This is “How Do Affiliates Promote Merchants?”, section 4.5 from the book Online Marketing Essentials (v. 1.0). For details on it (including licensing), click here.

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4.5 How Do Affiliates Promote Merchants?

Learning Objective

  1. Learn how affiliates promote merchants.

Affiliates are online marketers who are paid on a performance basis. Every type of marketing strategy will be found in the affiliate world, and affiliates can often be seen at the forefront of breaking technology and applying it to marketing strategies.

The basic aim of an affiliate is to send targeted traffic (that means customers who are very likely to perform the desired action) to a particular merchant’s Web site. Affiliates may promote as many merchants in as many industries with as many tactics as they wish, but usually affiliates will start to specialize.

Most of the tactics will be the same as those that the merchant employs but will reach a different part of the Internet population. Effective tracking takes care of any overlap and will help a merchant to adjust their spending for a most effective return on investment (ROI). The main types of affiliates can be broken up into the following:

  • Personal Web sites
  • Content and niche sites
  • E-mail lists
  • Loyalty sites (points or cash back or charitable donations)
  • Coupon and promotions sites
  • Comparison shopping (see also PPC [pay-per-click] advertising)
  • Search affiliates (search arbitrage)

Figure 4.4

GreasyPalm.co.uk is a cash-back site that is an affiliate.

Affiliate marketing came to the fore as a way for personal Web sites to make money, though this now forms a small part of the marketing mix. Affiliate marketing does still provide some income for these Web sites. However, we will focus on those endeavors that are created purely for affiliate marketing.

Content and niche sites are Web sites created around a specific topic, and any products promoted will carry affiliate tracking. For example, an affiliate might create a site dedicated to digital cameras, with tips and downloads to help you get the most out of your camera. It could review a number of different cameras and offer links to purchase those cameras online. All those links will be affiliate links.

Seasonality is also an important consideration for content sites. Web sites can be created specifically for Christmas, Mother’s Day, and many more key retail seasons.

Some affiliates run large opt-in e-mail lists, and they market particular merchant offers through their e-mail newsletters. Some renegade affiliates use spam e-mail to promote merchant offers, but as affiliate marketing has matured, there are usually terms and conditions to prevent such promotion.

As affiliates earn a percentage of a sale, some affiliates “split” this with the customer and create cash-back or points-based shopping sites. There are also some that donate a percentage of the commission to a charity.

Some of the most successful affiliate marketers are those who promote various merchants through paid search PPC advertising on search engines. These affiliates seek to find the highest earnings per click (EPC)Based on historical data and conversions rates, what an affiliate can expect to earn per click. for the lowest cost per click (CPC), this is also referred to as search arbitrage.

Note

Arbitrage is the practice of taking advantage of a price differential between two or more markets. It’s a term that is usually used in financial trading. Some might say that search affiliates trade in PPC advertisements—their revenue is the EPC – CPC.

Affiliates will find any means possible to promote offers. As new products and platforms become available, marketers and affiliate marketers find new ways to make them work. Some other examples of affiliates promoting merchants include the following:

  • Toolbars and other browser extensions
  • Social network applications

All that is required is that the click-through to the merchant’s Web site is tracked.

Figure 4.5

GoodSearch.com offers a toolbar. Proceeds from affiliate links are shared with charities.

Key Takeaways

  • Affiliates use a number of means to promote merchants. These include the following:

    • Personal Web sites
    • Content and niche sites
    • E-mail lists
    • Loyalty sites that award points, cash back, or charitable donations
    • Coupon and promotions sites
    • Comparison shopping (see also PPC [pay-per-click] advertising)
    • Search affiliates (search arbitrage)
  • Affiliates will find any means possible to promote offers. Examples may include toolbars or social network applications.
  • Affiliate marketing came to the fore as a way for personal Web sites to make money.
  • Sites may be developed for certain holidays, as dictated by the seasonality of retail.

Exercises

  1. How can a merchant try to ensure that its own marketing efforts do not overlap with those of the affiliates? Why would a merchant want to reduce overlap?
  2. Why do you think affiliates promote merchants in so many ways?