Affiliate marketing is a branch of digital marketing based on cost per acquisition or, what is the same, cost per result.
Affiliation networks are very large and important advertising network, and many brands choose to advertise in the different websites and formats they offer.
There are two assets in the process: the advertiser, which looks for new advertising spaces and the publisher or affiliate, which is the one offering his website for others to advertise. If the sale is obtained through the affiliate’s website, the advertiser pays a percentage agreed before the sale value (cost per acquisition), so that it is usually profitable, since both parties benefit, given that the advertiser or brand they can increase their coverage and appear in specialized sites with related themes. The affiliate manages to monetize their website passively.
One of the affiliate networks strengths is that they have different varieties when it comes to impacting and inserting advertising. They can be blogs or digital magazines, sponsored content, sites of offers and flash sales, mailing and even search engines, by which the impact can be done through different channels: content marketing, mailing, display and text ads.
At the end, it is a model that especially is more profitable for the advertiser, since he only pays when he gets results avoid paying clicks that do not get the sale or registration. Commissions for sale vary greatly depending on the network and especially of the advertiser margin, who will have to see how much he is willing to offer to obtain profitability. On the other hand, the affiliate will offer their space for the highest possible cost, within their possibilities, since it depends on the traffic and the relevance of the web to the advertiser.
Affiliate Marketing: Advantages and Disadvantages
Advantages of affiliate marketing
- The cost-per-acquisition model is fair and profitable.
- Coverage and new advertising spaces are increased.
- You do not pay for clicks (CPC) or impressions (CPM).
- It allows to attract new clients and have a high impact.
Disadvantages of affiliate marketing
- It is complicated for companies or brands with little margin on the sale.
- It is necessary to monitor the spaces that are approved, since some may be of little interest to the brand.
- In some cases, it is not possible to control the impressions of the ad, since it depends on the affiliate and the traffic, he/she may have.
In summary, affiliate marketing is an excellent strategy to increase scope and coverage as a brand, and it is also very profitable because you only pay per result. It is essential to have a significant margin, so it may be that for businesses based on low-cost or drop shipping business* it would be complicated to assume.
*Dropshipping: a business model in which the product is not stored in the depot, but it is purchased from a third party, and the third party also make the shipment.