Affiliate marketing, what is it and how do you implement it?

What is affiliate marketing,you ask? Are you ready to discover the potential of affiliate marketing? In this blog post, we reveal the secrets and strategies behind this marketing tool.

From the basics to advanced techniques, whether you’re just starting out or an experienced marketer, you’ll find valuable insights that can take your business to the next level. Let’s embark on this adventure together and discover how you too can use affiliate marketing to your advantage.

So stay tuned.

Definition: What is affiliate marketing?

Affiliate marketing is a method of online marketing in which companies (merchants) cooperate with website operators (affiliates) to promote their products or services.

In this system, the affiliate makes its digital platform available to advertise for the merchant. The affiliate receives a commission for each sale or lead generated by this advertising.

The merchant buys access to the affiliate’s customer base, so to speak, and the affiliate receives remuneration in return, in most cases in the form of money.

Affiliate marketing: terminology explained

Before you dive deep into the world of affiliate marketing, it’s important to understand some key terms. Here are these terms, each illustrated with an example:

• Affiliate:
  An affiliate is a partner who places advertisements for products or services and earns commissions for generated leads or sales.
  Example: Lisa runs a fitness blog and uses affiliate links for sports equipment. She earns a commission when her readers buy products via these links.
• Publisher:
  This is a synonym for affiliate, but emphasizes the role of content mediator.
  Example: Alex, a technology vlogger (operator of a video blog), publishes videos about gadgets and uses affiliate links in his video descriptions.
• Advertiser/Merchant:
  The advertiser is the provider of the products or services and pays the affiliates for advertising space.
  Example: A sportswear manufacturer works with various fitness bloggers to promote its products.
• User:
  Users are the Internet users and potential customers who are to be reached through affiliate marketing.
  Example: Sarah searches online for fitness tips and finds a sports store or the online store’s website via Lisa’s blog.
• Affiliate Network:
  Platforms that act as intermediaries between affiliates and advertisers, offer technical support, collect data and enable controlling.
  Example: ShareASale, a network that Lisa uses to find suitable sportswear brands for her blog.
• Partner program:
  Programs offered by companies to reward affiliates for customer referrals.
  Example: Nike’s affiliate program, where Lisa has registered to offer her readers products via affiliate links.
• Agency:
  Agencies that specialize in brokering and supporting affiliate partnerships.
  Example: A digital marketing agency that helps Alex find suitable technology brands for his vlogs.

By understanding these terms, you can better understand the mechanisms of affiliate marketing and use them more effectively.

But why is affiliate marketing interesting?

What are the goals of affiliate marketing?

Understanding the goals of affiliate marketing is crucial for both merchants and affiliates. Here are the main objectives:

• Umsatzsteigerung:
  Das primäre Ziel ist die Steigerung des Umsatzes. Dies wird erreicht, indem Traffic auf den jeweiligen Plattformen generiert wird.
  • Affiliates: They earn money through clicks on affiliate links on their site, whereby they receive a commission from the merchant.
  • Merchants: Sales increase when customers come to your website via affiliate links and buy products there.
• Building trust:
  In addition to generating sales, building and maintaining customer trust is a key objective. The focus here is on long-term customer loyalty.
• Find a quality partner:
  It is important for both affiliates and merchants to find trustworthy and high-quality partners they can rely on.

These objectives illustrate the complexity and strategic depth of affiliate marketing, with the focus on cooperation between affiliates and merchants.

But how exactly does affiliate marketing work?

How does affiliate marketing work?

Affiliate marketing may seem complex at first glance, but the process is actually quite straightforward. Let’s go through this process using the example of the fitness blog.

Steps of affiliate marketing:

1. Link integration: As the operator of a fitness blog, you integrate an affiliate link for a product (e.g. a fitness watch from SportsGear) in your blog post or on your social media page.
2. Click by a visitor: A visitor to your blog or social media page finds the post about the fitness watch interesting and clicks on the affiliate link.
3. Redirection: The click automatically takes the visitor to the SportsGear website or online store where the fitness watch is offered.
4. Conclusion of purchase: The visitor decides to buy the fitness watch.
5. Purchase tracking: The affiliate network to which you belong registers both the customer’s click on your link and the actual purchase.
6. Confirmation of the purchase SportsGear confirms to the affiliate network that the purchase has taken place.
7. Receipt of commission: SportsGear pays you a commission for successfully brokering the sale. The type of payment can vary and depends on the agreed commission model.

This step-by-step explanation makes it clear how affiliate marketing works and how you can benefit from it as a fitness blog owner.

But what areas of application are there in affiliate marketing?

Affiliate marketing examples and areas of application

Affiliate marketing plays a central role in online retail. Studies show that around one sixth of online retail sales are generated by affiliate marketing.

Here are some concise examples and areas of application that illustrate the diversity and importance of this marketing approach:

• Blogs: Specialized in various topics, they direct traffic to products or services via affiliate links.
• Comparison sites: They offer reviews and comparisons of different products and use affiliate links to lead users to the products.
• Voucher sites: Attractive for customers looking for discounts before making a purchase and an important source of income for affiliates through discount links provided.
• YouTube channels: Many YouTubers use affiliate links in the description of their videos to promote products that they use in their videos.
• Instagram accounts: Influencers use their reach to promote products via affiliate links.

Here are two industry-specific applications for a deeper understanding:

• Fashion industry: Bloggers and influencers play a major role here by referring new customers to major fashion brands every day.
• Technology sector: YouTubers and tech bloggers often use affiliate links for devices such as cameras, microphones or tripods.

These examples show that affiliate marketing is not only diverse, but also an essential part of modern online marketing strategy.

Let’s take a look at the different commission models.

Commission models – how are they billed?

So what commission and payment models are there? In a nutshell: many. We will introduce you to the most common models and briefly explain how they work.

Pay per click (PPC)/Cost per click (CPC)

With the pay-per-click model, the affiliate earns per user who clicks on the link provided. It is irrelevant whether the user ultimately buys the item to which the link leads. For the merchant, this variant is one of the most uncertain, as high costs may be incurred without generating more revenue through sales in the end.

Pay per click should not be confused with cost per click. While PPC describes the marketing method itself, CPC refers to the costs that the seller has to bear per click on his affiliate links.

Pay per Click Out (PPCO)

Pay per Click Out is a further variant of the PPC method. Unlike PPC, with PPCO the commission is only paid out to the affiliate when the customer clicks on a link on the seller’s website, for example to a product. This prevents the merchant from having to pay if the customer bounces quickly.

Pay-per-view (PPV) and the thousand-contact price (CPM)

Pay per view is even less reliable than the PPC method. The mere display of an advertising banner on a website is sufficient to guarantee the website operator an income. The merchant theoretically pays as soon as a customer sees the advertisement.

In most cases, however, a so-called thousand-contact price is agreed between the partners. After a thousand customers have seen the advertisement on the affiliate website, the merchant owes the affiliate a usually fixed amount.

Pay per sale (PPS)

The pay per sale method is the most advantageous for the seller. With the pay per sale approach, the commission is only paid out by the merchant when a referred user purchases a product.

The commission can be fixed or relative to turnover.

Pay per lead (PPL)

The pay per lead method works in the same way as the PPS method, except that it is used when the purchase is not processed directly online.

This may be the case, for example, with services such as a massage or a consultation.

Pay-per-sign-up

With the Pay per Sign Up model, the user forwarded via the link must register with the advertiser. Only then is provisioning carried out.

Pay per assist

In the past, only the affiliate through which the last click leading to the advertiser was made was usually remunerated. As websites that market articles more indirectly are now also becoming more important, this system is outdated.

A classic example is the relationship between blogs (editorial content) and voucher sites: A customer’s attention is drawn to a particular product by a blog. The customer wants to buy the product, but above all wants to save money.

He therefore googles for current vouchers, arrives at one of the many voucher websites, clicks on a link there and arrives at the store where the product is sold. The voucher site receives commission, but the operator of the blog goes away empty-handed – even though it was the operator who sparked the customer’s interest in the first place.

This can be frustrating for content creators. Advertisers and affiliate networks can now use pay per assist functions to track who was involved in the sales process. This means that affiliates who start the customer journey can also be remunerated fairly.

Lifetime remuneration

Lifetime remuneration has established itself in areas where products are usually rented or leased. The affiliate receives remuneration as long as the referred customer pays for the seller’s product.

In conclusion, the various commission and payment models in affiliate marketing offer a range of opportunities that can be attractive for both affiliates and merchants. Each model has its own special features and is suitable for different types of products and marketing strategies.

Now we know about the technical processing of payments, but how do you actually manage to earn money with affiliate marketing?

Earn money with affiliate marketing: Requirements for successful affiliate systems

Would you like to earn money with affiliate marketing yourself, but don’t know how? Then you should definitely read on here and take our tips to heart. In order to be successful as a beginner with affiliate links on an affiliate website, you need to create some basic requirements as quickly as possible.

Choose your platform wisely:

Choosing the right platform on which to provide your affiliate links is the first step to success as an affiliate beginner – and possibly the most important. Because from the moment you make your choice, you will be subject to the rules and standards of the respective platform.

Companies like YouTube, TikTok and Instagram are just a few examples of platforms where you can earn money. Other options include your own website or blog, which may even be the better choice at the beginning. Comparison portals and voucher sites have proved particularly useful.

Find the right topic:

There are already thousands of blogs on the subject of travel. So you have to do something really special to make your mark in this area. It is easier to look for a specific niche that has not yet been served or has only been served to a limited extent. How about a blog about raffia furniture, for example?

By focusing on a specific niche, you can attract more customers and entice them to buy a product via your affiliate links than if you serve an area in which there is a lot of competition.

Choose the right network:

At the beginning of your affiliate career, you should also choose the right affiliate program. Well-known affiliate networks include Awin and ShareASale. Awin, for example, has over 20,000 companies in its network. This makes it much easier for you to find suitable affiliate partners. Amazon is also popular with affiliates – because there you can earn money with links to all kinds of products.

When choosing a partner, make sure that the cookie duration is long. Often, visitors who reach a merchant’s website via your affiliate link do not buy something immediately, but return after days, weeks or even months. Certain cookies ensure that the website operator knows how a buyer originally arrived at his site and can pay out corresponding commissions.

Increase your reach:

At the beginning of your career, you will earn little to no money. There is a lot of competition fighting with you for your well-earned commission. To change this, you need to increase your reach.

This is where keywords such as Search Engine Optimization (SEO), Search Engine Marketing (SEM) and Search Engine Advertising (SEA) quickly come into play, at least if you have your own website or blog.

With the help of these “disciplines” you can generate traffic for your site and thus slowly but surely increase your reach.

Gain the trust of your visitors:

But traffic is not everything. What you ultimately need to make your affiliate business work is, above all, the trust of your customers. Therefore, your site should ideally offer your visitors added value that ensures that they return to you again and again.

For example, you can gain the trust of your visitors with information with added value, good backlinks or a focus on content, not advertising. You can also give your website or blog a more trustworthy look with a personal touch. Write from a first-person perspective, add an “About me” section or address your readers personally.

Keep in touch:

Once you have established contact with a potential customer, you should do everything you can to keep it. Try to obtain some of your visitors’ important data – using legal methods and in a less intrusive way, of course.

Newsletters that offer visitors a certain added value – for example a voucher or special offers – are often used for this purpose.

In order to be successful in affiliate marketing and earn money with it, a few essential considerations and steps are necessary. We support you in these considerations by providing you with questions that you should answer in advance.

Key questions for a successful affiliate system

Key questions you should ask yourself in order to create the right conditions for a successful affiliate system:

1. Platform selection:
   • Which platform is best suited to my affiliate marketing goals and content?
   • Do I take into account the rules and standards of the platform I choose?
2. Topic identification:
   • Which niche or topic can I choose that both reflects my passion and represents a gap in the market?
   • How can I offer unique added value with my chosen topic?
3. Network selection:
   • Which affiliate network offers the best options for my niche and goals?
   • How important are cookie lifetimes when choosing my affiliate network?
4. Increase in range:
   • What strategies can I use to increase the visibility of my platform (e.g. SEO, SEM, SEA)?
   • How can I optimize my content to generate more traffic?
5. Building trust:
   • How do I ensure that my content is trustworthy and authentic?
   • What measures can I take to build a loyal community?
6. Customer loyalty:
   • How can I communicate effectively with my audience and build a relationship?
   • What added value, such as newsletters or special offers, can I offer my visitors to retain them in the long term?

By answering these questions carefully, you lay the foundation for a successful affiliate marketing business.

Advantages of affiliate marketing

Finally, we would like to share the advantages of affiliate marketing with you. This is because it offers numerous advantages for both merchants and affiliates. Here is a structured overview:

Advantages for merchants:

• Results-based payment: With most affiliate marketing methods, such as pay per click, pay per lead and pay per sale, payment is only made for actual results, which benefits performance marketing.
• Dynamic Commissioning: Enables more differentiated billing based on customer types, product categories and other factors.
• Increasing customer loyalty: Affiliate marketing can increase the likelihood of recurring purchases (11% for new customers, 21% for existing customers).
• Valuable customer data: Collect data on customer behavior, e.g. where customers drop off, which partner programs are most successful, and average spend.

Now that we have looked at the benefits for merchants, let’s take a look at the benefits for affiliates.

Advantages for affiliates:

• Diverse application possibilities: Affiliate marketing is used on various platforms, from advertising banners to blogs that are entirely dedicated to product marketing.
• Increasing Internet use: As Internet use increases, so does the potential for income from affiliate marketing.
• Fair commission distribution: Thanks to new technologies such as Multi Touch and Pay per Assist, commission is distributed more fairly among affiliates.
• Access to valuable data: Affiliates can access data that helps them adjust their strategies to generate more clicks and sales.

These benefits illustrate how affiliate marketing can help both parties achieve their goals efficiently.

Conclusion

Affiliate marketing often proves to be a win-win strategy for both companies and affiliates. It enables companies to acquire new customers and collect valuable data while only paying for concrete results such as clicks, leads or sales. Affiliates, for their part, benefit from access to this data, which enables them to drive targeted traffic to the company’s website and increase their income through commissions.

In the world of growth marketing affiliate marketing can be an effective solution. With its ability to generate targeted traffic and high-quality leads, it not only helps companies grow their customer base, but also contributes significantly to brand building and expansion.

In an era where digital marketing and data-driven decision making reign supreme, affiliate marketing is an interesting tool for any growth-oriented business.