The Principles Of Affiliate Marketing
An affiliate could be a price comparison website, review website, a social media influencer, someone with a Facebook group (or any other media owner) that can provide promotion of your products. The affiliate will need to place a link or a banner to your website.
The links and banners placed on an affiliates website or media needs to track the purchase. This is what we do at Wigify – we track the customer for 30 days and wait to see if they purchase from the promoted retailer.
If one of the visitors from the affiliates makes a purchase within 30 days of clicking on the affiliates link then we’ll log this against the affiliate and process a commission.
We’ll process a commission which will be paid to the affiliate – you’ll set a commission rate for all your affiliates initially, usually this is a % of your shopping basket. You’ll set a rate that fits with your margins. As your programme advances you can pay different commissions to different affiliates and on different products sold.
Affiliate Marketing In More Detail
Affiliate marketing is a marketing tactic that lets your businesses advertise on digital media on a performance basis.
Affiliate Marketing has 3 stakeholders
- Merchant, Advertiser or Retailer – This is the entity that is looking to buy customers and sales on a performance basis.
- Affiliate or Publisher – The entity that can send people to the retailers and be paid on a performance basis
- Network or Tracking Solution – The system behind the scenes that tracks the transactions.
How It All Works
Step 1 is for the merchant to add a tracking code to their website. The tracking code will track the transactions that occur on their website. Tracking codes can be complex but affiliate networks and tracking solutions have developed products that take away the complexity of this and for for most merchants it’s simply a case of copy and pasting this code straight onto their website. This is what we do here at Wigify.
Affiliate networks and tracking solutions may make their solutions sound simple, but there is a big difference in the reliability of their systems. Merchants need a system that is reliable. Many browsers are restricting tracking capabilities due to privacy and so many affiliate systems simply don’t work on some browsers. Have a look at ITP from Apple if you want to know more information.
The affiliates complete the picture as they are the entity that will drive people to the merchants website and good affiliates will drive plenty of people who will buy the products of the merchant.
If you use an affiliate network or tracking system then the affiliate will have to apply to join the affiliate programme. This allows the merchant to check that the affiliate is suitable to promote their business.
When an affiliate is approved they will be provided with a tracking link. The affiliate will place this link on their website or within the media they own. The tracking link is important as this will drop a cookie (there are lots of types of cookies – Flash, HTML5 and more) when a person clicks on the link from the affiliates website or media. Normally the cookie will sit there for 30 days (some tracking solutions will let you change this).
Now we need the visitor to make a purchase (and they have the 30 day cookie period to do this). The tracking code will trigger off when a sale is made and will check the cookie exists. If everything matches then we have an affiliate sale. In the background the affiliate network or tracking solution will create a commission – they will take the sales value and process a commission value (most retailers pay a % of the basket).
Commission can be quite complex, they can vary between affiliates, volumes of sales or based on the products sold.
Good affiliate tracking solutions will have additional features for affiliates.
- Creative – banners, images, logos and email creative. The creative will help affiliate sell to their audience and get people visiting the merchant. Merchants will optimise the marketing messages on the creative to help the sales process.
- Tracking Parameters – Many affiliates optimise their performance and do this by passing additional information against the clicks.
- Reporting – Affiliates will need to know which links are working for them, how much traffic has been driven, timings and ultimately how much money they have made. Good networks will make this data available not only with online tools but as feeds to the affiliates.
Affiliates may ask for voucher codes, some networks and solutions will be able to track the sales against the codes used. Merchants need to be very careful providing voucher codes – If you a merchant Google “your brand name + voucher code” and you’ll see sites collecting your codes.
When your affiliates have earned their commissions it’s normal to check the sales are valid and not returned. You then validate the commissions so that the affiliate knows they will get paid for the sale. Most merchants will then pay their affiliates within 30 days of the end of the month. If you’re a smaller brand it’s worth paying quicker to build the trust with the affiliates. Please be mindful that as an affiliate programme grows making lots of payments can be time consuming – networks and solutions will have ways to do this easily.
The affiliate marketing channel is often know as a performance marketing and most of the money spent is based on a sale. Tracking solutions and networks will often have monthly fees to allow you to utilise their tracking and then charge a fee per transaction. Fees do vary massively across networks.
Affiliate programmes do require management and support. Many good affiliates will often find programmes they want to promote but other affiliates will need to be sold the benefits of the programme to them. An affiliate could be promoting a merchants competitor and so will need to be convinced to swap their activity. Ongoing merchants and affiliates need to talk to build marketing messages to increase sales. Bigger affiliate programmes have full-time staff just to deal with affiliates. It’s fairly common for merchants to see 10-15% of their sales to come from affiliates.