Ecommerce Affiliate Marketing: An Important Tool

customer segmentation

Ecommerce Affiliate Marketing 

Ecommerce affiliate marketing is a growing marketing strategy. Current estimates place total global revenue from affiliate marketing at over $19 billion, and project that number to surpass $36 billion by 2030. 80% of brands have affiliate programs, and the money spent on affiliate purchases accounts for 16% of all online spending.

For many brands, it is an essential part of their advertising spend. For many customers, the content generated by affiliate marketing is an essential part of the shopping process.

But many B2B Ecommerce owners still ask: Is it right for our business? For many, the answer will be yes. Learn how you can leverage this approach to boost your business.

What is Affiliate Marketing?

Affiliate marketing is when a business pays affiliates to advertise its products. The affiliate can be an individual with no connection to the company, be in a related space, or more deeply involved. The affiliate, also known as the publisher, usually receives a commission for every sale generated by the marketing material, which can range from a blog to an Instagram post to a YouTube review, as well as other forms  of online media.

When Is It Right for My Ecommerce Business?

The first step in determining whether affiliate marketing is right for your business is to identify whether or not your product would benefit from it. Do you have a product that demonstrates well? Is it relatively simple to understand, use, and explain? If the answer is yes, then you’re on the right track.

Now you need to clearly define your goals and to understand how the strengths of affiliate marketing can support the pursuit of those goals. Is your goal to reach a larger audience? Is it to expand your sales channels? Are you launching a new product and looking to generate grassroots enthusiasm among a niche audience? Are you trying to drive traffic to your website? Affiliate marketing can help with any and all of these goals, but it works best when the goals are defined and the affiliate program aligned with that pursuit.

How Does It Work?

While details can vary, most programs can be broken down into five steps:

  1. The Agreement: Before any marketing takes place, the company and the affiliate must agree on terms. Usually, the agreement will include the number, type of media, and regularity of posts, the copy and/or subjects covered in the posts, the commission received for each sell through by the affiliate, and any other concerns either the company or the affiliate have.
  2. The Post: The affiliate posts an ad for company’s product on its website, podcast, Twitch channel, or other outlet. These ads can take multiple forms, varying mainly in the shared level of intimacy between the affiliate and the product presented in the ad. For affiliates with intensely devoted followings, an ad portraying regular, habitual use of a given product by the affiliate can be particularly effective.  
  3. The Click: As part of the post, the affiliate includes a specialized URL assigned by the company that followers of the affiliate can click through if they want to purchase the product featured in the post. The link will lead the customers to the sales page for the product on the company’s website, where the customer has the option to purchase the product.
  4. The Sale: If the customer follows through and buys the product by clicking through the special affiliate URL, that sale is tracked by the company. As these sales accumulate, so too does the commission. 
  5. The Payday: Often, the affiliate will have a minimum sales target they need to hit before the commission is paid. Once it hits the target, the affiliate is paid.

Affiliate marketing helps both the company and the affiliate. For the company, their product is exposed to highly targeted and often terrifically loyal customer bases, who get a robust and intimate understanding of the product and its use cases. The affiliate, through the act of just a few carefully targeted posts, gets to make what can at times be significant passive income. 

What Are the Benefits?

The benefits of an effective affiliate marketing program for your Ecommerce business are plentiful. Effective affiliate marketing programs can:

  • Reduce Customer Acquisition Costs: Affiliate marketing, because it is commission-based, tends to be cheaper than traditional marketing and advertising strategies. This can be particularly helpful during new product launches when getting the word out is important.
  • Enhance Brand Awareness: Affiliates drive targeted audiences to the company’s website, increasing exposure and building brand awareness among a narrowly targeted, devoted customer base.
  • Demonstrate social proof: Social proof refers to a customer’s search for others who have A) purchased the product in question and B) found value in the purchase. Good affiliate marketing answers these questions through a voice the customer already trusts.
  • Improve Return On Investment (ROI): Determining the ROI of marketing and advertising can be challenging, especially for new businesses. With affiliate marketing, that calculation is much simpler. Because the affiliate often is only paid per sale, companies can analyze the return on investment in a straightforward, efficient manner.

How Can I Manage Affiliate Marketing?

Though affiliate marketing can be much more efficient and require less manpower than other forms of advertising, it still requires a fair deal of upkeep. Performance needs to be assessed and managed, customer and affiliate questions need to be answered, bad actors need to be identified and removed from the program, and good affiliates need to be paid for their hard work. 

Though this can be done in house, the best option for many will be third party software designed to manage affiliate marketing programs. The right software will be able to keep track of the most important metrics, monitor performance, protect the company from fraud and other violations of terms of service, and help with accounting come tax time. Moreover, in the event of company turnover, it’s easy to transfer management of the affiliate program from one user to another. 

Pair Affiliate Marketing With the Right Ecommerce Solution

Affiliate marketing is becoming a more popular and nearly essential part of any Ecommerce business. But first, you need to ensure you have a well-established Ecommerce solution to successfully capitalize on those affiliate marketing techniques. 

If you’re a B2B business still doing things in an outdated manner, it’s time to talk to us at Zoey to see how we can modernize your business, and ensure you can take advantage of affiliate marketing:

Talk With Us

Patrick Gallagher is a financial writer with nearly a decade of experience in communications with business owners and other high-net worth individuals. He was a writer for the New York Times and worked for several nonprofits. He holds an M.B.A. from the University of Minnesota. He lives in Atlanta with his family and two very rambunctious dogs. 

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