Affiliate marketing has long been an integral part of online marketing. Affiliate marketing involves a partnership between a publisher and an advertiser. The publisher integrates the advertiser’s advertising material on its website in order to navigate users to the advertiser’s website. The result is a win-win situation for both sides. The advertiser generates new customers and the publisher receives a corresponding commission if the referral is successful.
In the following, we explain exactly how affiliate marketing works, what an affiliate marketing network has to do with it and what affiliate marketing is important for.
The most important facts in brief
In affiliate marketing, there are various commission models that define the service for which a commission is paid.
An affiliate network serves as an interface between advertisers and publishers, with the network taking on additional important tasks.
Affiliate marketing offers a company, regardless of its size, many advantages on a relatively low budget.
Background: What is affiliate marketing?
Affiliate marketing is a tool that can be used for data-driven marketing. In affiliate marketing, publishers advertise the products or services of other companies on their own website or in social media accounts. Publishers receive a commission for advertising products and services.
The idea of affiliate marketing is said to have emerged at a party in 1997. The Amazon founder had a conversation with a woman who offered to sell 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 firmly established itself 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 in return. 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 promotion of the product or service was successful, for example if it results in an order. 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 linked via 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 makes the advertisers’ advertising material available to the publishers so that the publishers can advertise the products and services accordingly.
The publishers integrate the advertising material provided into their website. If this results in success in the form of a sale, the publisher receives a corresponding commission from the advertiser. The network is used to provide the technology and is responsible for billing.
An affiliate marketing network offers a wide range of potential affiliate partners. The positive thing about this is that many campaigns are bundled together and you can run everything via one platform.
The affiliate network offers an overview of campaigns and promotions and provides billing and reporting on the progress of campaigns or commissions.
What commission models are there in affiliate marketing?
The most frequently 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 when the referred user actually buys a product. A distinction is made as to whether the publisher receives, for example, €5 per purchase or 5% of the total purchase value.
Pay per lead (PPL): Payment of the commission depends on whether a contact was established between the potential customer and the company via the publisher. This is useful for products or services that require discussions or commissioning, e.g. management consulting or agencies.
Pay per install (PPI): In this case, the publisher receives its commission when a customer referred by it installs an app.
Lifetime commission: The publisher receives a commission for as long as the customer generates sales 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 the planning, management and control of affiliate marketing. This includes the conceptualization of measures and campaigns, the support and acquisition of affiliates, as well as the planning of associated projects.
The affiliate manager’s tasks also include constant monitoring of the success of ongoing measures. The affiliate manager adjusts the strategy together with the client on an ongoing basis.
The profession of affiliate marketing manager is very broad and technically not easy. It requires a comprehensive understanding for all parties involved. An affiliate marketing manager is therefore not only responsible for communication with customers, but also for communication with networks and publishers.
Why is affiliate marketing important?
Affiliate marketing is important for companies of all sizes, as it represents an extension of the marketing strategy. You gain the following benefits from affiliate marketing as an advertiser:
- Increase in brand awareness
- Targeted selection of partners
- targeted traffic
- Payment only on success (e.g. sales)
- Low risk
- Time saving
- detailed reporting
- broad range of potential publishers
As an advertiser, you can gain these and many other benefits from your affiliate marketing.
Summary
Affiliate marketing offers a company many advantages. Targeted traffic is possible, whereby you can select the affiliates that best suit your company. It also increases 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 on key functions such as the provision of advertising material and reporting.
You also have the option of hiring affiliate marketing managers. They take over affiliate marketing and deal with planning, management and control. Affiliate managers are also responsible for communication between merchants, affiliates and networks.
