Affiliate Programs

What Is Affiliate Marketing and How Can I Use It For Business?

What Is Affiliate Marketing and How Can I Use It For Business?
Written by publishing team

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Finding ways to generate new sales leads can be a very challenging task for some business owners. In this day and age, digital customers are incredibly fickle. They are difficult to engage with, and retention can be a thorny issue for various industries.

This is why many small business owners are turning to affiliate marketing in order to generate sales leads and generate a small income.

What is affiliate marketing?

Affiliate marketing is basically an exercise in revenue sharing where a company pays a commission to someone for the referred business. The concept itself has been around for a long time – but thanks to advances in e-commerce and digital technology in recent decades, affiliate marketing has rapidly developed into its own dynamic industry.

Affiliate marketing as we currently understand it was first popularized online by a startup called PC Flowers & Gifts in 1994. By launching a regulated platform for revenue sharing through the popular Prodigy Network, founder William J. Tobin has convinced thousands of other companies and publishers (or “Affiliates”) for passively promoting his company’s products for a small commission. PC Flowers & Gifts has earned millions in affiliate sales, and registered affiliates have been able to earn a small income with little or no effort.

Tobin went on to patent the idea in 1996, and dozens of digital pioneers inevitably hijacked the model and reorganized it. Amazon launched a hugely successful co-program in 1996 that rewarded website owners for promoting the company — and in 2003, the innovative online company Google streamlined the process by launching its own Google AdSense program.

How does affiliate marketing work?

Although the concept itself is quite simple, there is actually a wide range of different models that all fall under the motto of “affiliate marketing”.

Pay-per-click (PPC) is undoubtedly the most popular type of affiliate marketing among publishers. This method sees the company pay a commission for each visitor who clicks to access their website from an affiliate website. This method is popular among bloggers, as it enables them to become merchant affiliate partners without publicly advertising third-party products. PPC also generates higher commission levels for affiliates, because companies must pay a commission whether or not visitors purchase a product. However, PPC affiliate programs therefore offer relatively low commissions.

Another type of affiliate marketing is pay per customer. This structure provides affiliates with a commission that is usually based on referred visitors who sign up for a newsletter, demo or download a product.

Finally, PPS sees an affiliate rewarded with a commission for each referred visitor who continues to purchase goods and services from a merchant. This method usually offers the best value for money for companies, as well as significantly higher commissions for registered affiliates.

There are other models, and each subprogram comes with its own bells, whistles, and warnings. It is also worth noting that a large number of e-commerce programs are constantly evolving, and commission sizes tend to vary over time.

How can my company use affiliate marketing?

As a small business owner, you can benefit from affiliate marketing in one of two ways: you can either set up your own referral program in order to generate sales for your business, or you can sign up for an existing affiliate program and create leads for another company in order to generate a small passive income for your own business.

It is very easy to launch an affiliate marketing program for your small business. If your small business is currently hosted by a platform like WordPress or Shopify, there are plenty of downloadable apps or plugins that come pre-programmed with all the analytics, payment capabilities, and forms you’ll need in order to sign up affiliates, track referrals and pay the necessary commissions.

If you are not too keen on running your own affiliate program, you can also hire a professional agency to design and manage a program for you. There are lots and lots of dedicated agencies to choose from that specialize in both managing existing programs, launching new ones, and executing different types of short-term affiliate campaigns. If you are interested in going this route, just make sure to do your homework and shop.

Your small business can also participate in affiliate marketing by joining an existing program as an affiliate. Existing programs such as Amazon Associates and Google AdSense offer direct forms that can provide you with a steady stream of passive income each month by simply allowing certain ads to be displayed on your website. These programs also give you control over the types of ads that are shown on your site, which means you won’t have to worry about competitors’ ads being shown inadvertently.

bottom line

E-commerce is an ever-changing beast, and generating new leads can be very challenging. That’s why it’s definitely worth checking out affiliate marketing for your small business. This may or may not be right for you, and you will need to keep a lot in mind before trying to start your own referral program. The same can be said about joining an existing program as an affiliate.

But if you’ve done your homework and decided that affiliate marketing is actually a good fit for you or your business, there are plenty of tools that can help you get started.

Affiliate marketing image via Shutterstock

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publishing team