Affiliate marketing is simply selling other people’s products or services and getting paid a commission for it. The concept of affiliate marketing has become very popular with the emergence of e-commerce and e-commerce giants such as Amazon, Ebay etc.
Affiliate marketing is a relationship that involves three parties; the advertiser, publisher and consumer.
Definition of terms used in affiliate marketing
Affiliate
Another word that is often used for Affiliate is “Associate”. In business, the term has two meanings. An associate company is a company that is owned by another (the parent company) but the parent company only has a minority interest (the parent owns a share between 20%-50%) in the company. Two companies that are associates of the same company can also be called associates.
In e-commerce, an affiliate is a business or person who has signed up to sell the product of another. This is manly done through websites. For example, if I sign up to sell Amazon products on my website, I am Amazon affiliate, though Amazon uses the term associate instead of affiliate.
Publisher
A publisher is an individual or company that promotes an advertiser’s product or service in exchange for earning a commission. This is usually done by placing advertisements such as links and banners on their websites. The work of the publisher is to drive traffic or users to the advertiser’s site to take action, such as purchasing the advertiser’s products. A publisher can be an affilaite or re seller. Publishers are ones that sign up for Google Adsense to get advertisement placed on their websites.
Advertiser or merchant
The advertiser is the one who pays for the advertisement to advertise the product or service. Often, the advertiser owns or controls the product or service that is being advertised. The advertiser is the one that uses Google Adwords. The advertiser is also known as the merchant or retailer. Basically, anyone who pays others to help sell or promote their products or business is an advertiser
Affiliate Marketing Network
Affiliate network are businesses or intermediaries that act as a link between publishers/affiliates and merchants/retailers. They provide a platform for offering and managing products. Affiliates sign up with them and then can promote any product of their choice. They handle all the processes on behalf of the merchants, such as payment of of commissions. Common examples are Rakuten, formerly Buy.com, Commission Junction, Clickbank, ShareaSale etc.
Niche market
A niche market is a narrowly defined or specialized segment of the market for a particular product or service. The important thing to remember about a niche market is that the number of customers are limited but those customers are prepared to spend money on the type of quality of product they want.
How large is the affiliate market?
Affiliate marketing is huge. A research by Forrester Consulting published in 2016 shows that Affiliate marketing has reached a maturity stage and has now become a significant part of companies strategy for driving up sales. The study shows that 90% of advertisers use affiliate programs as an important part of their overall marketing strategy. Most of the publishers saidthat affiliate accounted for more than 20% of annual revenue. The report also estimated that spending on affiliate marketing in US will increase by a compound annual growth rate (CAGR) of 10.1% between 2015 and 2020, reaching an estimated $6.8 billion industry.
Here are some statistics that are worth knowing about affiliate marketing:
- In the US, affiliate marketing is worth $5 billion.
- In the UK, affiliate marketing accounts for 1% of GDP.
- Forty (40%) percent of marketing professionals regard affiliate marketing as the most desired marketing skill.
- About 15% of revenue of digital media industry comes from affiliate marketing.
- Over 30% of affiliate sales come from mobile devices.
- Amazon’s revenue passed the $100 billion mark in 2015. It is said that $10 billion of this came from affiliate marketing.
- Eighty (80%) percent of brands use affiliate marketing.
- Brands spend about $1.3 billion a year on affiliate marketing and lead generation.
- The acquisition of Ebates for $1 billion is the the largest amount paid for an affiliate business.
- Over 75% of Australian market is owned by one affiliate network, Commission Factory.
- According to Ratuken Marketing, brands surveyed by Forrester Research shows that 83% primarily used affiliate marketing for the discovery or awareness stage, 79% use it for conversion/purchase and ongoing customer engagement respectively.
How it operates
As already stated above, the relationship in affiliate marketing involves three parties; the merchant, the affiliate and the consumer. The first step is to have a website and then join an affiliate network and sell any product of interest. The rest is commitment and hard work, like most things in life!
Some smart people want us to believe that hard work belongs to to the past. Now you don’t have to work hard but smart. I don’t think so, because smartness when it comes to work is not the same thing as effectiveness. The meaning of smart in formal terms relates to appearance and informally, to intelligence. You can be smart and work intelligently, but does it mean that that you are effective?
Training for affiliate marketing at Wealthy Affiliate
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Wealthy Affiliate is about commitment and hard work because its not a scam. You will learn step-by-step how to build e website, which is a fundamental requirement in affiliate marketing. In a scam, you expect to earn or make a lot of money quickly doing little or nothing. If that is what you are looking for, I am sorry to disappoint you because Wealthy Affiliate is not about that!
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References
AM Navigator, (2016). 20 Affiliate Marketing Stats That Will Blow Your Mind. [online] Available at:https://www.amnavigator.com/blog/2016/04/27/20-affiliate-marketing-stats-will-blow-mind/[Accessed 17 Nov. 2017]
Rakuten Marketing, (2016) Affiliate marketing promotes discovery and drives revenue. [online]. Available at:https://rakutenmarketing.com/affiliate?_%2524ja=tsid%253A81694%7ccgn%253ARANF_PR_L2%7ckw%253ARANForrester&utm_source=L2&utm_medium=press_release&utm_campaign=RANForrester [Accessed 17 Nov.2017]