Affiliate marketing refers to an online business model where a website or publisher will refer traffic to a ‘product’ sales site. Any purchases made by that traffic at the sales site are recorded and a 'commission' is paid to the referring website. The referrer is called an 'Affiliate' and the manner in which that website gathers traffic and sends it to the sales site is called 'Affiliate Marketing'. It also covers product merchant who set up an affiliate infrastructure to assist and promote affiliate endorsement.
That traffic is gained via the affiliate’s own marketing efforts and turned either into direct referral traffic for the merchant or collected into a database for further marketing opportunities. The most effective database contained customers who have double opted in for information, resources and products reviews in their area of interest. A successful and sizable niche database forms the basis of many a successful joint venture between vendors or affiliates of related or identical niche markets.
There are six main elements to Affiliate Marketing:
- The ‘product’ - this can come in many forms including physical products, digital products, courses, seminars, online training, memberships and access to further networks.
- The ‘merchant’ – the vendor who is selling the product. Most online merchants undertake their own marketing to draw traffic to their sales website. Many utilise the power of affiliates and their networks to generate further traffic.
- The ‘publisher’ – the affiliate who promotes the product on their own websites and within their own networks. In exchange for sales generated from their own sources they receive a commission or affiliate payment from the merchant.
- The ‘database’ – the collection of customers, members, newsletter recipients created and managed by the publisher. The goal of any successful affiliate marketer is the creation of a sizable database to market new products to.
- The ‘customer’ – the consumer who is searching for the product or interested in information in and around the product. Customers can be casual web users who through the publishers’ online marketing strategies are drawn to the publisher website and are referred to the merchant. They can also be existing members of an affiliate’s database.
- The ‘affiliate network’ – the collection of affiliates who work together and cross market to each other’s databases via direct releases or joint venture strategies.
Affiliates employ a variety of marketing techniques to gather customers to their database from standard online techniques such as search engine optimisation (SEO), pay per click advertising (PPC), search engine marketing (SEM), email Marketing and banner advertising to more advanced methods such as article syndication, joint venture advertising and blog exploitation.
Affiliate marketing is now entering a mature stage as a business model with many professional networks of affiliates offering greater syndication methods and joint venture opportunities. While some early adopters used clandestine and now generally illegal means such as SPAM or non-permissioned email address trading, the industry now has not only general legal requirements for appropriate conduct but self-relegated ethical intra network guidelines and membership requirements.
Many product databases such as Clickbank and Commission Junction now exist for the sole purpose of giving affiliates a marketplace of products to promote and advertise. Social Media is also a new frontier for affiliate marketing but more on that in a later article.