Companies create affiliate programs, where participants receive remuneration for each client they attract. The partners are the owners of websites, blogs, channels, active users of social networks, traffic managers and entire teams.
Affiliates use a variety of internet marketing tools to promote themselves: targeted and contextual advertising, email newsletters, banners, and advertising on blogs and social networks.
Why and who needs affiliate marketing
The idea of paying a commission for the attracted client dates back to before the invention of the Internet. Any company, from a car service center to an international bank, can bring in partners for promotion.
Affiliate marketing is needed in order to:
- advertise products and services on the Internet;
- to attract a new loyal audience;
- search for and hire employees;
- quickly launch the advertising of a new product with a minimum budget;
- to reduce promotion costs, because the advertiser pays only for the result: a new user, request, purchase.
Types of affiliate marketing
Affiliate programs can be referral and affiliate programs. They are very similar in nature: an affiliate attracts a new customer and receives a reward. But there is a fundamental difference.
Referral marketing encourages current customers to recommend the company to friends, colleagues or subscribers. Referrals are rewarded with discounts, bonuses or points that can be spent on the company’s products.
In a referral program, a loyal customer brings in new loyal customers.
Affiliate marketing attracts affiliates who promote a product for money. The affiliate is most often not a customer of the company.
The affiliate assumes the obligations and risks associated with the promotion. He invests his own resources, knowledge, time, and sometimes money to make a profit. For example, affiliates may procure their own advertising that leads to the advertiser’s website.
There are three basic payment models in affiliate networks.
CPS (cost per sale) – payment per sale. The affiliate gets a percentage of the sale of the product. This model is the most profitable for the advertiser because he pays for a specific attracted client.
CPA (cost per action) is a pay per action model. A partner is paid for downloading a file, registering for a webinar or for submitting a request. There can be several target actions: install an application, register in a game, make the first purchase. The affiliate receives payment when all conditions are met, or for each event separately.
CPC (cost per click) is pay per click. The affiliate is paid per click on the link. This model is rarely used because it is not profitable and risky for employer. An unscrupulous affiliate can attract users who just click on the link but are not interested in the product.