Business growth is synonymous with creativity. One of the hardest parts of going into business is finding creative ways to let the world know that you are in business (and that you offer something they need). Even companies that have been in business for years can struggle to get their name out into the marketplace on a grander scale.
For small to mid-size businesses, multi-million dollar ad campaigns are just not in the budget. Creative marketing is your key to success, and one of the easiest ways to do this is through affiliate marketing. If you are new to affiliate marketing and would like to explore it further, we have outlined some of the pros and cons to help you decide whether it is right for your company.
What Exactly is Affiliate Marketing?
Affiliate marketing is a simple way for brands to generate income by allowing other businesses to advertise products on their website through ads, sales of affiliate products, or through other incentives programs.
There are essentially two forms of affiliate marketing:
- Having other brands advertise your products on their sites and to their customers
- Advertising the products of other brands on your website and to your customers
One of the most prominent examples of affiliate marketing is by way of influencer marketing. Social media influencers use affiliate marketing to earn money by endorsing a company’s products and sharing them with their followers. By mentioning a product or business in their videos or blogs, they generate more traffic to the company’s website and earn a small commission.
Another example is when small retail establishments pay a fee to sell their products on huge online marketplaces like Amazon through its affiliate program. This allows them to take advantage of its behemoth customer base.
Why Should I Use Affiliate Marketing to Grow My Business?
Affiliate marketing offers a small stream of income, which can really add up over time. Each time someone visiting your website clicks on a banner ad, you get a small commission for the click-through.
Sponsoring a non-profit organization or a small sports league is also a way to build a partnership that can generate extra income for your business. To sponsor a non-profit, you typically donate a sum of money to the organization and the organization then in turn will highlight your business as a sponsor in their marketing materials – it is a win-win situation for both businesses. Affiliate marketing is about forming partnerships with well-established companies in an effort to share consumer networks and get your brand name out there.
Here are some of the benefits of using affiliate marketing:
1. Low-Cost Revenue Stream
Most small to mid-size businesses simply do not have a large enough marketing budget to pay for high-cost advertising to the masses, like TV commercials and radio ads. Affiliate marketing allows you to generate extra income just for promoting products sold by larger companies or promote your own business by selling goods on larger platforms. With programs like Google Ads, you can add banner ad boxes to your website and generate a small commission when someone visits your website and clicks on the ad. Likewise, you can create your own banner ad, and Google ads will publish it in the ad box on other websites.
2. The World Becomes Your Oyster
Affiliate marketing reaches consumers all around the world with a very minimal time commitment on your part. If you are interested in adding banner ads to your website, the hardest part is figuring out where exactly to place them on the page. Selling products through affiliate marketing programs is also easy to do, and you gain access to a global customer base. The opportunities are vast, especially when you compare them against the amount of time and effort that goes into creating them.
3. Small Income Can Drive High Revenue
Have you ever heard the saying, “Mind your pennies, and the dollars will follow?” While you may only receive a couple of pennies per ad click or a smaller profit on items sold through affiliate programs, the revenue potential over time is huge.
It’s similar to email automation in that it’s almost a set it and forget it model. Once you set your affiliate marketing program up, the rest is up to the platform it’s running on, the users it’s appealing to, or your partners that are working to promote it.
4. Builds Partnerships
Whether your customers are promoting your product to their customers, a brand is sharing a banner ad on their site, or you’re pushing another brand’s product on your site, affiliate marketing enables you to build stronger partnerships.
At the root of the strategy is trust – each brand has to trust the other in order for affiliate marketing to be successful. And when trust is shown and lived up to, it strengthens the bond between each brand and opens the door for more partnership opportunities in the future.
And now, here is a quick look at some of the cons:
1. Following Another Company’s Rules
When you work with affiliates, you are required to follow the rules set forth by that company. In the case of banner ads, you will have no control over what ads are placed on your website. If you choose to work with an affiliate program, like Amazon, you have to sell your products in accordance with their policies and procedures.
2. Not All Affiliate Marketing Programs are Created Equally
Some affiliate marketing programs pay you for each interaction, while others only pay you if someone makes a purchase from your lead. In the case of selling products on affiliate websites, there is usually a sales fee that must be paid for each item sold.
3. A Lot of Website Maintenance
If you choose to run banner ads on your website to generate commission or ad click revenue, you have to maintain your website frequently in order to drive traffic to your site, so they see the banner ads in the first place.
Affiliate marketing is a great choice if you are trying to grow your business and are exploring other avenues of potential income, but it does come with its own unique set of challenges. Make sure you consider the pros and cons and what kind of program you’d like to participate in first (i.e., have other brands join your affiliate marketing program or be an affiliate marketer). Know your parameters and start small. Once you evaluate some return, you can decide to expand your strategy.
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