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Everything You Should Know About Affiliate Marketing

Aug 10, 2023 - Prerna Bhushan
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Are you an ecommerce store owner looking to expand your reach and boost your sales? Starting your own affiliate marketing program could be the answer you've been searching for.

Affiliate marketing is a powerful strategy that allows you to leverage the influence of others to promote your products or services. You can tap into a vast network of affiliates who will promote your products on their platforms and earn a commission for every sale they drive.

Let’s explore how to start affiliate marketing, including how it works, the different types of affiliate marketing programs available and the steps to start your own program. From understanding the various program structures to recruiting affiliates and establishing your terms and conditions, we’ll give you actionable insights to set up a thriving affiliate marketing program.

What is affiliate marketing?

Affiliate marketing is a strategic and cost-effective method businesses can use to expand their customer base and boost sales. Store owners collaborate with individuals or businesses called affiliates and leverage their networks to promote products or services through various online platforms like websites, blogs and social media.

The process is simple: Affiliates share unique tracking links with their audience, and when someone clicks on these links and makes a purchase, the affiliate earns a commission. This incentive-based approach encourages affiliates to actively market the store's offerings, driving traffic and increasing conversion rates.

For ecommerce store owners, affiliate marketing brings numerous advantages, including enhanced brand visibility, access to new target markets and a performance-based payment structure.

How does affiliate marketing work?

Affiliate marketing happens when business owners form partnerships with affiliates who promote the store's products or services to their audience in exchange for a commission. Let's explore how affiliate marketing works in more detail.

First, ecommerce store owners establish an affiliate program with predefined commission rates. Affiliates join the program and receive unique tracking links that they share with their audience. These links allow the store owner to track the source of the traffic and attribute any resulting affiliate sales or conversions to the specific affiliate.

Affiliates can promote both physical products and digital products, depending on the nature of the ecommerce store. Some of these marketing methods include creating quality content like product reviews, tutorials or recommendations on their platforms while providing their unique tracking links for interested buyers to make purchases. Affiliates also promote products on their blogs, email lists and social media.

When a customer clicks on an affiliate's link and makes a purchase, the affiliate earns a commission based on the agreed-upon commission rates. This incentivizes affiliates to actively promote the store's offerings and drive conversions through their affiliate campaigns.

Overall, affiliate marketing provides a win-win situation for both online store owners and affiliates. Store owners can leverage the reach and influence of affiliates to expand their customer base and boost sales, while affiliates can earn affiliate revenue by promoting products or services they genuinely believe in to their audience.

Types of affiliate marketing programs

There are three main types of affiliate marketing programs. As an ecommerce store owner, it's essential to carefully consider the pros and cons of each conversion process and choose the best strategy for your company. Let’s dive in.

Unattached affiliate marketing

Unattached affiliate marketing occurs when there’s no connection or authority between an affiliate and the customers in the product's niche. In this approach, affiliates primarily rely on running pay-per-click (PPC) advertising campaigns with their affiliate links. The goal is to get people to click on their ads, make a purchase and generate a commission for the affiliate.

Unattached affiliate marketing is appealing to affiliates because it requires less effort on their part than other types of affiliate marketing. Many affiliate marketers depend on their reputation and trust among their online target audience. But some marketers may not have the time or inclination to build those relationships, making unattached marketing their preferred choice.

For ecommerce store owners, working with affiliates experienced at running ad campaigns can be lucrative because (with a big budget) PPC campaigns are scalable. But the downside is business owners have limited control over the affiliate’s marketing. You’re relying on the affiliates' strategies and tactics, which may not align perfectly with your brand image or messaging. And any negative experience or misrepresentation by affiliates could reflect poorly on your brand.

Related affiliate marketing

Related affiliate marketing is a strategy where affiliates promote products and services connected to your niche, even if they haven't personally used them. Affiliates need an established audience through platforms like blog sites, YouTube or TikTok. Their influence and credibility with their audience allow them to recommend products.

Related affiliate marketing allows you to tap into new audiences that align with your niche, increasing your brand's visibility and potential customer base. Plus, affiliate marketers who are experts in your niche can lend their credibility and influence to endorse your products, boosting your brand's reputation among their audience.

But there's a possibility that affiliate marketers may misrepresent or oversell your products, which can lead to dissatisfied customers and damage your brand's reputation. As an ecommerce store owner, you have limited control over how affiliate marketers promote your products. It's crucial to choose affiliates carefully and set clear guidelines to maintain your brand's image.

Involved affiliate marketing

Involved affiliate marketing occurs when affiliate marketers only endorse products and services they have personally used and believe in. Instead of relying on PPC ads to generate clicks, involved affiliate marketers leverage their influence to promote products and services that their followers genuinely need. 

For business owners considering affiliate marketing, the involved approach offers significant benefits. It enables partnerships with affiliate marketers who are passionate about your products or services, leading to more authentic promotions and stronger connections with their audience. Aligning your business with credible and trustworthy affiliates enables you to build a solid foundation for long-term success.

Additionally, involved affiliates often have a specific niche or audience they cater to. This allows ecommerce store owners to target their promotions effectively, reaching the right audiences who are more likely to be interested in their products or services.

On the downside, since involved affiliates focus on specific niches or audiences, the reach may be more limited compared to other affiliate marketing approaches. This can result in a narrower customer base and potentially lower overall sales volume. And if an affiliate experiences a decline in their own popularity or decides to stop promotion, it can impact your sales. Additionally, you’ll probably need to invest more time into the affiliate relationship than you would with unattached affiliates.

How to start an affiliate marketing program

There are three major practical steps to take when starting your program, which we cover below.

Look at competitor programs

When starting an affiliate program, analyze competitor programs to gain insight into what works well in your industry and things you can do better. 

Competitive analysis can help you with:

  • Benchmarking: Get a baseline for understanding what features, commission structures and promotional strategies are common. Then you can benchmark your own program against industry standards and best practices. 
  • Competitive advantage: Identify unique selling points and competitive advantages for your program. With more appealing incentives, you can attract high-quality affiliates to your program.
  • Commission structures: Understand prevailing commission rates and structures in the industry. This will give you insight into different commission structures and which will suit your business best.

Determine how you will recruit affiliates

Study how your competitors attract affiliates to learn effective promotional strategies. Identify popular marketing channels, creative promotional materials and successful campaign tactics so you can adapt them to your own needs.

Some of your affiliate-promotion efforts could include:

  • Including a link to your affiliate program in your website's top and bottom menus
  • Mentioning it in your emails and other marketing tools
  • Running paid ads
  • Promoting it on social media
  • Joining affiliate forums and communities
  • Writing content about your program that’s optimized to appear in search engines

Identify the terms and conditions of your program

You may want to consult with a lawyer to get every detail correct, but in general, you’ll want to consider these areas at the bare minimum:

  1. Government regulations: To ensure compliance with FTC guidelines, you need to specify that affiliates must disclose their compensation for promoting your products in a transparent manner, such as using the hashtag "#ad" when sharing affiliate posts on social media.
  2. Brand reputation: Your terms and conditions allow you to establish behavioral standards for your affiliates. This helps to clarify what’s considered acceptable when promoting your products and what behaviors will not be tolerated.
  3. Intellectual property disputes: This covers copyrights, trademarks, patents and trade secrets. Your contract should clearly state that affiliates bear responsibility for any claims related to intellectual property rights that may arise from their content.

Choose the right affiliate partner today

Setting up an affiliate program for your ecommerce store can be a game-changer for your business. It opens up opportunities to expand your reach, increase brand visibility and drive sales. By following the steps outlined in this blog post, including choosing the right type of affiliate marketing for your company and promoting your program effectively, you can start a successful affiliate program.

If you're looking for expert guidance and support in setting up and managing your affiliate program, Cart.com is here to help. With our experience in running successful affiliate programs for brands like Bonobos, we understand the intricacies of affiliate marketing and provide tailored solutions to meet your business needs. Reach out to us now to learn how we can assist.

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