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Affiliate marketing: everything you always wanted to know

In a nutshell, affiliate marketing is where affiliates (some people call them publishers) advertise your product or service on the Internet, either on their own website via pay per click advertising on Google Adwords, for example, or by email marketing, and thus drive visitors to your website.

When those visitors make a purchase, or complete a measurable action such as completing a lead form, you reward the affiliate by paying them a commission, either a fixed amount of money or a percentage of the sale value.

So the main advantage of affiliate marketing is accountability; you pay only on the completion of a defined action, be it a sale via your checkout or the completion of a lead form. So, it’s 100 per cent measurable, and provides the highest return on investment of any form of online marketing – particularly valuable in this recession when driving revenue forward is a challenge.

A recent report by Econsultancy found that UK merchants involved in affiliate marketing drive 16 per cent of their online sales via this channel and that 78 per cent of them expected to be "more reliant" on affiliate marketing in 2009. Other UK merchants argue the percentage of online sales via affiliate marketing is higher at 30 per cent but there’s no doubt that these statistics underline the fact that affiliate marketing should form part of an integrated and successful digital marketing strategy.

As a sales force, affiliates can deliver a significant volume compared to other sales channels.

However, this can’t be done without a competitive commission rate. The highest sales levels come from setting competitive commissions, although excessive commissions are not necessary to achieve great results. Good affiliates stay in business because they’re good at connecting with consumers, delivering offers consumers want and managing their business so it’s profitable. Low commissions won’t deliver volume as they don’t incentivise successful affiliates to work with you.

Affiliates need to be at the heart of your business rather than peripheral to it. They need to become ambassadors for your brand. Like any other member of your team they need the tools to do the job. This includes a good company website, optimised to convert customers online or complemented by an offline reward mechanism, good stock levels if appropriate and good quality creative. Your internal processes also need to be geared up so that when high volumes of profitable business are delivered you can provide support efficiently and promptly.

It can be tough to identify the right affiliates for your brand. This is vital, however. To get affiliate marketing right, it’s worthwhile finding an agency with experience in the sector. New affiliate schemes are emerging where some of the traditional costs are stripped out and agencies are leading with results driven campaigns. So, if your business could benefit by affiliate marketing don’t settle for an agency that’s not prepared to share the risk and put its money where its mouth is!

Ray Wellington is managing director of integrated marketing agency Milton Bayer. Related articles The 10 best business models for the 21st century Profile of affiliate marketing firm Digital Window Corpdata’s marketing scheme to revive the economy

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