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01/05/2019

How affiliate marketing can grow your business

The digital and social revolutions have changed how we inform and make our purchasing decisions – irreversibly. Big brands have been taking advantage of these developments for some time, recruiting high-profile influencers to promote their products to their followers.  But the benefits and flexibility of affiliate marketing mean it’s a strategy that can be deployed successfully by businesses with small budgets.  We look at how it works and how to implement it into your marketing strategy.

What is affiliate marketing?

Have you ever watched a YouTube video with a vlogger reviewing a particular service, or followed somebody on Instagram or Facebook who regularly recommends different products? The chances are that the brand that owns these products or services have recruited your “influencer” to help them to sell their product. But how does it work?

Affiliate marketing is a scheme that many brands use to gain coverage by utilising the influence of other brands or personalities to sell their products. The affiliate – in this case the influencer – is somebody who has an arrangement with a brand to sell their products in return for a commission on all sales made through their work. But an affiliate isn’t always an influencer; many people have built up online affiliate stores, making a huge amount of money by selling other people’s products. One example of this is This is Why I’m Broke, an affiliate store that sells mostly amazon products, making money from a website which is essentially a shop window showcasing gadgets and gifts that fit within their off-beat brand .

Benefits of affiliate marketing

The initial benefits of affiliate marketing are obvious; enlisting the support of an affiliate instantly puts your brand in front of new potential customers, increasing your brand reach and (hopefully) increasing your sales. Furthermore, affiliate marketing requires no initial investment, you pay commission on sales (or website visits depending on what you agree with your affiliate), meaning you don’t need to fork out large amounts of capital. This guarantees profits on your campaigns because, no matter how much or how little you sell, you only pay out a proportion of the revenue/profits. This has an advantage over advertising, one-off payment campaigns and Pay Per Click because you have a guaranteed return on your investment; if you don’t get any sales, you don’t pay.

Targeted recruitment of affiliates can be an excellent way to appeal to your brand audience. If a well-known and well-respected influencer with an audience that closely resembles your ideal customer starts advocating your product or service, it could go a long way to building trust in your product or service to the very people you want to reach.

Another benefit of affiliate marketing is that you can invest as little or as much time on your marketing as you want; your affiliate has an incentive to sell your products, and so it’s down to them to get creative and produce marketing materials or campaigns that sell your brand.  Affiliate marketing therefore effectively gives you a completely new sales team. 

Things to look out for

Affiliate marketing may look great at first glance, but it’s important to consider the potential pitfalls involved:

  • Does it work with my brand? Some businesses offer services that simply don’t fit the affiliate model. For example, a marketing agency such as Sharp Minds Communications would struggle to track sales and conversions through an affiliate programme, whereas an ecommerce or SAAS site would have an easy job of tracking sales through software such as Affiliatly
  • Fake influencers: When you enlist the help of an affiliate, make sure that they’re legitimate. Some Instagram users have paid for their followers, giving the impression of ‘influence’ when really they’re just promoting your products to thousands of bots.
  • Misaligned values: When you recruit a brand or influencer into your affiliate programme, it’s important to ensure that their values and methods of promotion support your brand values. Also, if they promote other brands, make sure they align with your principles. For example, if you sell eco-friendly products, don’t recruit an influencer who moans about the 5p plastic bag cost or promotes animal-fur coats.
  • Reduced profit margins: While you’re guaranteed a return on investment with no upfront costs and only paying commission on sales, your profit margins will drop depending on how much you pay out to your affiliates. You should definitely take this into account when deciding whether to start an affiliate programme. If you’re generating a large number of sales, it might make more cash-flow sense to pay for one-off adverts instead of commission on sales if it generates more profit. However, you should still consider the non-monetary advantages a good affiliate marketing strategy brings to the table over advertising.

Building a successful affiliate programme

When you build an affiliate programme, you first need to create a list of potential influencers and brands to approach. You should always consider that the more followers they have, and the more business they’re likely to get for you, the higher their prices are likely to be. But don’t let that put you off; you can always negotiate to get a better deal.

However, a growing method of affiliate marketing is to recruit multiple micro-influencers to address a more granular crowd and gain exposure through more personable interactions.  This strategy can have two big advantages over going for the influencers with the stratospheric followings: micro-influencers are likely to expect to negotiate a lower fee with you, meaning you retain more profit, but they are also likely to have a more targeted, niche following.  You may reach fewer people, but they may be more inclined to buy your product or services – and for a lower commission.  You can read our article about how Adidas have been using micro-influencers to improve trust in their brand here.

When you approach somebody to promote your brand, make sure you act professionally and friendly. You can contact affiliates directly through social media direct messaging, or you could send them an email or give them a phone call. Remember that whoever you’re talking to has an incentive to get involved, and the more money they make for you, the more money you make for them!

Make sure your website’s affiliate sign-up page is optimised and ready to go. If you’re selective about who you recruit for your affiliate programme (which, unless you’re Amazon, you probably should be), you could make your affiliate page password protected or difficult to access from your main website to discourage anybody who stumbles upon the page from signing up.

One great way to expand your affiliate network is to give your current affiliates incentives to sign-up other affiliates. Maybe for each high-quality affiliate they refer to the programme, they earn a higher commission; it all goes to expanding your brand reach and improving your sales.

Building an affiliate programme is one great way to boost your brand reputation and grow your sales. By following our simple tips, affiliate marketing could take your brand and products to new markets – but remember to be careful; there are certainly many benefits to affiliate marketing, but there are also drawbacks.

To find out more about how Sharp Minds Communications can help with your marketing, email communications@sharpminds.agency 

 Based in Tunbridge Wells, Kent, Sharp Minds offers brand development, digital marketing, offline marketing and public relations to businesses across Kent, Sussex, Surrey and Greater London. You can see what our customers say about us here.

 

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