How Does Affiliate Marketing Work?

14th October 2017

Affiliate marketing is best compared to a commission-only salesman. You undertake the basic marketing costs such as producing brochures and other promotional material and then send the salesman out on the road to do his thing. In affiliate marketing, the blog or voucher site replaces your salesman and your offer codes and banners replace your marketing material.

Most affiliate placements happen through a specialist affiliate agency. This takes the effort away from the affiliate publishers in trying to find deals for their sites and for them to process the claims for money from the companies offering the offers.

However, whilst the affiliate companies make things easier for publishers, they can make things complicated for those companies making the offers. There are many types of discount and promotions that can be offered on those sites, there is also the added complication of checking for fraudulent transactions and disapproving transactions that were voided, returned or otherwise did not qualify for a commission on the sale.

 

Types of Affiliate Marketing Promotions

There are a number of ways that you can promote your company and products using affiliate networks. The two main ways, however, are offering a discount code or offering an affiliate link. In addition to the fee paid to the publisher, there will also be a small charge, known as a network override, to pay. This varies between network but is typically around 3%.

Discount Code for Affiliate Marketing

A discount code tends to appeal to voucher code sites, but can occasionally be of use to a blogger or other publisher. In a discount code system, the customer gets given a discount code, this can either be a sitewide code that gives a discount from every item on your site (typically 5 or 10 percent of the listed price of the item). Alternatively, you may offer the customer a free gift or free delivery. Typically, you will also pay a 2-3% fee for the referral.

 

Referral Links for Affiliate Marketing

Some blogs are able to use their influence to suggest products to clients. This is typically the role favoured by a fashion blog or a technology news site. These links can take more effort to produce and are were using an agency such as DOM Marketing can really show clear benefits. Think of this as being more akin to getting your product in a department store or at an exhibition.
This kind of promotion typically pays more to the site referring the traffic. (typically, this will be 5% of the sale, but in cases of demonstrated high reach and high conversion, you may look to increase this commission to a far more substantive level.

For the higher range of referrals, you may also be into influencer marketing territory, providing product samples for use in photography, or even coming to an arrangement for featured placement. As well as providing you with the same basic services as provided to the voucher sites, any good affiliate marketing agency will be able to advise you on how to go about setting up these product placement and influencer crossovers.

 

Item Specific Promotions

Sometimes you may wish to dispose of stock quickly or run loss leader promotions to get people to visit your site. Both types of promotion can be used to channel your potential customers towards these items. As well as arranging for bespoke promotional collateral to promote these specific products, an agency will also handle closing the promotion once your stock has been exhausted.

These promotions work by making the click-through link deliver clients to the product page or other landing pages rather than to your home page. They tend to convert the incoming traffic well, however by their very nature they will produce less traffic overall.

Whatever you decide, the main benefit of this style of promotion is that it is entirely scalable, aside from programme and agency fees, sales are only made once a sale is made, meaning that the marketing cost is a known percentage of the product sale price. Affiliate marketing agencies such as DOM Marketing will be able to assist you in identifying the sale costs and helping you to pick a useful retail price for your goods that keeps you in profit.