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A Beginner’s Guide to Understanding Affiliate Marketing

Last Modified: August 16, 2022

Affiliate marketing is one of the most prominent types of marketing in digital spaces right now, and if you’re looking to build a strong marketing strategy, you need to understand how to leverage it.

With over 80% of advertisers using affiliate marketing of some kind, it’s clear that this isn’t a passing trend and is likely to be one of the most enduring marketing choices of the digital age.

Here’s everything you need to know about affiliate marketing from the ground up.

What Is Affiliate Marketing?

Affiliate marketing is a type of performance marketing. With this marketing structure, an affiliate publisher promotes a website, product, or service using a referral link or code. When a customer uses that link or code to make a purchase, the merchant pays the affiliate publisher a commission on the purchase. That means affiliate marketing utilizes three distinct parties:

  • User/Potential customer

The user is the potential customer that you, as the merchant, are trying to court. This is someone who is reading an affiliate’s blog, following an influencer’s social media profiles, or watching a publisher’s videos, who might be interested in the product you have to sell. They’re the person you’re targeting in your affiliate marketing.

  • Publisher

The publisher is the individual that you’re partnered with. This is the individual that creates content attempting to get the user to click through and check your website. Publisher sites can include any content–videos, blogs, websites, social media posts, and anything else that an end user might be interested in.

  • Merchant

The merchant is the group that pays the affiliate a commission any time the affiliate makes a purchase. Merchants will often partner with affiliate management agencies to make it easier for them to find high-quality affiliates who are driven to create great content that actually sells their products.

Affiliate marketing has gained significant popularity in recent years because it can be great for everyone. The merchant gains targeted exposure without having to invest money upfront, the publisher is able to gain income from their existing content, and the customer gets a recommendation from someone whose input they value, as well as potentially a discount, which many affiliate programs provide.

The Top Benefits of Affiliate Marketing

There are many reasons merchants have been flocking to affiliate marketing. Here are a few of the most prominent benefits.

  • Increase sales quickly

Affiliate marketing is well-known for prominent, strong sales. Recommendations are one of the best ways to secure sales, and in the absence of peer-to-peer recommendations, many individuals look instead for recommendations from industry leaders and influencers whose opinions they trust. That means affiliate marketing can be a great way to secure more sales.

  • Create an authentic awareness campaign

Authenticity and transparency are two of the most important factors for the modern-day advertising campaign; an astonishing 90% of consumers indicate authenticity as one of the important factors they consider when deciding on a brand to buy from. When you select affiliates that actually enjoy your product and have a genuine reason to use and recommend it, you open up a world of authentic brand awareness.

  • Test out many different marketing strategies

Affiliate marketing can be an extremely effective way to test new campaigns and marketing strategies. Because it’s performance-based, you don’t have to pay as much for a marketing campaign that does poorly. If you’re looking into seasonal marketing strategies, new Instagram strategies, or new content creation strategies, you can funnel it through your affiliates to see which ones perform best.

  • Build a reputation and improve brand awareness

Reputation can be an important part of your business as a whole. Whether you’re trying to create an entirely new brand impression or you’re just trying to change the way people think of your business in a very subtle way, you can use affiliate marketing to impact the way people think of your company as a whole without having to spend millions of dollars on reputation management.

  • Save money on your marketing

Finally, one of the biggest reasons companies are flocking to affiliate marketing is simply because it’s generally inexpensive when compared to other types of marketing. You only have to pay when someone makes a purchase, which means that you’re making money when your affiliates do. This especially helps if you don’t have a large marketing budget to begin with.

Paying Attention to Legal Requirements

Remember that affiliate marketing is still beholden to the Federal Trade Commission’s legal guidelines, especially regarding FTC disclosures that marketers and publishers alike need to understand. Generally, the disclosure needs to be clear and conspicuous to all readers, and the people you’re paying to endorse your product should be transparent with the end user that they could receive a payment if you purchase through their affiliate link. Remember to look through all of these requirements before you start working with affiliates so that both you and your affiliates understand what you legally need to remember.

Additionally, while not a legal requirement, an affiliate program policy is a legal agreement that you and the publishers you work with should both keep in mind. It helps moderate the process of creating content and paying for commissions, ensuring that you both know the terms and conditions before you enter into an agreement. Our guide to creating a program policy is a great starting point.

The Bottom Line

If, after reading this beginner’s guide, you’re ready to get started, then Refersion is a great tool to help. This program helps you manage, track, and grow your affiliate marketing network, celebrating the publishers that help push your program to new heights. Sign up today to find out how Refersion can help you develop a great affiliate marketing program.

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Written by

Ruthie Carey
Ruthie Carey