Sales strategy: Affiliate marketing

Unfortunately, your ecommerce shop probably won’t draw huge swathes of traffic without some hard work to draw the sales in. Affiliate marketing is great way to broaden your reach without spending too much cash – you only pay when you make sales. Interested?

In this article we will:

•    Explain what affiliate marketing is
•    Talk through the pros and cons
•    Walk you through joining a network
•    Discuss creating your own network

What is affiliate marketing?

Affiliate marketing is basically a deal between you, the retailer, and a publisher that says the publisher will advertise your goods on their website or emails in return for commission if and when you sell something through their advertising.

It’s an extremely cost effective tool for ecommerce professionals as they only pay when they get leads. Exactly what these “leads” mean is down to the negotiation between you and the affiliate – you might pay if a customer comes to your site via a link, if they sign up for a newsletter or only if they purchase something.

According to Forrester Research’s Affiliate Marketing Forecast, the affiliate industry should grow to be worth $4bn by 2014. As long as it is carried out following some thorough research, affiliate marketing can be a real win-win for all involved.

What are the pros and cons?

The pros

Cheap advertising – Only paying when you make a sale or get a lead means that you don’t have to put up any initial investment for the advertising.

Creates a virtual sales team – By signing up to an affiliate programme you are activating a third party sales team which you don’t have to pay unless you make the sales.

Reach new audiences – The fact of the matter is your site won’t reach wide audiences initially but by using affiliate publishers, you can access their pre-existing audiences and target them with your products.

Brand association – By getting your name onto a site which has a good reputation you are positioning your brand next to theirs which can be good for your reputation.

The cons

Joining can be tough – Certain affiliate networks will only let you join once you can prove a certain turnover which makes them unsuitable for start-ups.

Deception – If you agree to pay a publisher based on how many clicks the advertising on you site generates you might find the publisher creates fraudulent clicks to boost their revenue.

Handing over control – By trusting an affiliate to advertise your products you are essentially handing control of how certain audiences experience your brand to a third party.

Joining an existing network

There are many affiliate networks that you can join which will help to manage your partnerships. Joining one means that you will have access to a large range of affiliates which you can pick and choose from.

These networks can help to take a lot of the work out of running an affiliate programme such as tracking your progress and making sure you get the money you are owed. The networks tend to work by taking a cut out of the commission you pay the publisher so you shouldn’t have to pay more.

There are networks which cover certain niches which means you can target which kinds of affiliates you’d like to work with. Most have a set of policies which they work with and some of these can be quite stringent. For example some won’t accept retailers who don’t have a proven track record of sales.

Creating your own network

It is possible to go it alone and set up your own affiliate network which would help you to avoid any unfavourable rules and regulations imposed by the existing networks. It does however mean that the responsibility of tracking everything that takes place, keeping on top of payments and recruiting the actual affiliates is up to you.

A number if shopping cart vendors such as GoECart and 3DCart support the setting up and tracking of affiliate networks.

You can start by making a list of the kinds of content sites your products would complement. You could approach them and see if they are interested in partnering with you.