide tracking technology and payment options. However, they do not manage networks of affiliates. They’re just technology-based.

Apart from these 4, there are two more parts involved in the process. First, there are affiliate agencies. They manage the day-to-day activities, such as optimization, finding new partners, changing links, etc. Second, you’ve got the end customers. They must perform a specific activity so that money can be released into your bank account as an affiliate partner. Your link should get a new lead, a new subscription, a customer, or sell a product. That’s when a publisher gets paid.

And since we’ve arrived at the payment bit, you might wonder, what percentage do affiliate programs pay? Let’s look at the data.

Affiliate marketing statistics

81% of brands and 84% of publishers were using affiliate marketing as of 2016. Fashion, sports, beauty, and travel are the top categories for affiliate marketing. According to Business Insider research from 2016, affiliate marketing represented 15% of the digital media industry’s revenue.

 

Affiliate marketing programs pay by commission. You could call it a reward, as well, for every new sale or lead brought via the affiliate link. Some e-commerce companies are offering store credit as payment. However, in most cases, cash is king.

If you want to jump ahead and look at affiliate programs that pay the most, then take a look!

Some of you wondering what percentage affiliate programs pay; you might be disappointed to hear some of them pay flat rates. Companies that sell just a few specific products usually prefer to set a flat fee. However, they are the minority.

Percentage commissions are the most popular in affiliate programs, and the average is between 5% and 30%. What do you need to do to earn that commission?

Usually, a business pays its affiliates when sales have been made. Some affiliate programs would also state that you won’t get to keep your money if the product is returned or the service is canceled. That’s tough, yes.

B2B companies with long sales cycles will pay their affiliates just to generate leads. This means you will have to bring potential buyers to research a product or service. To get paid for a lead, it has to be a qualified lead, i.e. leave their contact details so the sales teams can contact them further on.

Affiliate program’s payment types

So, what affiliate programs work better for a publisher? The most popular approaches are:

• PPA ( pay per action).

The company will pay the affiliate a certain percentage of the product that has been sold via the affiliate link. This is probably the most challenging for affiliates and the most profitable for companies. It’s rather tricky to write, say, about a car, add affiliate links to tires and car parts, and get people to order the products right away. This is why the most accessible types of affiliate links lead to cheaper products, cosmetics, and supplements that do not require the buyer to sit and think about it. However, the cheaper the product, the less money you’ll get from the commission. So, you might enter a vicious circle here. Most publishers choose to add affiliate links to specific product review articles. If you look for product reviews, it means you’re already thinking about purchasing that product, right?  But more on the types of content marketing later on.

• PPL (pay per lead)

Affiliate programs like PPL are not as simple as they sound. You don’t have to make a sale. However, you have to persuade your readers to go to the company’s website and do certain activities. These include: leaving their contact details, signing up for a trial version, downloading an app, or subscribing to a newsletter.

• PPC (pay-per-click)

In this case, brands reward affiliates for driving traffic to their website. Companies might combine these three main affiliate approaches. For example, a brand could pay a considerable flat rate for a first-time buy and then blend a flat rate with a commission for specific products.

Complex affiliate programs will offer a plethora of performance tiers, bonuses, and incentives to keep the best-performing publishers hooked. Some examples are:

• Temporary increase in commission to encourage performance
• VIP commissions for the affiliates that drive the most value
• Referral commission for affiliates bringing in other affiliates
• Recruitment incentives for inviting other people in. Some networks let you do that.

More than this, you might stumble upon certain other variations of the payment plans mentioned above.

There are two-tier programs that pay affiliates for two distinct actions. The first one is for driving sales, leads, or traffic. The second type of payment is for the performance of the other affiliate sites they’ve referred to the company. That is to say, if you bring in other affiliates, you will get a percentage of their commission as well. Yes, it is a sort of multi-level marketing.

Then there are the residual affiliate programs. Let’s say you convince two people to purchase a monthly service. Every month they renew that service, you will get a commission.

Furthermore, you might also stumble upon pay-per-impression models. Let’s say you place a banner on your website that advertises a specific product. If a user clicks on this banner, then you will get paid, as an affiliate.

If you’re wondering about the most profitable affiliate programs, we recommend: “Can We Talk about Profitable Affiliate Programs?”

What are some affiliate marketing programs you can use

Now it’s time for some affiliate program reviews. We’ll showcase the most important ones on the market at the moment and what you can get out of them.

1. Amazon Associates

First of all, almost everyone has an Amazon account where they spend an insane amount of money buying stuff that they sometimes don’t need. That’s life.

So, for you, as an aspiring affiliate, it makes perfect sense to partner with Amazon. Moreover, they have a tremendous variety of products, so you can be sure you’ll find a relevant product to market on your website. It is free to join, and once you’re in, you can sell just about any Amazon product you want, including third-party ones.

What is more, you will get a commission not only for the specific product you’ve marketed on your website but for any purchase your reader has made at Amazon 24 hours after they’ve clicked on your affiliate link.

Signing up for Amazon Associates is easy. You won’t have to apply for each affiliate product/service you want to market. A single sign-up will do.

However, this wouldn’t be a fair affiliate program review if we didn’t mention that Amazon commissions are relatively small. Moreover, they change their terms quite frequently. Although it’s free to join and easy to use, the sad truth is you won’t make much money with Amazon Affiliates. It’s just a good start for the beginning.

2. Fiverr

Fivver is one of the biggest marketplaces for talent and overall online services. Whether you need a logo design, a brand proposal, a VA, or a programmer, you’ll find them on Fiverr for short gigs, and why not, long-term work collaborations.

As a Fiverr affiliate, you can promote their services, refer people and earn a commission of up to $1,000 per sale as they advertise on their platform. More than that, it is free to join. They have a specific system that will approve your application. Most applicants are approved almost instantly.

The Fiverr commission structure is quite complex. First of all, you need to understand how Fivver works. They receive 20% of what the freelancers working through their platform charge, and you, as an affiliate, will receive a cut of that 20%.

There are a few types of Fiverr payment systems:

• The revenue share commission (lifetime sales commission on every sale)
• The CPA model (you get paid one time, per acquisition; however, the commission rates are much higher)
• The hybrid model ($10 CPA + 10% revenue)
• Sub-affiliate model (you get 10% of the commissions generated through your referred affiliates, much like multi-level marketing)

3. Awin

Awin has reported fifteen thousand advertisers, 200,000 active publishers, and $147 million in sales in 2019.  These are some impressive numbers that make Awin one of the biggest affiliate networks out there at the moment.

Awin offers diversity when it comes to companies and products. However, you will have to apply for those, one by one. You cannot just pick whatever product you desire, like on Amazon, and add an affiliate link on your website.

Moreover, brands can be pretty picky when it comes to accepting to work with certain affiliates. So, overall, you get a massive base of products to choose from, an easy-to-use platform, but picky companies. You cannot have everything in life, can you?

4. ShareASale

Acquired by Awin, ShareASale is an affiliate marketing platform with more than eighteen years of tradition. Their catalog includes beauty supplies, branded sports gear, and luxury goods from more than 5,000 vendors. It is free to sign-up, and their Power Rank system will tell you which are the most popular vendors.

The downside is the high payout threshold. They can even delete your account if it is underperforming. So, maybe it is a good idea to start with ShareASale.

5. eBay Partners

eBay is another colossus of a marketplace. EBay’s Partner Network tools enable you to promote their product listings and thus get paid. The good news here is that you will find almost any type of product. Somewhere in the world, someone is selling something you can’t even think of now. So yes, no lack of diversity here.

The eBay affiliate sales methods are pretty straightforward, and you get a double commission in the first three months.

6. Shopify affiliate program

Shopify is quite popular these days. A lot of bloggers and online retailers are using it. It pays pretty well per referral. In the first two months, you can earn your referral’s subscription fee. It is a relatively new and fresh platform with a good image that will appeal to many aspiring digital geeks and bloggers.

However, it is a niche platform. The payout is great, but you have to write for that exact niche target audience. It might prove problematic in the end.

7. Leadpages partner program

As far as affiliate programs for the website are concerned, Leadpages can prove an efficient online marketing tool. They sell a tool that helps create landing pages that convert. So, if your audience is highly digitalized, then you’d want to promote this service.

The tool does its job for its customers, and the affiliate program plays well for referrals. You get a 30% commission on whatever your reader decides to spend on their platform.

However, same as Shopify, it is a niche platform and product. There is not much space for diversification. You need to have the same audience as Leadpages. If you are a web designer or digital marketing specialist with an audience interested in these topics, then yes, Leadpages is a good affiliate program.

These are only seven examples of where you can go and do affiliate marketing. Let’s get back to what affiliate marketing programs are and how you can channel their power.

How can you start affiliate marketing?

Now that we have answered the question of what are affiliate programs, it is time to see what you can do to start making money online.

First, you have to think about your average reader persona, where they spend most of their time, what sort of products they are most likely interested in, and how you can integrate them into your content. Are your readers always on the lookout for a good deal? Do they tend to do a lot of research before making the purchase? You have to assess all this before deciding what type of content you can create for affiliate marketing.

From a digital brand or company’s perspective, affiliate partners fall into the following categories:

• Bloggers/Influencers

For companies, bloggers and influencers that engage with their ideal audience regularly are the perfect affiliate partners. For example, if you have a cooking blog, then you could partner up with kitchen appliance suppliers or look for products in this area.

• Review sites

You could have a general lifestyle blog and also write product reviews from time to time. However, it will not be the same thing as a specialized review site. Companies with more high-end products that require research would look to the review sites for affiliates.

• Coupon sites

With good SEO and a bit of work, you can put up a Coupon site that only talks about special offers, promotions, vouchers, etc. This is a sort of niche platform you can build mainly for the sake of affiliate marketing and advertising.

For more on how to make money on affiliate programs, read “How To Make Money on Affiliate Programs Starting from Zero”

Affiliate marketing is a good start

In the end, it only comes down to one question. What are the affiliate programs’ pros and cons, and is it worth it?

Affiliate marketing will offer you a passive income. It will take a bit of work to set it all up, but then you can make money even if you’re not in front of your computer.

You will sell products without worrying about shipping, payment solutions, customer support, or warranty issues. The seller will deal with all these issues.

You can work from anywhere, any time you like. Affiliate marketing is part of the remote work, digital culture.

It is cost-effective. You do not have to pay any fee to become part of an affiliate marketing program of any sort. You get paid based on your performance.

However, you will need strong SEO knowledge and skills to get your website or publication up there in the search results. You cannot have success in affiliate marketing without a solid SEO.

We hope we’ve provided enough answers to the question of affiliate programs. They’re a powerful marketing tool both for the publisher and for the brands. With our ever-digitalized world, they look like they’re here to stay.