When it comes to digital marketing, businesses have many tools at their disposal. However, one of the most reliable and profitable options is affiliate marketing. Whether you’re running a blog, an online store, or a brick-and-mortar business, affiliate marketing can help improve your bottom line. On the flip side, as an affiliate, you can get paid quickly and efficiently when promoting products and services for other companies.

Since this type of marketing is so lucrative and easy to do, we’re going to take a deep dive and look at how this process works and how each party can benefit. Here’s why you should pay attention to affiliate marketing.

What is Affiliate Marketing?

This marketing strategy involves three groups: the company, the affiliate, and the consumer. Let’s break down each group and how it fits into the process:

  • The Company – This is the company making the products or offering the services. For example, let’s say you’re an online store that sells baby toys.
  • The Affiliate – This person has a sizable audience that might be interested in the products or services that the company is selling. In this case, let’s say they are someone who runs a mommy blog with 10,000 active monthly subscribers.
  • The Consumer – Customers buy the products from the company by way of the affiliate. For example, a new mom reads a blog post from the mommy blog about the best new baby toys for 2022. The mom is impressed by the post and decides to buy a toy from the company.

As you can see, affiliates basically act as brand ambassadors for specific companies. However, the secret to affiliate marketing is that the affiliates are not necessarily exclusive to a single business. So, while they might recommend some products and get a commission from each sale, they’re not official representatives of that brand.

Overall, the more customers an affiliate can bring to a company, the more commissions they make. Also, since affiliates are often independent of any one brand, they can have multiple revenue streams.

Affiliate Marketing Stats for 2022

If you’re curious about this marketing tactic, it helps to know how valuable it can be for both companies and affiliate marketers. Here are some hard statistics to illustrate the importance of this industry:

  • Eighty-one percent of brands use affiliate marketing.
  • Almost one-quarter (23 percent) of all affiliate marketing relates to the fashion industry.
  • The majority (65 percent) of affiliates generate traffic and revenue through blogs.
  • Forty percent of all U.S. businesses report that affiliate marketing is their number one customer acquisition channel.
  • In 2019, the affiliate marketing industry generated over $6.4 billion for companies and marketers.
  • Affiliate marketing accounts for 16 percent of all online sales.

As you can see, this strategy is a substantial component for businesses and influencers to make money. The industry has grown over the last decade and shows no signs of slowing down. With so much potential, it’s easy to see why more brands are hopping on the affiliate marketing train.

The Benefits of Affiliate Marketing

We mentioned that affiliate marketing is a win-win situation for companies and marketers. However, it’s technically a win-win-win when you consider the value it brings to consumers. Let’s look at the top reasons why each group should take advantage of this practice.

For Companies

Brands of all sizes can utilize affiliate marketing to strengthen their bottom line. This strategy doesn’t require any upfront investment, so small businesses and startups can get in on the action. All a company has to do is draft a contract with an affiliate to determine their commission rate, including any bonuses or deadlines.

When a brand partners with a well-known affiliate, it can broaden its outreach and increase brand awareness. Over time, the company can increase sales dramatically by working with affiliates with large audiences.

  • Low startup costs
  • Increase brand awareness
  • Work with multiple affiliates to broaden outreach
  • Set commission rates and budgets

For Affiliates

Marketers technically have the most challenging job because they’re the ones who have to build a significant subscriber list. As a rule, brands won’t want to work with affiliates with only a handful of followers.

That said, if a marketer already has a sizable audience, they can generate passive income through affiliate marketing. As we showed, most marketers use blog posts to promote affiliate products. So, the more people who read the blog, the more chances of making a sale. For example, if an affiliate has 100,000 followers with a five-percent capture rate, they can get commissions on 5,000 sales. Best of all, the money comes in without the marketer having to do anything extra.

  • Passive income stream
  • Make money from multiple brands
  • Earn commissions from links long-term

For Consumers

Up to 93 percent of customers rely on reviews to make purchase decisions. With so many brands and companies out there, it’s hard for the average person to do their research. So, by relying on a trustworthy affiliate source, customers can get recommendations and make informed decisions. Up to 74 percent of online shoppers compare reviews by multiple affiliates before making a final purchase.

  • Get more information about specific products
  • Get insight into the best options and use cases for each product
  • Discover new items they might enjoy

What to Consider Before Starting an Affiliate Marketing Campaign

While affiliate marketing is beneficial for everyone involved, it’s not a magic money-making scheme. There’s a lot of work involved, so you have to be prepared. Consider these factors before pulling the trigger:

  • Work With Reputable Clients – Whether you’re a business or an affiliate, you want to make sure the other party holds up their end of the deal. Never enter an agreement without a signed contract.
  • Work Within Your Niche – If you’re selling baby toys, you don’t want to reach out to fashion or fishing blogs (and vice versa). Be sure that the partnership makes sense.
  • Focus on Quality, Not Quantity – If an affiliate has one million subscribers, that may sound impressive. However, if they only have a tiny click-through rate, that number doesn’t mean anything. As a rule, it’s better to have 1,000 engaged followers than 100,000 inactive subscribers.

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