Affiliate Marketing Basic Concepts Explained

Oct 11, 2016 | Affiliate Marketing

To do affiliate marketing right, your organization must first understand the basic concepts. Use this infographic to explain what it is and how it works.

Affiliate Marketing 101

What is affiliate marketing, and could it work for your business?

Affiliate marketing works when advertisers wanting to sell products partner with affiliate companies to post banners, deals, coupons, or reviews that link back to the advertiser's website. When those trackable clicks translate into sales, the publisher or affiliate earns a commission.

You may have already experienced affiliate marketing without even realizing it. If you've used the Groupon app or the website Rakuten, for example, you've earned a discount on your purchase and a commission for your affiliate.

Getting signed up to participate in an affiliate marketing program is the easy part when going through a platform such as Rakuten or CJ, which Informatics regularly uses.

How does affiliate marketing work?

Affiliate marketing is all about leveraging partnerships and collaborations to benefit both parties. To get started, your business will need to partner with an affiliate network, which is a management platform that directly connects advertisers with relevant affiliates. Affiliates that work with a variety of advertisers are also known as “publishers.” Sometimes this advertising content is embedded in a blog post, or it might take the form of an image displayed on their site.

Advertisers have different business goals, so it’s important they choose an affiliate network that gives them the best return on investment (ROI, measured as net return over the total investment cost).

A banner ad for SEO Boost

An awareness campaign may deliver a commission to the affiliate every time someone on their site clicks thru to visit the advertiser's website (pay per click). A sales campaign may withhold commission until that user actually completes a purchase online (pay per sale). A lead campaign may only pay a commission when a user clicks through to the advertiser's website and requests more information or signs up for something (pay per lead).

When selecting a specific affiliate marketing platform, remember that the service acts as the go-between for the financial transaction between advertiser and affiliate—trust is key. Select a partner that offers reasonable commission rates, reliable tracking, and timely payments.

Learn more: How to Select Your Affiliate Marketing Network

Essential concepts in affiliate marketing

Understanding a few key terms will give you the power to analyze and optimize the effectiveness of your affiliate marketing campaign.

Affiliate Link: A unique URL with tracking codes makes it possible for Advertisers and Affiliates alike to accurately determine the results of the marketing campaign.  

Conversion: This is when a customer completes a desired action, like a click or a purchase.

Click-Through Rate (CTR): The percentage of users who click from an affiliate site to the advertiser’s site.

Cost per Click (CPC): How much it costs the advertiser every time a user clicks on the affiliate’s link.

Learn more: 10 Common Affiliate Marketing Terms You Should Know

Note that, just like your SEO, your affiliate marketing campaigns need constant upkeep and care to remain effective. Your administrator needs to make regular tweaks to your affiliate offerings to keep up with market trends and customer habits. That includes updating content, managing relationships with your affiliate partners, and ensuring compliance with contractual rules.

New to the world of affiliate marketing, or just need an assist? Informatics' Digital Marketing team is ready to help you build a campaign that pays off. Contact us today!

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