There are so many options available for small businesses to market their products and services. How can you decide which ones are the most profitable?
Often, the answer is that many different marketing strategies used in conjunction with each other are the best solution to maximizing time and resources and increasing profits. These strategies may include email, social media, SEO, PPC, and more.
You’ve likely heard of these strategies and their benefits, but there’s another strategy that can also help you avoid up-front costs and decrease risk while increasing sales: affiliate marketing. Have you ever considered this as part of your marketing arsenal? If not, you could be leaving a lot of money on the table.
In this post, we’re going to cover:
- What affiliate marketing is.
- The benefits of affiliate marketing for small businesses.
- How to set up an affiliate program for your small business.
- Tips for finding affiliates.
What is affiliate marketing?
When a company or individual promotes someone else’s products, they are participating in affiliate marketing. Affiliate marketing aims at generating revenue by promoting third-party products and services.
If a customer purchases through an affiliate link, the affiliate earns a commission. Affiliates are akin to salespeople for the company whose offerings they promote.
The affiliate model is based on revenue sharing. As a small business, you offer a financial incentive to others to promote and sell for you.
Affiliate marketing is a performance-based marketing method that has proved hugely successful among SaaS business models, subscription-based services, and the product review sector. For a broad range of industries, it is a risk-free way to improve traffic, increase brand awareness, and generate more sales.
Statista projects that by 2022, companies will spend $8.2 billion on affiliate marketing. Are you ready to tap into this billion-dollar industry? Check these Mosaic list of books on affiliate marketing programs.
What are the benefits of affiliate marketing to small businesses?
Small businesses often have limited resources and budgets. Sometimes they do not even have a dedicated marketing team to promote their business. Affiliate marketing offers a cost-effective and efficient way to drive more traffic to your business and increase profits. However, while having a terrific affiliate marketing network is a huge advantage for small businesses, you still need to be selective in who you choose.
Rather than accepting everyone into your program, it is best to have a vetting process in place. In the same way that an ecommerce search marketing strategy impacts your brand’s visibility, your affiliates also impact your brand image and reputation.
Much like the search engine strategies used in ecommerce, affiliate marketing will help increase your product exposure and increase sales. Here’s a rundown of its benefits:
1. Boost brand awareness
Every business’s online goal is to be easily recognized by as many potential buyers as possible. As affiliates drive more traffic to your website, they increase awareness of your brand and its reach. Because affiliates earn a share of your revenue, they have a vested interest in your success, are loyal brand advocates, and help build trust with potential customers.
2. Enhance social proof
Consumers today are more informed and have higher expectations than ever before. They rely heavily on social proof of a brand’s reputation. According to research, almost 95% of consumers read online reviews before deciding to make a purchase. When a company builds rapport with an engaged audience that trusts them, their affiliate product or service reviews provide credible social proof to prospective buyers.
3. Reach a broader targeted audience
Small businesses can tap into the audience of their affiliates and, as a result, expand their brand’s reach. These new audiences might not have been easy to target and identify using other marketing and advertising methods. By selecting affiliates who resonate with your brand, you ensure that the traffic you receive through an affiliate’s link will be targeted to those who find your products or services useful.
4. Improve conversion rates
The ability to track how your business performs enables you to make operational improvements in the future. By collecting data from affiliate marketing tracking, companies can gain essential insights into where their customers come from and why they are buying.
Studying and analyzing the rich collection of data helps companies improve conversions by making changes to their website, offering more engaging visual creatives, and identifying which affiliates bring in the most revenue.
5. Save money
When compared to the costs of advertising or other marketing initiatives, affiliate marketing is far more cost-effective. Because it is performance-based, affiliates are only paid when they generate a sale. Businesses set up the commission structure in advance and avoid wasting money on ineffective advertising campaigns.
6. Gain a higher return on investment (ROI)
For most marketing and advertising campaigns, determining ROI can be challenging and an unpredictable waiting game. The performance-based model of affiliate marketing is built for profitability. Businesses are not paying for potential buyers through impressions or clicks, only for closed sales.
This is one of the primary reasons small businesses choose to utilize affiliates to promote and sell their products or services. By channeling your promotion efforts through an affiliate program, you are gaining influence and direct access to a receptive, highly targeted audience more likely to buy from your company.
How to set up an affiliate program for your small business
Before getting started, make sure you understand the Federal Trade Commission (FTC) guidelines about disclosing affiliate relationships. And do not assume that if you create an affiliate program for your small business, affiliates will automatically join.
First off, potential affiliates need to know your program exists. Equally as important is providing an incentive for someone to want to become an affiliate and promote your products or services. For example, Amazon, the most popular affiliate program, offers more advantages and benefits than its competitors.