Whatever you are wanting these partners to do – drive sales, leads, new customers, etc. – you pay them after they’ve delivered on that desired action.
In other words, you’re paying for actual outcomes.
WHO ARE THE PLAYERS IN THE AFFILIATE MARKETING MODEL?
Brands (Advertisers/ Merchants)
Companies that sell a product or service. Industries include retail, direct-to-consumer, subscription services, financial services, travel, telecom, broadband, gaming, e-commerce, marketplaces, B2B and more.
Affiliates (Publishers, Partners)
Marketing partners to brands. They can be bloggers, active social media posters, niche content sites, personal website owners, product review websites, shopping sites, mobile apps, app-to-app marketing platforms, mass media sites, loyalty, coupon and reward websites and even other brands.
To get a more in-depth breakdown of these different types of affiliate partners, download our Ultimate Guide to the Affiliate Marketing Model.
In an affiliate program, affiliate networks typically handle all tracking, reporting and payment to affiliates. In addition to providing tracking technology, some affiliate networks also provide full-service management or self-service management of a program. Affiliate networks also give brands access to a network of affiliates who apply to join their network, which also gives these affiliates access to hundreds, even thousands, of affiliate programs.
Software as a Service (SaaS) Platforms
In an affiliate program, SaaS platforms also provide companies with performance tracking, reporting and payment, however, they do not manage affiliate programs or provide companies with access to a network of affiliates. Their focus is just on the technological aspects of an affiliate program.
Brands select eitheran affiliate network or a SaaS platform as their technology partner, not both. For greater insight into networks and SaaS platforms and the types of companies that fall under each type, download our free Quick Guide to Affiliate Networks and SaaS Platforms.
Agencies (see Affiliate Program Management below)
Oversee and manage the day-to-day operations, and strategy of a program on behalf of brands, including partner relationships, partner recruiting, activation and optimization. They work directly with affiliates and with the affiliate network or SaaS platform that services the technological needs of the program.
The audience that affiliates look to influence to make a purchase, submit a lead form, sign up for a newsletter, test out a service, become a new customer, etc.
HOW DOES AFFILIATE MARKETING WORK?
To those on the outside, the inner workings of affiliate marketing can be mysterious and confusing. Some marketers even think it’s a channel that you can turn on and turn off like you can with paid search or paid social (spoiler: it’s not).
While affiliate partnerships are multifaceted, it’s a structure that’s built on transparency and real relationships, not one-off transactions.
The overall goal of an affiliate program is to create a win-win framework for both brands and their affiliate partners – a structure that, when established properly and strategically managed, can make up a significant portion of a brand’s online revenue, with high ROAS and low CPA.
Example of affiliate marketing being used to drive a sale:
- Affiliate partner promotes a brand’s products or services on their site.
- Consumer clicks on brand’s promotion on the affiliate’s site and a cookie is then stored on the consumer’s browser (see the next section below for more on cookies); this is what makes it possible for the affiliate network or SaaS platform to track the consumer’s progress from the affiliate’s website through to the brand’s shopping cart.
- Consumer is redirected to brand’s website.
- Consumer purchases a product/service from the brand.
- The network or SaaS platform then automatically pays out a commission to the affiliate (based on the rules set by the brand) for driving that sale.
TRACKING PERFORMANCE IN AFFILIATE MARKETING