An internal marketing technique, affiliate marketing calls for various websites joining hands to promote each other’s products and services. This boosts the revenues of all the participating sites. Affiliate marketing involves the payment of a commission or a reward by a website to another for the business referred to by the latter. While Search Engine Marketing, Web 2 and Search Media Optimization (SMO) have gained huge popularity, affiliate marketing is also being recognized as a cost effective method of boosting revenues.
Affiliate Marketing and the Techniques Used
Using one website to promote another’s business and drive traffic to it is called affiliate marketing. This technique often overlaps with other widely used online marketing techniques in the sense that affiliates often use regular advertising methods like Search Engine Optimization (SEO), paid Search Engine Marketing (SEM), E-mail marketing and in some cases display marketing too. Traditional techniques, like providing reviews of products and services offered by other websites, are also used by several websites.
Participants of an Affiliate Marketing Program
The affiliate marketing industry involves basically three players. While the first is the retailer or the merchant who wants to sell services and products, the second participant is the affiliate or the affiliates who agree to promote or sell the products and services of the former. The third participant is the consumer or the potential customer who, on visiting the affiliate’s site, gets interested in the merchant’s site and visits it. Over the years, the market has expanded to include affiliate management agencies, super affiliates and specialized third party vendors.
Most of the affiliate programs use revenue sharing or Cost Per Sale (CPS) methods to reward the affiliates. Other prevalent methods to reward affiliates are Cost per Action (CPA), Cost Per Click (CPC) and Cost Per Mile (CPM).
Affiliate Marketing is also called compensation marketing, since it involves rewarding the affiliate in the same way one would reward their internal sales people. However, there is a big difference in the way the affiliates market a product and the way the sales staff of a business promotes and sells a product. While an affiliate introduces a potential customer to the merchant or retailer website’s products and website, it is not responsible for converting the potential customer into an actual customer. In contrast the sales personnel of a company are actually responsible for completing the sale of a product.
Some companies run their own in-house affiliate programs while others take the help of expert agencies to track the traffic or sales referred by affiliates. Recent years have seen the emergence of Outsourced (affiliate) Program Management (OPM) companies that work like advertising firms and provide affiliate marketing services.
The author, Neena Arora, is a member of the SEO content writing team with Veda Informatics.