Affiliate Marketing is a growing industry which is often linked to the inbound marketing strategies of many larger companies. It essentially involves individual bloggers and smaller niche marketing sites, using specifically designed links to promote products from other companies, for a commission.
A report out in May 2015 by Topseos has listed the top 30 affiliate marketing organisations in the world (although mainly the US), which shows that affiliate marketing as an industry is still continuing to gather momentum. This becomes even more apparent when you consider that these 30 were selected from thousands of organisations, with each one being assessed in detail against 5 key indicators of success.
In other parts of the world the total expected spending through affiliate marketing has also seen changes. By the end of 2012 6% of the UK internet economy was dominated by affiliate marketing, according to PriceWaterhouseCoopers in their report on British Affiliate Marketing.
It seems that affiliate marketing is now an accepted and legitimate advertising strategy for many large organisations.
What is the affiliate marketing model?
So what exactly is an affiliate marketing programme and what is the advantage for any business to select this model, compared to the more traditional approaches.
So what exactly is affiliate marketing? – it is often defined as –
"A way for a company to sell its products by signing up individuals or companies ("affiliates") who market the company's products for a commission" (Entrepreneur.com).
The affiliate business or industry really began to grow with the development of the internet cookie, and Web 2.0. This meant that referrals and sales through third parties could be tracked and the appropriate promoter rewarded, even if the client left the site and didn’t return for a few days before making the final purchase.
According to a brief history of affiliate marketing in Skimlinks the first ever affiliate marketing company was founded by William J Tobin for his company in 1989. However the biggest promoter of affiliate programs is probably Amazon who launched there own affiliate programme in 1996 and managed to attract global interest.
This formally brought affiliate marketing forward as a model for any retailer to consider.
Shortly after Amazon launched their programme a number of affiliate networks began to emerge, which in turn also facilitated smaller companies setting up affiliate programmes who didn’t have the resources of the larger online companies.
How do affiliate programmes work?
Affiliate programmes can operate at different levels for some organisations, especially larger businesses, they might choose to link in with individual affiliates through their own in-house managed affiliate programme.
However many smaller organisations prefer to use an affiliate network that can specifically manage the affiliate programme on their behalf. Affiliates often join several of these networks and then have access to all the products available, they then choose which products they feel will sell best in their particular niche.
Most affiliate networks only mange the technical side of the marketing which enables affiliates to have access to the html code for banners and links and to be able to track the referral process.
The Topseos evaluation was looking for more than this in their review, they wanted affiliate organisations to concentrate on monitoring campaigns and improving campaigns once they had been started. This required a closer and proactive working relationship between the affiliate organisation, affiliates and the sellers.
5 Key Indicators of Success for evaluating affiliate organisations
The Topseos report used five indicators to determine what they felt were important for their top affiliate organisations.
- Networking – The first criteria looked at the range of affiliates and publishers that an organisation had access to.
- Implementation -The evaluation looked at how affiliates were recruited and publishers sourced
- Monitoring – This section reviewed how the affiliate links were monitored and how best practice was observed for affiliates during their campaigns.
- Reporting – data and metrics are considered important to assess whether campaigns are successful, the report considered what information was being shared with both publishers and affiliates.
- Optimization – once a campaign has been implemented the evaluation reviewed how the organisation continued to assess its performance and whether they continued to work closely with the publisher to improve performance.
Linking affiliate marketeers to appropriate merchant programmes
An affiliate interested in marketing often apporaches a company directly or applies to join an affiliate network.
However the Topseos evaluation also considered whether affiliate organisations approached affiliates, to ‘headhunt’ the best websites and marketeers. Those organisations that had adopted a stronger and more proactive approach scored better in the Topseos rankings.
Affiliate Marketing across the globe
As the internet becomes even more widely accessible the options for internet marketing will continue to expand. Countries across the globe can apply to market products based in the US or Europe, and this pattern seems set to continue as more and more people become aware of the industry.
Companies such as Sharesale work on behalf of a business and will handle all the affiliate side of the process. This makes it a more manageable option for many smaller businesses that are unlikely to have the time or resources to provide niche marketeers with all the support that they need.
"Learn how we can increase your sales, develop your brand, and generate interest in your site". (ShareSale promote affiliate links to potential niche marketeers)
Affiliate Marketing in Europe
However the fact that affiliate marketing is so new is also reflected in the lack of opportunity available to learn about it, either as a publisher or as an affiliate. In particular Europe has been slower to fully understand the potential benefits of online affiliate marketing as Andre Slack wrote in his article for the Guardian.
"With return on investment (ROI) at the top of every brand's agenda, affiliate marketing will continue to gain traction. It's now time for this discipline to gain more exposure by improving education through university marketing classes and penetrating the corporate agenda" (The Guardian, 2013)
This would probably explain the almost total dominance of US based organisations within Topseos top 30 rankings. The only other country to appear in the list was India.
Education on affiliate marketing
There are organisations emerging that have started to focus their efforts on educating potential affiliates about what is involved and how to develop the specific skills required.
Organisations such as Wealthy Affiliate, that I am participant with, offer training and a peer support programme specifically aimed at improving the quality and quantity of affiliate marketing sites available. However there are other changes affecting affiliate programmes.
The change in Google’s algorithms to focus on quality, people orientated content instead of simply placing a few keywords wherever possible, is another sign that affiliate marketing will need to evolve in the techniques that it uses.
This can only be achieved if more education programmes are developed and if the next generation of marketeers are taught systems and models such as the affiliate model.
There also needs to be education for potential merchants and publishers who want to expand their marketing strategy and make use of affiliates.
It is a different form of advertising and in order to support the affiliate there is the need to develop specific tools for them to use.
Such as ads and banners as well as text links, to ensure that the company logo and marketing image doesn’t get lost.
The easier these tools are for affiliates to use the more likely they are to be inserted into the web sites.
Implications for affiliate marketing in the future
It seems that affiliate marketing is becoming more established in its role within business management. The benefits have been noted and now the challenge is to improve the standard and efficiency in how these tools are used.
There are many gaps at the moment such as education and training for both businesses and affiliates and currently many countries outside of the US have not embraced this approach.
Despite these changes it seems that affiliate marketing is a tool that is determined to stay and certainly offers many benefits to both large brands and smaller companies alike.
I would love to hear your own thoughts and comments on the issue.