As an entrepreneur or marketer, how to increase product sales in order to grow revenue is often the topic of discussion. For online marketers, the goal is increasing the number of buying customers. If you increase website visitors by 90% but they are not buying, the effort is useless! This is the reason affiliate marketing programs have become so popular.
Did you know that affiliate programs in the US, affiliate marketing spending increases by 10.1% annually and will hit the $6.8 billion by the year 2020? The numbers show that entrepreneurs rate affiliate marketing as an important approach for boosting sales, and that’s why they are not shying away from increasing their spend.
If you are considering taking on Affiliate marketing is an approach for increasing your product sales, learn the essentials first. This will minimize the risks of investing where you are not likely to earn returns. So, let us discuss important facts about affiliate marketing, and evaluate the pros and cons associated with affiliate marketing.
The foundation of affiliate marketing
Think of affiliate marketing as outsourced marketing where you are consulting affiliates and paying them for driving paying customers to your website. Therefore, with every new customer or purchase, you are paying the affiliate. Note that the payment is done only when they convert the visitors into paying customers.
Affiliate marketing model
When running an affiliate program, each of the affiliates is assigned a tracking URL, that tracks which affiliates are driving sales. These affiliates are expected to market the products or services using different approaches, including a blog post, Google ads, YouTube videos, product reviews, etc. a customer or a lead is registered whenever a visitor makes an online purchase or any other conversion metric used. In the end, the affiliate will be paid a reward as agreed by the program owner.
What are the advantages of running an affiliate program?
1. You only pay for results
The agreement is that your affiliate partner shall be paid after a purchase has been made. Therefore, unlike the other advertisement models where you pay for an advert regardless of whether sales made, affiliate marketing is a sustainable advertising model.
2. If run keenly, affiliate marketing tends to be more cost-effective
As illustrated above, you only spend because you have earned a sale. This makes affiliate marketing a cost-effective advertising approach.
3. Allows you to take advantage of different advertisement methods
Each of the affiliates chooses an advertising program they feel will work best. Thus, at the end of the day, your products will be featured via different advertisement platforms. Remember that affiliates may be better at creating copy and reaching segments, hence helps you to earn profits.
4. It is a measurable advertising approach
Affiliate marketing is better since you are able to account for every acquisition made. Therefore, you can determine if you are making or losing money.
What are the disadvantages of affiliate marketing?
1. You do not have control over the message
The affiliates might end up lying or misrepresenting your product in order to earn money quickly. This is a major drawback and a reason why many entrepreneurs shy from affiliate marketing
2. Lead quality may not be well qualified
Chances are that you will have high web traffic, but the sales are exactly opposite, or not so good.
3. Traffic might come from sources with a bad reputation
You risk losing brand image if associated with customers with a negative perception from other audience.
Therefore, affiliate marketing requires that an entrepreneur is keen before launching the program. Check what affiliates are saying about the product, or choose to guide them on what to mention. Overall, it is a good advertising approach worthy of giving a trial.