Definition

Affiliate marketing is an advertising model in which affiliates earn commission for generating more sales and higher traffic for another company’s products.

Description

Companies look for higher sales and conversions than they made last time. And for that, one alternative the companies may use is that of affiliate marketers.

Affiliate marketing is promoting other companies products and services in exchange for money. In simple words, it is the online sales technique that helps affiliates to earn commission and motivates the product owner to increase the sales.

The sales can be generated by sharing about the product in a blog or a video on a social media platform or website. It is a performance-based marketing opportunity that helps affiliates generate extra income.

The brands incentivise the affiliates who promote their product/services by offering them commission. So you can say that with affiliate marketing, companies can have increased sales while affiliates have better earnings.

Example

Airbnb, a rental brand, allowed individuals to earn by renting their place and acting as a host. The company started with their affiliate program and soon they had Airbnb in 191 countries with more than 4 million Airbnb properties.

Importance of Affiliate Marketing

Affiliate marketing is the future of marketing and advertising. Starting business online is equally challenging as is offline marketing. Let us see the reasons why affiliate marketing is important.

• Generate source of traffic: Affiliate marketing helps generate sources of traffic for different affiliates within their network. It helps to promote business with the affiliate audiences making it an effective way to register presence in the online media.
• Cost effective: The way of marketing is cost-effective. Affiliates promote a third party’s business online on social media platforms. Because the medium is the internet, the promotion is cost effective as it is reaching a mass audience using the internet.
• Improves competitiveness: Affiliates leverage social media presence to spread the word for a third company’s products and services. Capitalising the power of blogging, search engine marketing, email marketing, and professional networks, a brand can drive more revenues which improves the competitiveness of a brand.
• Gained reputation: Affiliate marketing is not going to fade soon, rather it is going to stay for long. By connecting with an affiliate you can conveniently broaden the audience. The brand promotion leads to building trust with the new as well as existing audience.
• Get inbound links: Inbound links are crucial to get higher ranking on search engines. This pushes the revenue upwards for the company.

Future of Affiliate Marketing

Affiliate marketing has led to an increase in the massive sales for a brand. Studies have shown that affiliate marketing business in India is expected to exceed up to Rs.66168 millions approximately by 2025.

Affiliate marketing seems to have a great future as:

• India is the country with the largest start-up ecosystem as mentioned in the research by NASSCOM in 2019.
• The Internet is a strong medium for businesses to sell their products online.
• Customers are interested more in buying the products online. The sales online accounts for 6.5% of the $836 billion retail sector in India. About 24 percent of respondents choose to shop online many times in one week. This entails the truth that affiliate marketing has high prospects.

How does Affiliate Marketing work?

This is how an affiliate marketing works:

• You will have to find and join an affiliate program.
• Then make a choice of offers which you want to promote.
• In the next stage, obtain a unique affiliate link code.
• Share these links code on different social media platforms or channels.
• After every sale, you can collect your commission earned.

FAQs

What will you have to do if you want to join an affiliate program?

If you want to join an affiliate program, you will have to:

• Find and explore the affiliate programs.
• Choose the ones you are interested in.
• You will then obtain a unique link or code for it. The code will be used for the customers to motivate them to make purchases.
• You will have to share these links on your social media, blogs, etc.

What are the benefits of affiliate marketing?

Affiliate marketing is free from the burden of planning, developing, and supporting. These are the benefits of the affiliate marketing:

• It is a low risk activity.
• There is no initial cost or investment if you want to start as an affiliate marketer.
• Affiliate marketing can help generate passive income.
• You can gradually scale the income after evaluating the ways to drive traffic towards the brand products/services.

How much percentage of commission affiliate marketing pays?

The affiliate marketing can pay 1% to 20% or at times more commission to the affiliate marketers.

Can beginners start with affiliate marketing?

Yes, beginners can start with affiliate marketing. They just have to grab a code and then post it across social media to earn commission.

Is affiliate marketing the same as influencer marketing?

No it is not the same. Affiliate marketing is called a promotional program to drive traffic for business. Under affiliate marketing the affiliates have unique digital IDs enabling them to get unique clients. After each sale, an affiliate earns a commission.

In influencer marketing, an influencer has a large audience whom they can influence to make a purchase decision. They can use social media platforms to promote products with their audience.