Products are not always fully determinable and consumers therefore rely more and more on comparison shopping websites and specialist portals. At the same time, more and more people are consuming content digitally. With affiliate marketing programs, for example with larger sales platforms, websites advertise external products and services. They offer customers a free service, for example by providing more information about the product or service. If the next step is buying via e-commerce websites anyway, why not via the affiliate link? This results in advantages for both parties and the providers receive a percentage of the sales revenue once the purchase has been completed. There are different accounting models which depend on the respective partner program. However, for whom does affiliate marketing really make sense and what are the common ways to use it?

Affiliate Marketing – Based on a Community

It generally sounds like a simple concept. First, you bring users to your website where they can find content about external products. This can be a review, a thorough blog post about a certain topic or a comparison with competing products. In the middle of the page, users then find a so-called “call-to-action“.

As the website operator, you refer users to (external) sites where they can buy the product, sign up for newsletters, or simply find the advertised company and product. There are, however, two points that page operators have to pay attention to before embedding an external link.

1. Only visitors generate revenue

The imperative of authentic messages applies. Paid content must now be labelled as such, an additional line within the text or the video about the relationship between product and author never hurts. Most users will already know that the author earns money through affiliate links. An honest discussion about cooperations and the use of affiliate marketing is a good step to involve your own community. After all, it is also important for many users to support their frequently visited websites – with affiliate links at no additional cost. If you don’t overdo advertising and integrate it between your own content, you won’t lose credibility. A great asset, especially during the company’s development.

2. Beware of dubious external links

In digital marketing, the quality of one’s own page is a valuable asset. A lot of time goes into the optimal shape of texts and content. A point that has to be considered in regards to SEO optimization of your own content that many tend to forget: The embedding of external links and the quality of the linked website is also rated by Google’s crawlers! The same rule applies as in point 1. Serious sources and a correct embedding of the link pay off. As a site operator, you often have little to no influence on embedded advertising banners on the website. However, the implementation of dubious advertising messages has an impact on the visitors indeed. The contact with webmasters and with the responsible advertisers can often change things when you’re receiving negative feedback.

Target setting & applicability of Affiliate Marketing

As with any marketing strategy, you have to analyze your own goals. Where does the company stand and how do you use your time optimally? Affiliate marketing has to be managed and the advertising message needs a suitable placement in addition to the design of your own content. Affiliate marketing is particularly popular with new businesses and start-ups, as their own content is still being developed and links and banners can be implemented quickly. In addition, niche markets with special keywords and topics have a strong target group focus. Thus, visitors can be quickly turned into customers through posts on special topics. Although the number of users is smaller, the conversion rates tend to be higher. Combined with the company’s digital marketing strategy, the distribution of content is one of the objectives. The more users learn about your content via channels such as blogs or social media, the higher is the success of affiliate link placements.

Increasing sales is the actual purpose of affiliate marketing. In order to get interesting offers, it is advisable to explore affiliate programs according to criteria. How is the accounting program working (and how much money do you receive), which tracking methods are offered and are you free to create your own content?

Click, sale or contact generation?

The accounting models in affiliate marketing differ in regards of which action you get ultimately paid for. Four models have emerged here.

Cost per Click (CPC)

• A click on the ad via the embedded link or banner. This is the most common method and can easily be measured using tracking software. Creates attention, even if no purchase is made in the end. The affiliate partner is independent regarding the use and generates a secure basic income, given that the website traffic remains constant.

Cost per Lead (CPL)

• If the affiliate partner establishes contact between customers and merchant, a commission is paid. However, the process is usually time-consuming and depends on the partner’s business model. This is lucrative for products that require a lot of consultation, as the payout is normally higher.

Cost per Sale (CPS)

• If a purchase is made, a commission will be paid. This can lead to high revenues, but is also associated with strong fluctuations in different products.

Cost per mille (CPM)

• Payment of a commission per 1,000 advertising contacts with users. Strongly dependent on the partner’s products and how much revenue is ultimately generated of the cooperation. With high traffic and a suitable selection of topics however, high revenues are possible.

Making affiliate marketing measurable – Tracking

Various tracking methods make these accounting models measurable in the first place and ensure a performance-related payout. By using the internet, every person leaves traces. Cookies are data that are stored when you visit internet pages and enable the user to be clearly identified. In this way, the path between the websites is read out and recurring users are recognized. The relationship between affiliate partner and user is visible when a purchase is concluded after clicking on an affiliate link. With the new EU General Data Protection Regulation (GDPR), the storage of cookies must be approved. Afterwards, nothing stands in the way of making use of the most common tracking method in affiliate marketing.

Another possibility is the allocation of personal IDs, either via a special URL that the user receives and the payment of a commission to the affiliate partner after the purchase has been completed. Or via Session Tracking, which is assigned to the customer after the click – with both models, there must be no interruption between the click and the desired action (purchase, newsletter, download).

Develop long-term concepts

Affiliate marketing is subject to fluctuations due to the shift of trends and the resulting click numbers. Long-term financial stability through affiliate marketing alone is therefore a difficult matter. Affiliate marketing, together with your own content, is a clever way to start a business and build a community. All accounting models described above require steady website traffic. In addition, the authenticity of one’s own company must not suffer from testing or advertising third-party products. For the launch of your own website and the SEO optimization of content, it is worthwhile to check out common partner programs: Choose your key topics, take a close look at the accounting of clicks and don’t allow yourself to be too restricted by external parties when it comes to the creativity of your own content.

If you have any further questions about affiliate marketing, please do not hesitate to contact HBI!

About the Author

Alexander Hencel
Marketing Assistant at HBI Helga Bailey GmbH – International PR & MarCom

Alexander Hencel has been part of HBI’s marketing team since 2018. He is responsible for content management such as the creation of specialist articles, managing social media channels and supporting online marketing campaigns for customers and HBI.