Online Marketing

Why industries use affiliate marketing – Arutz Sheva

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As the e-commerce industry grows, it opens up the potential for other lucrative areas of online business, including that of affiliate marketing. Affiliate marketing is a strategy through which an ‘affiliate’ promotes a company’s products in exchange for commission. This technique was first used in 1994 in the online start-up company PC Flowers & Gifts by William J. Tobin, who later patented this clever online marketing strategy two years later (1996).

Tobin convinced multiple companies to promote various different PC Flowers & Gifts products with little-to-no effort required, and in return they received commission for this.

Since then, affiliate marketing has experienced exponential growth, particularly in recent years; with spending on such marketing by various different types of businesses increasing by a staggering $2.5 billion in the USA alone from 2007 to 2014.

It is no wonder that an increasing number of companies from various different industries are starting to use affiliate marketing to help boost their sales; as implementing an efficient affiliate marketing strategy within any business can help to significantly improve online sales. Affiliate marketing is utilised across almost all industries from online gaming and even through to property management software (Arthur Online Property Management Software).

Although this marketing strategy started out as a fairly straight forward method, with the tremendous growth of the internet and online business, so too has affiliate marketing branched out and developed into various different models (source: Advice to Buy). Three of the main models that fall under the name of affiliate marketing are Pay-per-click (PPC), Pay-per-sale (PPS), and pay-per-lead.

Arguably one of the most well-used models of the affiliate marketing approach, PPC is a method in which an affiliate will get commission from each click a company receives due to said affiliate. This is measured, as the number of visitors a company’s website will get from a link on the affiliate’s own website.

This model is one of the most widely used, as it one of the most attractive offers for affiliates, with company’s having to pay commission regardless of whether the visitors of the page buy products or not.

Pay-per-sale (PPS) is another affiliate marketing approach in which said affiliate will receive commission on each customer that goes on to not only click on the page, but also ends up purchasing products from the company. This type of affiliate marketing will usually offer affiliates considerably higher commission than the previously mentioned PPC method.

The pay-per-lead method is another popular approach companies may use when incorporating affiliate marketing strategies into their business. This model will typically pay commission to affiliates on the number of visitors that sign up to various things on the webpage; including but not limited to a newsletter and free trials.

Although the methods mentioned above are all main approaches companies will often use when incorporating such strategy into their business, it is worth mentioning there are numerous different models for this, all coming with their own pros, cons and detailed workings.

There are two ways in which businesses can use, and further benefit, from affiliate marketing, these being as follows: being an affiliate for another company or finding affiliates for your own business. Business owners can use either of the two methods to help in the growth and development of their company.

One of the great benefits to using an affiliate marketing strategy is that it can reduce the amount of money a company spends on its marketing and advertisement. It does this as by only paying an affiliate by commission, companies only pay for direct results and, in the case of pay-per-sale (PPS), sales. Often this can be seen as a much more financially efficient method than hiring an employee on a set salary.

This can be the case as an affiliate is more directly affected by the results of their marketing, and so may often be more driven to increase clicks/leads/sales for the website. This can increase a company’s overall productivity by improving upon its economic efficiency.

Not only can using an affiliate marketing strategy reduce marketing and advertisement costs and thereby improve upon the overall success of a business, it can also do wonders in brand exposure. By increasing the presence of a company’s brand on numerous other affiliate businesses, brand exposure overall is then automatically increased.

This increased presence and visibility could then translate into increased sales, as more and more people will have a chance of being exposed to the brand.

In addition to the numerous different pros of implementing such affiliate marketing methods, becoming an affiliate for such methods can also come with its benefits. Companies can earn money with minimal effort on their part. A passive mention such as including a link on a blog post can lead to money for the business via affiliate commission. It is no wonder that with so many benefits to be reaped, affiliate marketing has become a widely used marketing strategy throughout numerous different industries.

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