Is Affiliate Marketing Right for Your B2C Company?
If you have an e-Commerce website in 2018, you should consider using affiliate marketing to promote your products online. That said, this article will help determine whether you have the time and resources to make an affiliate program successful and worthwhile.
What is affiliate marketing?
Affiliate marketing is the process by which you (the merchant) get partners (the affiliates) to promote your products online. Unlike paying for clicks on your ads (CPC) or paying for eyeballs on your ads (CPM), you’re only paying partners a small commission for actual sales on your website.
Sound familiar? It should – The concept began with offline referral programs by which you (the merchant) would get a partner (the referral source) to refer your product or service for a small commission. Affiliate marketing just takes this referral program concept to the 21st century.
Say I’m your affiliate partner – Here’s how it would work:
- I promote your product on my website.
- My website visitor clicks a link on my website advertising your product. This “affiliate link” has a tracking code that attributes any resulting sales to my website.
- My website visitor lands on your e-Commerce website and purchases your product.
- You pay me a small commission.
Who are these affiliate partners, and where can I find them?
If this sounds good to you, you’re probably wondering how you can start finding affiliate partners right away. The good news is that there are plenty of affiliates out there – the key is finding partners that are right for both your brand and your goals. To simplify, affiliate partners fall primarily within 4 key categories:
- Content partners (also known as influencers): Loyal followers trust these partners, also known as “taste-makers,” for their recommendations and style. Content partners make good affiliate partners if you want to build your brand; however, the sales impact will depend heavily on the popularity of your influencer and placement of your product.
- Price comparison sites: Shoppers use these partners to compare prices across the internet. Price comparison sites make good affiliate partners if you have best-of-web pricing or are promoting sale items.
- Coupon sites: Shoppers use these partners to find deals online. Coupon sites make good affiliate partners if you want to drive sales for a concentrated period of time, can afford to provide a coupon, and prefer not to lower prices directly on your e-Commerce website.
- Incentivisation sites: Shoppers use these sites to get cash back, or other incentives, while shopping online. Incentivisation sites make good affiliate partners if you are looking for smart, thrifty shoppers buying in bulk. Pro tip: these sites are known in the industry to provide the highest average order value (AOV).
How do I recruit affiliates to work with me?
Many large companies have full-time employees, or even entire departments, dedicated to recruiting, engaging, monitoring, and compensating affiliate partners. But not to worry – here are three ways to begin an affiliate marketing program of your own, depending on your time and resources.
- Start your own program: With this option, the key to success is a system to reliably generate and track affiliate links and attributable sales (e.g. the WordPress Plugin AffiliateWP). By using this option, you’ll need to recruit and manage your own affiliate partners. You need to be scrappy enough to teach yourself the ropes and plan to dedicate 30+ hours per week. The cost for the Professional Plan is as low as $249 per year, in addition to commissions.
- Leverage an affiliate platform: Leveraging an affiliate platform (e.g. SharASale), you’ll be able to benefit from extensive affiliate partner networks. Affiliate partners may reach out to you, or you may have the option to send recruiting messages or find your own partners online. Plan to dedicate 20+ hours per week, but know that you’ll have support available to help you get started. The cost for SharASale is as low as $550 to implement, with a $25 monthly minimum for commissions.
- Leverage managed services: Leveraging managed services (e.g. CJ Affiliate), you’ll be able to have the experts run your program. Not only will your account team handle your strategy, recruiting, and management, you’ll also benefit from competitor insights. You’ll still need to dedicate 10+ hours per week, but it’s by far the least time-intensive option. The cost for CJ Affiliate managed services will run you about 3K for setup, and an additional 3K per month, in addition to at least $500 monthly for commissions.
Is affiliate marketing worth the time and resources?
The results don’t lie. According to top affiliate aggregators providing managed services, mature affiliate marketing programs boast 20-25% of annual e-Commerce revenue, and well-run new programs increase annual e-Commerce revenue up to 10% in their first year.
Determining whether affiliate marketing is righ for your B2C company ultimately depends on whether or not you have the time and resources to invest in making it successful. Like so many things in life, you get out what you put in.