Affiliate Marketing

Affiliate Marketing is a very commonly used business model pattern. It is applicable in various contexts ranging from massive multi-million dollar companies (Amazon) to small and medium sized enterprises (from fashion, insurances to any business other business), or bloggers and opinion leaders. In simple terms, a company offers financial compensation to people that advertise the company’s products and services. It is often seen as a win-win situation because the more one sells, the more profit the other earns and vice-versa. If you want to boost your products and need more online presence and sales channels, you can have relevant bloggers or other website owners to publicize your products in exchange for a percentage of the earnings. On the other hand, if you want to make some extra money, you can offer to publicize the products of a partner company and generate some revenue by encouraging your audience to buy a product from your partner company.
One main challenge for companies in partnering with affiliate marketers is making sure the revenue generated from selling products through an affiliate link covers the costs to promote the product. Such an issue is more likely to arise if the company is mainly or even primarily reliant upon affiliate marketers; however, if the affiliate marketing strategy is nothing more than an added supplement to the core business model, there is almost no risk in using this pattern. Only reputation issues in case of bad quality, poor service or bad publicity can be a risk – therefore it is important to carefully choose your partners.
As for affiliate website owners, the issue seems to be ensuring that potential consumers are referred to your website. You have to decide on an attractive share and find partners who want to promote you.

CHANCES for Affiliate as revenue stream
· Low Barrier to Entry: Affiliate Marketing can be started at any point in time with minimal efforts and low capital.
· Existing Audience / Community: use your reputation and brand awareness to promote products of your partners
· Numerous Revenue Streams: The more affiliates you attain, the more opportunities you will have.

CHANCES for Affiliate as Sales Channel

• Additional sales channels help to broaden the customer base

• Possibility to enter in markets that are not connected to one’s own business
• High loyality in your partner can help you as well
• Cross Selling effects RISKS for Affiliate as revenue stream
· Changes in the commission rates: if the merchant provides a platform for affiliate marketers rather than an official contract, you have no say in how the commission structure evolves
· Small revenues: It can take some time before your website gains enough traction and you master how to engage with your target audience, i.e. posting the right content for the right people.
Reputation: you need to carefully decide who your affiliate marketing partners are to avoid bad reputation for your brand

RISKS for Affiliate as Sales Channel
· High Commissions: Balancing the commission rate with the profit you generate
· Poor Involvement: Affiliate merchants may say or do anything for quick cash. Thus, they may misrepresent the product or service on sale.
Reputation: you need to carefully decide who your affiliate marketing partners are to avoid bad reputation for your brand

SUCCESS FACTORS (Businesses Using Affiliate Marketers)
Know Your Affiliates Depending on the number of affiliate marketers you encourage to promote your products, it is important to have a good relationship with them and to explain your company’s principles and values.
Do Your Research Dig into your affiliates’ promotion strategies and understand the tactics they use to ensure they are not intercepting buying customers.
Ensure Consistency Consider hiring an in-house affiliate manager who can follow up with these marketers and make sure they are working effectively to ensure you meet your goals.
SUCCESS FACTORS (Affiliate Marketers)
Create and care for your community The more you are an opinion leader in your field the easier it is to promote other products.
Make A Plan It is important to think from the perspective of the product owner and bring together the value of your brand with the brand or product of your partner when promoting the product.
Learn About The Product You’re Promoting Always make sure you have done your research on what you are selling. Specifically, be aware of the advantages and disadvantages of the product and why it outperforms competitors.
Generate Traffic In order to guide your audience to the partner company for buying a product you first need to have traffic on the website you are promoting the product. This can be done by content marketing : Think about the user journey and the value proposition that bring the reader to your website and use the link to buy the product. This might be interesting content, easy research for products or recommendations.
Optimize You will naturally have some failed attempts. Think of this as an opportunity to continue refining, testing and improving your promotion strategies and the way you are displaying the affiliate content until you find the right one. Even then, there is always room for improvement. Always think about the value proposition for the customer. In order to optimize the traffic and conversion rate, use web analytics to analyze acquisition, behavior and conversion and methods like A/B testing to improve these KPIs

· Financial sustainability: The simplicity and low capital needed to implement an affiliate business model makes it easier for people to become self-employed.

Amazon Associates A free-to-join affiliate platform where you can easily set up a referral link for amazon products and make money by simply sharing the link.
Nerdwallet An Affiliate Site for financial products and services ranging from insurance to credit cards.
MoneySavingExpert It helps people make better financial decisions while promoting other brands.

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