If you think that Affiliate Marketing is a relatively new thing, then you need to dig a little bit deeper into the history. Way before Amazon rose up as the first company to start an affiliate program, the patent to affiliate marketing went to William J. Tobin, the founder of PC Flowers and Gifts. He launched a program on the Prodigy Network based on a commission pay out to the network on every purchase. Though it turned out to be pretty successful, affiliate marketing was popularized by Amazon. It launched its Amazon Associates in 1996, which involved paying a commission as a percentage of the item sold, and became the framework for the current affiliate marketing model that we know.
Cut to modern days, affiliate marketing is proven to be one of the most viable forms of marketing for the past few years and is seen to be contributing to almost 30% of the total revenue for the companies. Through affiliate networking, marketplaces can not only make their brand more popular but also make more sales. But this type of marketing is especially beneficial for startups and new marketplaces. Wondering why? Let’s read a bit about the basics.
What is Affiliate Marketing?
Affiliate marketing can be considered as outsourced marketing: you ask others to promote your business in return for a commission. Affiliate marketing involves an affiliate partner signing up for an affiliate program provided by the retailer to promote their website or products. The partner is assigned an affiliate link which pushes through his promotions. This unique link garners traffic to the site and every time a lead purchases a product through that link, the affiliate partner gets paid a certain percentage of the sale as commission. In this way, both the partner and the site generates a considerable amount of revenue through affiliation.
Affiliates can promote the link through various methods like Google Ads, blogs, YouTube videos, product reviews, e-mails, etc. Similarly, there are different options for commissions that can be set up for the affiliates such as commission due to registration to the site through the affiliate link, commission due to sale of the product through the affiliate link, etc. Due to its simplicity and the potential to increase sales rapidly, affiliate marketing is gaining popularity on the global market. About 84% of marketplaces leverage affiliate marketing.
Why is Affiliate Marketing the best for startups?
Neil Patel, one of the top business influencers, states that he hasn’t seen any other form of marketing more effective than Affiliate Marketing. There are several advantages of opting this kind of marketing for startups. Let’s look at some of the most important ones:
1. Cost Effective: According to a recent survey by Gartner, the average marketing budget for a startup is around 11.2% of the total revenue of the company. Out of this, usually 15% of the marketing budget is spent on Affiliate Marketing. Why do you think these startups allocate such a huge chunk of their budget on Affiliate programs? Performance based marketing is usually more cost effective than other forms of marketing because the commission is paid only when there is an actual sale or an effective conversion. You pay only for the results and, therefore, you do not require any initial investment. Also, you are aware of your cost per acquisition so you know how much money you’re spending and making through affiliations. Apart from that, you don’t have to worry about hiring additional marketing staff especially for this kind or bother about creating content for the same. Moreover, having a robust affiliate software like WCFM Affiliate can alleviate your stress as it provides all the tools and resources required to set up an efficient affiliate program for your marketplace. This type of marketing definitely provides good ROI!
2. Improves discovery: In order to be discovered by potential customers, businesses usually look out for advertisements and other promotional options. As for affiliates, they usually have a broad and established visitor base. When these affiliates promote your products or website, they let your brand be discovered by the visitors who might not have even heard of your brand. 83% of affiliate marketers are focusing on this type of marketing to increase their brand awareness. Thus, Affiliate Marketing provides ample exposure to startups, thereby leading to increased sales.
3. Builds popularity: When a popular market influencer or blogger speaks about your marketplace, people tend to believe what he/she says. People tend to fall for third-party recommendations on a product or service and user generated content (UGC) for such reviews become a social proof for the brand, service or product. 91% of 18-34 years old trust online reviews as much as personal recommendations. By partnering with trusted bloggers, reviewers and influencers, you can further the reputation of your marketplace and its products to a larger extent.
And most importantly…
4. Greater traffic and conversion rates: According to a survey, one of the top challenges for marketers is generating traffic and leads. While paid ads are often quite unpredictable when it comes to grabbing more leads, Affiliate Marketing is a much safer option. When affiliates promote your website on different channels, your pages get linked to those platforms. The more your pages get linked to relevant audiences, the more traffic you get. Moreover, Affiliate Marketing gives a “halo effect” on your search engine ranking.The affiliate links don’t have a direct impact on your search engine rankings but since more people are looking up for your products and navigating through your web pages, your website automatically does better on the search results. Thus, a good network of affiliates not only brings in more traffic but also spikes search algorithms and improves your SEO and SERP rankings.
Talking about the conversion rate, the average conversion rate of Affiliate Marketing is about 1%. Well, that might seem to be very low. However, this is just an estimation as most of the affiliates do not expose their actual conversion success rate due to market competition. In reality, the average conversion rate through Affiliate Marketing could be somewhere between 2-3% but it is also shown that successful and strategic marketing has led to almost 10% success rate! E-Commerce is specifically known to have an average conversion rate of 1.84% through marketing. Therefore, Affiliate Marketings seems to be a good option for increasing leads for marketplaces.
WCFM Affiliate: The best tool for your marketplace’s affiliate program
Apart from bringing in more traffic to your website, one of the crucial requirements of a new marketplace is bringing in more vendors to join your marketplace. WCFM Affiliate allows not only the usual influencers or bloggers becoming your affiliate but also lets your vendors become your affiliates! Your vendors can also become your affiliate and promote your marketplace to other vendors. In this way, your marketplace gets exposed to more sellers, increasing your seller count easily!
WCFM Affiliate provides all the necessary tools and resources that one requires for starting his own affiliate program for his marketplace. The best part is that it lets you set the commission for your affiliates and generate different affiliate urls for promotions. Without any hassle. Through WCFM Affiliates, you can set different types of commission for your affiliates like pay out when a new vendor registers for your marketplace, pay out when a product is sold due to an affiliate’s referral, etc.
As you install this addon, you as well as your affiliate will get a separate Affiliate dashboard where one can get an overview of the total commissions being paid out to the affiliates, total revenue earned due to the affiliate program, no. of vendors registered due to the program, etc. Also, you may check all the affiliate’s commissions statistics from his stats page.
The best part is that the admin can generate unique affiliate urls for the affiliate partners with just one click! Setting up and managing your marketplace’s own affiliate program has become easier and more efficient with WCFM Affiliate.
Affiliate marketing is not only advantageous for new marketplaces but also for existing marketplaces that want their vendor connection to become stronger. It is proven that through affiliates, vendors place their trust on the affiliate’s promoted marketplaces much easily. With a wide network of vendors, your marketplace will have a variety of products and, therefore, would stand out from the rest of marketplaces. Experience the power of Affiliate Marketing for your marketplace with the help of WCFM Affiliate and ace your marketing game.