What is Affiliate Marketing? Is It an Alternative to PPC?
Looking for a way to avoid marketing pot holes? Tired of the same old advertising pitfalls? We bet affiliate marketing has entered your thoughts once or twice. The commission-based marketing system is expected to continue growing by 10% per year for several years. Most advertisers surveyed by Rakuten associate affiliate marketing with good ROI. Most also plan to spend more money on it in the near future. But should you try it?
A Basic Definition of Affiliate Marketing
affiliate marketing noun: a type of revenue sharing in which marketers promote a product and earn commission when their work results in a sale.
How Does it Work?
There are 4 parties in affiliate marketing: merchant, network, publisher and customer. The merchant is the company offering a product or service. The network is the means of arranging the affiliate commission system. This usually involves tracking codes, cookies and other technical things. The publisher (the affiliate) promotes the merchant's products. Often, they write blog articles reviewing or explaining the benefits. Lastly, the customer purchases the product. If the customer visited the publisher's site before purchasing, a tracking code will record the action and the publisher can receive commission.
Most merchants that promote their products and services through affiliates list their products on platforms such as ClickBank or Rakuten Marketing. On these affiliate platforms, there are publishers looking for products to promote. The merchants decide how much commission to pay them.
Is Affiliate Marketing an Alternative to PPC?
Sure, affiliate marketing can replace PPC. Most affiliate platforms cost next to nothing to get started. ClickBank asks for a $50 activation fee and a $2.50 charge for each payment sent to you. Other than that, you just pay their fee per sale and the commission per sale to the affiliates. Clickbank's sale fee is $1 + 7.5% of your product's retail price. For most affiliate platforms, you decide the commission you pay affiliates. These low barriers to getting started mean you can try it out without too much downside.
PPC, on the other hand, can be costly from the start. Everything from keywords to landing page to conversion tracking has to be right or you'll end up with a shockingly high cost per conversion. A good PPC manager will be able to optimize and bring that cost down, of course, but your campaigns might require a lot of spending in the first stages of optimization.
The "pay for performance" model of affiliate marketing means you don't pay (much) until you've already generated revenue, and is an attractive value proposition. You don't need to find your own affiliates or handle the payments because platforms like ClickBank exist.
The most important question on the matter is whether you want lots of publishers talking about your product or not. They can say whatever they want. Many of them will write honest reviews, which could be good or bad. The publishers probably won't know much about your company as a whole, which means your brand-building efforts may suffer.
On the other hand, it's easier and cheaper to get affiliates than it is to recruit your own publishers or salespeople. It's also easier than getting started with PPC, which requires some setup time and an understanding of the (rather complex) platforms used to manage the campaign. Affiliate marketing gets a confident nod from us.
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