Affiliate Marketing: Is it the right choice for your web business?

For a generation, e-commerce is such a large part of their lives that they can’t imagine a time when it didn’t exist. That time did happen; it’s not quite the land that time forgot but certainly heading in that direction.

Yet it’s easy to forget that e-commerce as we know it today, didn’t exist 20 years ago.

The story of its creation was fictionalised in the 2009 film Middle Men, starring Luke Wilson, with the usual poetic licence involved. The truth was less prosaic and now e-commerce’s proliferation is such that it is as much its own industry as a part of any other.

During its lifecycle, every business will consider whether it is appropriate to instigate their own e-commerce operation. It isn’t always the right choice but for those who choose to follow that path, there are many options available.

The obvious example is Amazon or any other online outlet. Aggressive pricing and market share means the larger fish gobble up the consumer bites, creating profit through volume.

Following that path is a recipe for disaster for smaller businesses, giving rise to a more creative approach.

Many take the view this can be solved via affiliate marketing.

Affiliate marketing is recognised as a vital tool for many merchants, using the efforts and reach of third-party websites to promote products and services. Sales generated through leads pay a commission to the affiliate although on rare occasions, businesses will pay for clicks.

The principle remains the same whichever model is utilised.

The Good and the Bad

As with any sales-generation program, there are benefits and risks. The symbiotic relationship between the merchant and its affiliate is the tools strength. It’s mutually rewarding with a strong structure providing increased profits to the merchant and a healthy commission income for the affiliate.

If a network of affiliates is judiciously compiled can be a strong revenue stream for the merchant. Working with them to promote the brand takes effort but is ultimately rewarding, ensuring that brand parameters aren’t compromised through shoddy marketing.

With a strong brand or product involved, the merchant and affiliate’s roles are much more straightforward than unknown quantities. For these less ‘famous’ enterprises, the affiliate must work harder to generate income. The cost-benefit becomes more important; affiliates don’t mind putting effort into earning commissions but not if the cost of earning that income – either through time or anything else – exceeds the reward.

It’s at this point the merchant faces problems. Affiliates are not employees and there is limited control which can be exerted over their marketing of the product or services. The ultimate sanction of closing the affiliate link exists, but by that point damage has been inflicted on the brand.

This conflict is one of the biggest questions a merchant must answer before embarking on an affiliate marketing campaign: is it better to outsource or manage the relationship in-house?

Digital marketing, SEO; these are big growth areas and very much shark-infested waters. Due diligence is the central plank of the decision-making process. Creating a website has never been easier and one-man operations can easily masquerade as a team of twenty.

Affiliates Now & The Future

There are, however, many platforms which provide a credible service. Awin, founded in 2000, are a market leader in this area, generating income but as ever, at a cost. Merchants find their own tipping point for outsourcing or bringing in-house, and this typically comes when margins are squeezed.

Amazon is a good example of this. Previously outsourced, the operation is all completed in-house and modernised on their own terms. A relatively recent innovation is the Influencer program which reaches out to social media and website accounts deemed to be important enough to offer potential sales.

Another is sports betting and casino site Betway who recently brought their affiliate marketing in-house on the basis that it gave them greater autonomy over their programs and flexibility to react to market forces. It is by no means certain that big companies will choose to run their programs in-house. Nike, for example, use the popular Webgains platform.

As consumers become more discerning, merchants are working harder to gain their money. Building a network of affiliates is one of the flexible methods of achieving that. Unless there is a particularly strong product at the heart of the campaign, revenues are not going to arrive in avalanche.

Affiliate marketing is a long game; ultimately, it can be rewarding for sharp-thinking merchants.

Boyan Josic is the Founder & CEO of Mogul Media, and the editor of JOSIC Media. Boyan also serves as an advisor to Aeron, SignIX, Velix.ID, and Energy Premier. 

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