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Affiliate Marketing VS. Paid Advertising: Which Is Better?

Last Modified: February 8, 2023

Brands and companies alike have been utilizing paid advertising online for nearly 3 decades now, with the first online ad appearing all the way back on October 27, 1994. This simple banner ad contained a simple phrase, “Have you ever clicked your mouse right here? You will”. 

But, this simple banner ad would forever change how businesses reach their audiences. As banner ads became increasingly more popular, advertisers needed ways to target specific audiences and consumer demographics instead of simply placing their banner ads on every possible website hoping that their target audience would see them. 

This demand ushered in the beginning of targeted ad placement in 1995, which would become the hallmark of online advertising. Targeted online paid advertising revolutionized marketing for brands and companies worldwide. It would quickly become the most popular marketing channel for driving brand awareness and converting consumers.  

But, after nearly 30 years of use, traditional methods of online paid advertising are bringing diminishing returns for brands and companies alike. There’s so much paid advertising online today that many of today’s consumers have started to tune it out entirely. 

What was once an effective way for businesses to present solutions to consumers’ problems has turned into a seemingly gainless endeavor, converting fewer consumers with each passing day. 

Today’s consumers are increasingly more demanding and more challenging to convert, which paved the way for alternative advertising methods online. One such method that has quickly taken the throne of the most popular marketing channel online is affiliate marketing. 

Affiliate marketing involves hiring affiliates to promote your products and services and rewarding them with a commission percentage of every sale they contribute to. 

Below, we’ll cover the top 5 reasons affiliate marketing has become the go-to solution for businesses to reach new audiences, drive brand awareness, and convert consumers.

Reason #1: Affiliate Marketing Is More Organic Than Traditional Paid Advertising

In the early days of the internet and paid advertising, consumers quickly learned to ignore the overwhelming presence of pop-up ads. Similarly, today’s consumers are learning to ignore the overwhelming presence of traditional paid advertising displayed all around them online. The sheer quantity of paid advertising online has forced consumers to tune them out subconsciously. 

Additionally, many of today’s consumers employ adblockers to block out display ads online completely. Many of today’s online shoppers perceive traditional online ads by brands and companies as inorganic and inauthentic. 

Today’s consumers are experiencing social media ad fatigue from the seemingly endless number of ads present on Facebook, Instagram, and all other social media platforms by companies and brands alike. Social media ads displayed by companies and brands are becoming increasingly less effective in converting consumers. 

More and more consumers each day, such as the increasingly more dominant demographic of Gen Zers, demand organic means of advertising from brands and seek trusted resources before purchasing. One such trusted resource that is increasingly becoming more dominant is influencers. Influencer marketing was rated as the fastest-growing online customer acquisition channel by businesses. 

Affiliate marketing beat paid online display advertising, search advertising, and email marketing as the fastest-growing channel. Another recent survey by Thrive My Way discovered that 52% of Gen Zers go to social media to seek advice from social media influencers before purchasing a product. Additionally, 52% of Gen Zers also said they value authentic snaps over professionally-edited product photos. 

Reason #2: Affiliate Marketing Has No Defining Guidebook

Affiliate marketing takes full advantage of the seemingly endless number of niches and their respective online affiliates. Unlike traditional paid online advertising that often utilizes specific best practices, affiliates in every niche have their own unique approach to reaching audiences and their own tried and tested advertising methods that best resonate with their respective audience. Thus, different affiliates working in the same niche and industry can reach different groups of audiences. This is a significant advantage of affiliate marketing for businesses compared to traditional paid advertising. It allows brands and companies to reach new audiences and convert them more successfully. 

Reason #3: Low Costs to Getting Started

Brands and businesses looking to get started with affiliate marketing don’t need a dedicated advertising team or expertise to begin their affiliate marketing program. Aside from choosing an affiliate network and selecting and vetting affiliates, there’s not much effort required to get started with affiliate marketing. This, along with a commission structure that only pays affiliates once a confirmed conversion that resulted in a sale, is one reason why affiliate marketing has become an immensely popular marketing method for businesses. 

Traditional paid advertising methods commonly utilize a PPC, or Pay-Per-Click, payment structure that charges businesses a fixed amount for every click made on their ads. Because most of the marketing activities are done by affiliates, the costs to maintain an affiliate marketing program are significantly lower when compared to traditional means of paid advertising online. This makes it easier for brands and businesses to manage their marketing costs and doesn’t strain their cash flow. 

Reason #4: Low Risks

Since businesses are only charged once sales are made, the risks of running an affiliate marketing program are significantly lower than traditional paid advertising. In addition, since affiliate marketing is performance-based, affiliates are incentivized to do their best to make the most amount of conversions possible. Finally, affiliate marketing further alleviates risk because businesses can permanently terminate their affiliate relationships with poorly performing affiliates. 

Reason #5: More Flexibility

Compared to traditional paid advertising, affiliate marketing offers businesses more flexibility to make their affiliate marketing programs smaller or bigger at little to no cost. The relative ease and flexibility of scaling an affiliate marketing program make it a popular marketing method for small businesses and big brands alike. In addition, affiliate marketing offers more creative flexibility regarding the marketing methods companies can use to reach their audiences.

The Bottom Line

Paid advertising online has been the leading marketing method for most businesses in the 21st century. But, because of its diminishing returns, brands are increasingly turning to affiliate marketing to reach new audiences and drive sales. 

Affiliate marketing offers an organic, highly-effective, low-cost, and flexible solution for businesses to increase brand awareness and conversions. Getting started with an affiliate marketing program is easy with Refersion

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Written by

Ruthie Carey
Ruthie Carey