When it comes to digital marketing, most people think about social media, SEO, and influencer marketing methods. However, one of the most forgotten methods is digital affiliate marketing, even though it can be an effective marketing strategy for improving brand awareness. The risk of using affiliate marketing is also low, and the rewards are high.

However, since affiliate marketing involves many factors outside your control, it can take time to understand the best approach. This article will guide you through using affiliate marketing to market your products and services.

What is a Digital Affiliate Marketing Program?

Affiliate marketing is a program where a third party promotes a merchant’s products in return for a commission. It is considered to be a crucial part of digital marketing. The methods appeal to most businesses because they enable them to reach their customers at a lower cost. On the other hand, they also benefit affiliates by allowing them to promote products or services in return for a commission.

Some of the goals that a business may have for affiliate marketing may include:

• Making sales.
• Connecting with your audience.
• Increasing website traffic.
• Increasing brand awareness.

One of the benefits of affiliate marketing is that it enables businesses to partner with affiliates at a low cost. The payment made to affiliate businesses can be in different compensation methods such as:

• Commission
• Free products
• Free education and training
• Exclusive rewards

While affiliate marketing isn't new, how it is done has changed as the world moves toward digital marketing. Nowadays, digital marketers drive traffic to the products and services they promote by including affiliate links.

Key Elements of an Affiliate Marketing Program

There are four factors involved in an affiliate marketing program, each playing an important role. These are:

• The affiliate. This is the entity or individuals promoting the products or services of a merchant.
• The merchant. The person or entity that sells a product or service being promoted by the business.
• Affiliate Network. This is the intermediary between the merchant and the marketer. Some merchants don't register with affiliate networks but invite them to promote their products. However, the affiliate network is still an essential part of the transaction.
• Customer. Finally, the customer buys the merchant product after coming across it through an advertisement by the digital marketer.

Why Small Businesses Should Use Affiliate Marketing

Affiliate marketing has many benefits, especially for small businesses. Here are the pros and cons.

Pros of Affiliate Marketing

• You only pay a commission when the marketer makes a sale.
• It is cost-effective as you don't need to have an advertising budget.
• Effective marketing method, as hundreds or even thousands of marketers promote your products or services.
• A better understanding of your cost per acquisition can provide better insights into whether you are making or losing money.
• Profitable marketing method. You are almost guaranteed not to lose money when you promote your products or services using this advertising method.

Cons of Affiliate Marketing

Even though there are many benefits to using the digital affiliate marketing program model, this will also present challenges, as noted earlier. Therefore, you need to devise a strategy to overcome these challenges. Like any other marketing method, affiliate marketing has its fair share of cons. These include:

• Little control of your marketing language. Since marketers can use any marketing method, you don't have control over what they say concerning your brand. Some marketers may use inappropriate tactics and messaging to make a sale, affecting your brand. Be careful of this, as you don't want marketers to lie or misrepresent your brand.
• Possibility of affiliate frauds. If merchants use underhand tactics such as fake leads and click fraud, this may bring poor-quality leads to your website. Such traffic may not convert despite costing you. Therefore, implementing measures to prevent affiliate fraud would be a good idea.
• Competition among affiliates. Remember that you are not the only brand looking to work with affiliates. Your competitors will be competing for the same audience and keywords. This can increase advertising costs. It is, therefore, essential to put in place clear guidelines to help you reduce competition.
• Attribution challenges. When you get conversions, it can be hard to attribute these accurately, especially in a multiple-process customer’s journeys. This raises the need for an advanced attribution and tracking journey to ensure that commissions have been fairly distributed.
• Challenges in managing affiliates. As your business grows and thousands of affiliates register with your digital affiliate marketing program, it can be hard to manage them. Consider using an affiliate marketing platform or software to help streamline the reporting and administration process.

Types of Affiliate Marketing Programs to Consider

There are different types of affiliate marketing programs. These include:

Pay Per Click (PPC)

With the PPC advertising model, digital marketers promote your products and services in return for a commission on every click received. You can work with bloggers, YouTubers, and other content creators skilled in creating content that will drive traffic to your website or landing page.

This marketing method aims to drive traffic to your site, increasing visibility and sales. Brands should set clear guidelines and advertising rules to ensure success with PPC advertising while maintaining the brand's integrity.

Cost Per Acquisition (CPA)

This is an affiliate marketing model where digital marketers are rewarded based on their performance. Depending on the specific program, they could be rewarded based on the number of sales made, leads generated, trials, or sign-ups. Because of its result-oriented reward mechanism that guarantees a return on investment, it's the most preferred affiliate marketing model by most merchants.

In this model, affiliate marketers use different methods to drive traffic to the merchant's website or landing page. These include:

Blogging

This is one of the most popular methods of driving traffic to affiliate sites. Bloggers often look for products and services aligned to their blog to market in return for a commission. Others deliberately create websites to monetize them using affiliate marketing. The blogger creates content that helps the customer make a buying decision. The content could be buying guides, product reviews, round-ups, etc.

Social Media Marketing

This is an affiliate marketing method where digital affiliate marketers promote your products or services on social media using organic posts. This strategy is usually more effective for social media marketers with a huge following or having groups or pages with a huge following. An example could be an Instagram influencer selling products to their followers, creators on Twitch advertising products or services, and more.They leverage the trust they have built with their audience to promote their products and services to them.

Social Media Advertising

While this method also occurs on social media, it uses paid ads to market Affiliate products to followers. Digital affiliate marketers run targeted ads on Instagram, Facebook, and TikTok affiliate marketing. Since each platform has its unique audience, they leverage that to reach their target audience and drive product awareness, lead generation, and conversion.

Email Marketing

This involves creating an email list to which affiliate marketers send affiliate links. This approach requires an established audience. Marketers often tap into their audience to encourage them to sign up for an email list. They could entice them using a gift like a newsletter.

Influencer Marketing

Influencer marketing involves collaborating with social media personalities with thousands of followers to promote your products and services. This differs from traditional endorsement in that influencers often have an engaged and authentic approach resulting from the relationship with their audience. To ensure success with this affiliate marketing method, selecting the right influencer who aligns with your brand needs is important.

Steps in Using Digital Affiliate Marketing to Promote Products

You need to follow several steps to promote your products and services using digital marketing. These are:

Determine Your Goal

Start by determining exactly what you want to achieve with the affiliate marketing program. Is it to increase sales, improve brand visibility, or reach new markets? You can easily set up the program's structure when you have a specific objective. This will also enable you to evaluate whether the program succeeds.

Choose an Affiliate Program

You need to determine whether to create your own affiliate program or join an existing one. One benefit of joining an exciting affiliate program is the access to a network of already-existing affiliate marketers. 

They will also handle the administrative work for you. However, the earnings will be lower as you still need to pay the affiliate network compared to an in-house option. The other benefit of an in-house program is that it will provide you with better control and customization options.

Determine the Commission Structure

You should decide how much you will pay your affiliates for every sale you make or per lead. Many factors must be considered when making this decision, such as profit margins, product pricing, and your industry's standards. You will also need to determine the terms of the program, such as promotion guidelines, cookie duration, and payment schedules.

Launch Your Affiliate Program

You need to follow several steps when launching your affiliate marketing program. These are:

• Have a brand identity. A strong and consistent brand name is vital to an excellent affiliate marketing program. Therefore, you should have a consistent message, visual elements, logo designs, and more. These are the details that affiliate marketers will use in their marketing.
• Terms of the program. Your affiliate marketing program should have clear and enticing terms. Ensure you have the right payment schedules, commission structures, incentives, and bonuses to offer affiliate marketers when they achieve a particular milestone.
• Create affiliate marketing merchandise. Merchants often provide affiliate marketers with promotional materials such as banners, product images, and text ads. These ensure a more successful affiliate marketing program.
• A tracking system. Ensure you also have effective software for tracking and monitoring activities more effectively. The software should track different activities, such as conversions, clicks, and commissions, to ensure accountability and transparency.
• Create guidelines for affiliate marketing. You must establish guidelines outlining affiliate marketers' acceptable and unacceptable behavior. This helps ensure that your brand gets represented positively and ethically.

Leverage Referrals and Strategic Partnerships

Affiliate marketing is built on the foundation of partnerships and referrals. The partnerships should be built on a mutually beneficial relationship that benefits each party. It involves businesses that complement one another even though they aren't competitors. There are several tips to help gain the most out of strategic partnerships. These include:

• Working with your best match. Whether working with an influencer, YouTuber,  or other brands, you should ensure they are the best match for your brand.
• Ensure genuine value. The affiliate marketing offer should be attractive enough to attract suitable partners.

When searching for the right affiliate marketers, there are several factors you need to consider. These are:

• Experience. Consider whether they have the relevant experience in affiliate marketing. Working with an experienced affiliate marketer can provide better results because they understand what is needed to market an affiliate product effectively.
• Diverse promotion methods. Instead of working with an affiliate marketer who uses a single digital marketing platform, you can work with one using diverse promotion methods. These can include methods such as websites, email marketing, social media, content creation, and more.
• Relevance. If you sell car accessories, working with a chef influencer as your affiliate associate will not achieve the desired result. On the other hand, working with a digital creator on Facebook who is a mechanic can increase your chances of success. Therefore, consider the partner's relevance to your niche.
• Compatibility. Assess the potential values and strategies of the affiliate program to determine if it aligns with your brand. Partnering with digital marketers whose values align with yours can improve your chances of success.
• Research and outreach. You can find potential affiliates using different methods, such as industry, specific forums, and directories. After you have found a few you are comfortable working with, you can contact them and tell them about the benefits of joining your affiliate program.

Managing and Nurturing Leads

After recruiting affiliate marketers, you should manage and nurture them to see if they will bring the desired results. There are several ways you can do that. These are:

• Assign affiliate managers. An affiliate manager can provide your marketers with the necessary guidance and support. This can improve communication, trust, and collaboration.
• Good constant communication. You should regularly communicate with your affiliate marketers through emails, newsletters, and messaging platforms. Take the opportunity to inform them of upcoming promotions, newsletters, and tips for success.
• Training and resources. Provide your affiliate marketers with training materials, resources, and webinars that help them understand the product you are selling, their target audience, and the right marketing strategies.
• Incentives. Provide bonuses and other incentives to the top performers to motivate them to perform even better. You can offer them better commissions or product-exclusive offers.
• Monitor for compliance. You must also monitor the affiliates' activities to ensure they comply with ethical marketing practices and program guidelines. Regularly monitor their content and promotional activities and take action if fraud or non-compliance is noted. If any issues arise, address them promptly to avoid spoiling your brand image.  Maintain the highest level of standards in the program.

Determining the Success of Your Affiliate Marketing Program

There are several key performance indicators you can use to measure the success of your affiliate marketing program. These are:

• Return on investment. To measure the ROI of your affiliate marketing program, compare the amount you spent in the affiliate marketing campaign with the revenue generated.
• Conversion rate: When affiliate marketers refer visitors to your site, do they complete the desired action, such as signing up for a newsletter, making a sale, etc.?
• Individual affiliate performance. You need to find out how your affiliates perform depending on the conversion rate, CTR, and overall contribution to the program.
• Customer Lifetime Value, also known as the CLV, measures the lifetime value of the customers who are the result of the program. Measuring this figure determines whether they will bring a lifetime value to your business.
• Affiliate growth. It's essential to understand what your affiliate program is offering. Some key metrics to check include the number of affiliate marketers signed up, the program's geographical reach, and the different promotional methods.

Scaling Up Your Affiliate Marketing Program

When you notice your business is growing, it's time to scale up the affiliate marketing program to generate the maximum impact. To do that, the process of recruiting affiliates should be ongoing. This will enable you to bring new audiences and perspectives.

Consider also whether your industry has segments or niches you can explore to reach a bigger audience. If there are complementary businesses in your niche, consider if you can collaborate with them to co-market each other’s products. 

If possible, look for ways to diversify your affiliate program. You can also expand the program to access the global market, which will help improve your brand's visibility. You should use data to optimize the affiliate program to increase conversion, improve affiliate satisfaction, and increase revenue.

Compliance with Legal Regulations

When creating an affiliate marketing program, there are several laws that you should be careful to comply with. These are:

• Data Privacy laws. Many jurisdictions are now taking data privacy very seriously. Therefore, if you are collecting customer data, you should ensure that you are doing so in accordance with your local and international data privacy laws.
• Affiliate agreements. Well-drafted and comprehensive affiliate agreements that spell out the program's terms and conditions, commission guidelines, and complaint requirements are essential.
• FTC guidelines. You should ensure your affiliate marketers disclose that they earn a commission when someone buys a product using their affiliate links. This is in line with the Federal Trade Commission’s rules and guidelines.

Is Affiliate Marketing the Right Fit For Your Business?

While we have seen the immense potential of affiliate marketing models for marketing your brand, the truth is that they are not suitable for all businesses. When considering whether to include it in your digital marketing strategy, there are several factors you need to consider. These include:

Suitability of Your Product or Service

The best affiliate marketing product or service caters to a particular niche and is in considerable demand. Therefore, you need to determine if your product offering will generate interest from potential customers.

Profit Margins

When affiliate marketers consider whether to join your program or not, one of the factors they will consider is the commission. Therefore, you need to determine whether your product or service offers good commissions that can entice affiliate marketers while still giving you some good profit margins. You need to strike a good balance between the two.

Online Reputation and Presence

Another factor that will affect the chances of success of your affiliate program is your online presence. If you have a robust online presence, an established brand name, and good customer feedback, this can quickly impact the success of your affiliate program. Affiliates often prefer promoting products from well-known or well-respected brands.

Infrastructure and Other Resources

Consider whether you have the resources to enable your business to track sales, provide marketing materials to affiliates, and disburse payments. Without these resources, running an affiliate program effectively can be challenging; therefore, it should be among your considerations.

Conclusion

As long as you have the right product, reputation, pricing, and digital marketing resources, you should not be afraid to try this digital marketing model. By leveraging the power of affiliate marketing, you can tap into new markets, increase brand visibility, and boost sales. However, before you join the program, you should ensure that it aligns with your business goals.

Remember that you will commit to the relationship when you recruit affiliate marketers. Therefore, it requires a lot of forethought and careful planning. Fortunately, by reading our detailed guide, you can quickly start affiliate marketing as part of your bigger digital marketing strategy. We recommend you also read our guide on becoming an Amazon affiliate on Instagram.