A Performance Marketer’s Guide to Affiliate Marketing
Today, creators are driving bottom-of-funnel actions — and that’s exactly why so many performance marketers are tapping into the power of affiliate marketing to grow their businesses. A tried-and-true strategy, affiliate marketing has been around for over 30 years because it’s extremely effective. Now, the affiliate marketing industry is set to grow to approximately $14.3 billion in 2023 globally and $15.7 billion by 2024.
Want a piece of the affiliate marketing pie? Keep reading to learn how to build a successful affiliate marketing program and bring in a new revenue stream for your business.
What is an affiliate marketing program?
An affiliate marketing program is a strategy that brands use to connect with new customers and drive more sales, specifically by working with individual creators — the affiliates — who promote their products in exchange for commission. In many cases, brands work with a wide range of affiliates, such as customers, employees, and other brand fans. However, today, many brands combine affiliate marketing and influencer marketing to run influencer-affiliate campaigns that drive sales at a greater scale.
Influencer affiliate campaigns are often more effective for ecommerce than traditional affiliate programs because they drive immediate revenue and increased exposure through partnerships with influencers who are invested in winning for your brand. Influencers are motivated to continue creating quality content and generating sales for you because they’re paid on a per-sale basis.
Brands provide influencers with a unique affiliate link or code to track the sales that each creator drives, and creators get paid for every conversion they bring in. These links and codes are promoted through the influencers’ engaging content about the brand, typically on their blogs or social media platforms. Authentic content such as try-on hauls, “Favorites” videos, and tutorials are what get their audiences to become aware of the brand, visit its website, and eventually make a purchase. In fact, influencer-generated content (IGC) is so powerful that it achieves 2x the engagement of brand-directed content, and IGC-based ads gain 4x higher click-through rates.
Check out how YouTuber Jenn Im seamlessly incorporates her affiliate links into this video description.
Not to mention, you can experiment with your goldmine of influencer content, repurpose different IGC across various channels, and track each type of content to see what converts best. Then, you can find more influencers who create similar high-performing content, who can reach your target audience better. After all, creative is the new targeting.
Benefits of an affiliate marketing program
Affiliate marketing is a win-win for brands, creators, and consumers alike.
Benefits for brands:
- Cost effective: Brands typically pay affiliates only for the conversions that they drive, allowing you to make a big impact without breaking the bank.
- Increased awareness and sales: A report from Forrester revealed that 70% of U.S. adults online trust recommendations from each other far more than statements from brands. By having your affiliates (aka real consumers) promote your products, you’re adding social proof, thereby boosting brand awareness, engagement, and sales.
- Easy to track: Through unique codes and links, you can easily determine your top performing affiliates and measure the impact of your affiliate program to your overall business.
Benefits for creators:
- Seamless content: Most creators only sign up to become an affiliate when they really love your brand. And since there’s a genuine connection, it’s easy to incorporate your brand into their organic content.
- Passive income: By setting up affiliate links and dropping them into their usual content, creators can have a source of passive income coming through without any extra effort.
- No pressure: While some affiliate campaigns are termed campaigns — requiring creators to make a certain number of posts to receive a commission — many brands hold evergreen affiliate campaigns that have no content requirements. This allows affiliates to post whenever they want to whichever channel they want.
Benefits for consumers:
- Exposure: Consumers gain awareness about amazing products and services that they never knew they needed, all coming from a trustworthy source.
- Discounts: Some brands provide affiliates with discount codes and links, allowing shoppers to save a few dollars when they make a purchase.
- Support for their favorite creators: By shopping through an affiliate link, consumers are getting a cool new product while helping their favorite creators earn a little extra money.
How to start an affiliate marketing program
Step 1: Determine your offering
Your goal is to create an affiliate community that is attractive for people to join, yet still yields profit for your brand. So, start by conducting research on the payment system you want to use.
Like any other marketing program, your affiliate marketing program will be unique to your business. Your process of designing a competitive and sustainable commission structure will largely depend on:
- Your customer lifetime value (LTV): This is how much each of your customers spends throughout their relationship with you. If your average customer spends $100, you can easily offer your affiliates $10 per sale they bring in.
- Your marketing budget: The average commission structure is 10% to 30%, but you need to determine your rate based on your business’ needs. Remember that your marketing budget covers many other projects throughout the quarter.
- Your competitors’ offers: To make your affiliate program even more attractive to join, you can build a tiered commission structure that rewards better performance. For example, give your new affiliates a 10% commission and increase that commission by 5% every time they generate 20 new customers.
Consider factors such as how often you’ll pay affiliates and what metric you’ll measure to determine the affiliates’ performance, whether it’s sales, leads, or clicks. Some companies pay their affiliates a flat fee for bringing in a customer, while others offer recurring payments for every purchase that customer makes. While the latter has a higher chance of cutting into your profits, it may incentivize affiliates to bring in higher quality customers with higher retention rates.
Step 2: Recruit your brand fans
Like any other partnership, authenticity is the key ingredient to success when it comes to affiliate marketing — so find partners who align well with your brand. Focus less on working with people with a large following. Follower count does not equal to sales. Instead, find creators who operate in a relevant market, so that it’s easy for them to integrate your brand into their organic, everyday content.
Additionally, watch out for those who are just financially motivated. Instead, look for those loyal fans who can talk about your brand with passion. By sharing their positive experiences with your brand, they’ll be able to provide social proof and inspire others to purchase and try out your products.
You can find these valuable affiliate partners by using a social listening tool to scan for those who are already talking about your brand, or by setting up a callout for affiliates organically on your social channels or on a channel like Aspire’s creator marketplace.
Step 3: Educate your affiliates.
Now that you have a solid army of affiliates, it’s time to educate them on your brand. This is crucial for affiliates to understand and communicate your brand’s value to their audiences. Discuss how the company was founded, how the products can make people’s lives easier, and how the products are made. Sharing what goes on behind-the-scenes will not only provide transparency, but also show how your brand differentiates from your competitors.
Don’t forget to educate them on your guidelines and policies as well. Clearly communicate your expectations and tell them how they can be a successful business partner.
Step 4: Engage your affiliates to build a true partnership
The most successful affiliate programs are rooted in meaningful relationships. At the end of the day, your affiliates aren’t just machines that generate leads for your brand. They are real people who are growing their own personal brands. And while financial compensation is great, it’s likely that they wouldn’t mind some extra attention.
You can repost their content to your branded social channels, ask them for product feedback, and give them special privileges like early access to products or invitations to exclusive events. Affiliates who experience such perks firsthand will love the brand even more and therefore talk up the brand to their friends and family organically. Plus, these activations will allow them to get to know the company better and build a relationship with the people behind the brand.
Take Mountain Rose Herbs, for example. The wellness brand often collaborates with affiliates to create educational content, including behind-the-scenes snapshots, recipes, and DIYs. The content is then distributed across the company’s blog, as well as the affiliates’ blogs and social channels — including Instagram, Facebook, and YouTube. Through co-creation, Mountain Rose Herbs gives affiliates a bigger hand in building its brand — re-emphasizing the company’s focus on treating affiliates as true brand partners. This hands-on approach has resulted in over 900 conversions, $140K (and counting) in sales, and more than 95,000 clicks!
Step 5: Evaluate performance
Keep track of what’s working, so you can replicate success throughout your entire program. Influencer affiliate marketing programs have three important success indicators:
- Number of sales per affiliate shows which of your creators have the most compelling content, as their audience is buying more.
- Value of sales per affiliate shows how much each creators sells in dollar value.
- Frequency of mentions per affiliate shows the value of your partnerships by tracking how many pieces of content or mentions your affiliates post and their level of engagement.
- Overall program revenue gives you a bigger picture of your program’s effect on growth. If your affiliate-generated revenue is negligible, you might need to change your commission structure, find better affiliates, or both.
All these factors are beneficial for tracking brand loyalty and recognition. You can use a spreadsheet or an analytics platform that can gather and display all of the data for you. Take note of your top performing brand partners, so that you can ask them what they’re doing and share their techniques with your other affiliates.
Interested in learning how to build and automate your influencer affiliate program? Watch our webinar, Product Overview: Affiliate Marketing Capabilities.