Affiliate Marketing

In affiliate marketing, affiliates advertise the products and services of other companies on their websites and receive a commission for doing so. Affiliate marketing is a tool that can be used for performance marketing, i.e. data-driven marketing. It has become firmly established in the Internet advertising landscape. There are different remuneration models. What they all have in common is that payment is made exclusively in the event of success. This can be, for example, a click on an advertisement or a purchase made.

The idea behind affiliate marketing

The idea of affiliate marketing is said to have originated in 1997 at a party where the Amazon founder was talking to a young lady about her website. The woman offered him to market books on the website in exchange for commission. Gradually, more and more partners joined in, wanting to advertise other people’s offers on their websites in return for a commission. Today, Amazon is still one of the big players in affiliate marketing. Affiliate marketing is playing an increasingly central role in the marketing mix. In 2019, 74 percent of affiliates, 61 percent of merchants, and 90 percent of agencies and networks enjoyed rising sales, despite various hurdles associated with the issue of e-privacy.

How affiliate marketing works

Many companies rely on affiliate marketing to market their products and services online. In affiliate marketing, publishers link to content on partner sites and receive a predetermined commission. Advertisers only have to pay this commission if a certain action has taken place. This could be a click on a banner or the ordering of a product on their website.

Hand on heart: affiliate marketing is about money. These are the most important factors for affiliates when looking for suitable affiliate programs:

  • Commission level
  • Timeliness
  • Advertising allowance

In any case, it makes sense to regularly check the commissions of your competitors. The affiliate program search engine serves as a first aid.

But be careful: Commissions are entered manually here and can be outdated. Therefore, you should always check the program description of the respective networks. In view of browser regulations and data protection, which is becoming increasingly important, affiliates may be uncertain when it comes to allocating orders. Therefore, for many, the advertising cost allowance is a viable option. However, the following remains to be said on the subject of advertising cost allowance: Large affiliates have a very high reach, often with hundreds of thousands to millions of newsletter recipients or followers on social media. Due to this enormous reach and the associated advertising power, these affiliates often demand an advertising cost allowance (WKZ) as a fixed contribution, which can open up two sources of error: A WKZ should not be paid blindly at every site without any prospect of success. On the other hand, prominent advertising spaces should not be underestimated – often the payment of a WKZ can be quite profitable.

Partner programs and affiliate networks ( >> JOIN Partner-Program )

Many website operators offer an affiliate program. In order to track through which publisher an interested party has reached an advertiser’s website, the links in the advertiser’s advertising material are provided with a code. When the user clicks on an ad, cookies are also set, which can be used to track the process.

Affiliate marketing can also be handled via professional affiliate networks. These are platforms that bring advertisers and publishers together and bundle functions such as the delivery of the advertising material, tracking and performance measurement, and the distribution of commissions. Well-known networks for affiliate marketing include Awin, Digistore24 and Belboon. Amazon PartnerNet is a popular and widespread affiliate program. Here, affiliates can build up their partner business via the online giant.

Partner programs

Advantages for advertisers

The goal of advertisers is to lead potential customers to their website, for example, so that they make a purchase there. By including their content on suitable publisher pages, advertisers have the chance of more prospective customers coming to their website and can thus increase their sales. Affiliate marketing is a favorable advertising opportunity for advertisers, because they only receive payment if they are successful. With this form of performance marketing, advertisers therefore have a fairly low risk. In addition to the possibility of higher revenues, advertisers benefit from branding effects through the integration of their content on third-party websites.

Advantages for publishers

Publishers can earn money by marketing third-party products on their website. To do this, they integrate an advertising medium (e.g., a banner) on their website that promotes a third-party offer. The publishers act as partners (affiliates). Depending on the agreed remuneration model, the partners receive a commission for clicks, leads or sales, for example.

Finding niches: Success factors for affiliate marketing

For the US market, it is predicted that a whopping 8.2 billion euros will be spent on affiliate marketing in 2022 – compared to 5.4 billion in 2017. If you want to get into the billion-dollar affiliate business, the best thing to do is to look for a lucrative niche and create a corresponding page. However, there are other factors besides such promising niche topics and basically high-quality affiliate texts that could drive affiliate marketing success.

Mobile first

The use of mobile devices is also becoming increasingly important in affiliate marketing. As early as 2016, more affiliate traffic came from mobile devices than from desktops, and since 2018, the speed of mobile pages has finally also been considered a ranking factor. In the meantime, many companies and affiliates have adapted to this and adapted their websites and stores or developed their own apps. However, an online store should not only be responsive, the ordering process should also be easy to execute via smart device in as few steps as possible.

Affiliates as sales partners at eye level

The relevance of open communication in affiliate marketing is often underestimated. Affiliates expect a personal contact person for questions and suggestions regarding the affiliate program. Therefore, contact persons and contact details should be communicated in all channels, i.e. in the program description, newsletters or affiliate program search engines.

Often the mistake is made to inform affiliates last or not at all about changes to the affiliate program or the store. In the case of changes in the URL structure, this can lead to links suddenly leading nowhere. The bounce rate increases dramatically and no more sales are generated. Communication should also not be a one-way street: Talking to affiliates often provides a lot of useful information and suggestions for improvement. What does the competition do better? Are additional commissions being paid? What does the affiliate need to better promote the store? With this input, the affiliate program and the collaboration can be actively developed further.

Focus on the customer journey

The topic of customer journey tracking and the associated analysis of online marketing channels also represents a central aspect for affiliate marketing. In order to draw meaningful conclusions from online marketing activities and uncover important touchpoints, merchants must take the time and provide the necessary resources to deal intensively with the topic of the customer journey. This is the only way to document and analyze a customer’s journey from initial contact to purchase completion and ultimately invest the marketing budget in the relevant online marketing channels. In addition, a clean customer journey analysis opens up opportunities to remunerate high-quality affiliates appropriately or more fairly.

Compensation models

Traditional affiliate marketing compensation models

There are different compensation models in affiliate marketing. The affiliates’ commission is calculated on the basis of these models. All of them are performance-based, i.e. they are only paid if a predefined service has been provided:

  • Pay-per-click (commission per click of a user on the advertising material).
  • Pay-per-sale (commission as a percentage of the sale)
  • Pay-per-lead (commission per contact of a prospective customer, e.g. registration or download)

Pay per Assist – the model for content affiliates

The “last-click model” or the “last cookie wins” model now seems outdated. Affiliate networks have also recognized this. Many therefore rely on alternative technologies to recognize affiliates who contribute value and to pay them extra. Awin, for example, offers pay-per-assist remuneration in its platform. This is intended to break the focus of publishers on having to generate the last click and to focus on all stages of the advertising impact principle (AIDA model).

To retain partners who often initiate purchases but do not complete them, for example, special payments can be made in the form of an advertising allowance. This can also satisfy partners who would otherwise not have received any payment and would therefore no longer promote the store in the long term.

Important: This does not mean that the voucher site has not provided any advertising service. It may well be that this provided the final impetus for the purchase. Without previous editorial content, however, the user would not have become aware of the offer. This is one reason why classic voucher portals are able to expand their editorial content more and more and thus bring increased initial traffic.

Conclusion: Appropriate remuneration for affiliates

In affiliate marketing, affiliates advertise the offers of third-party companies on their website in exchange for money. For example, blog operators can market their web space and make it available to affiliates, which can consist of a newsletter subscription or a sale via the corresponding store. Common commission models in affiliate marketing are pay-per-sale, pay-per-lead and pay-per-click.

For publishers, affiliate marketing is basically a welcome opportunity to monetize their own content. Affiliates are personal sales partners with whom a constant exchange is profitable for both sides. In order to make affiliate marketing viable for the future, one should not focus on the last click, but recognize and remunerate affiliates who have already participated before. A fairer way of remuneration is, for example, to include assists in the commission model.


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