How does affiliate marketing work?
This guide will answer questions such as:
❓ What is affiliate or partnership marketing?
❓ What is performance marketing?
❓ How does performance marketing actually work?
❓ Why should affiliates care about performance marketing?
If you’re looking for answers to these questions, or want to learn more about affiliate marketing in general, keep reading.
What Is affiliate/partnerships marketing
Partnerships marketing is a form of marketing where two parties collaborating on a marketing campaign.
Any sponsored YouTube video, ever. In the YouTube video, a product or service is promoted by the affiliate (the YouTuber) to their audience. In this type of partnership marketing, the YouTuber collaborates with the business (the merchant) to promote their product to the YouTuber’s viewers. Both parties gain from this collaboration. The merchant (the company offering the product) pays the affiliate (the YouTube channel) to promote a product or service to the video viewers. For every good sold through the YouTuber’s affiliate link, they receive a commission (a percentage of the price). YouTube is only one option for the partner. Any medium where the partner can promote something to their audience is a viable option for affiliate/partnership marketing.
What is performance marketing and how does it work?
Here’s our performance marketing definition: performance marketing is a type of marketing where the results are measured by performance. Compared to brand marketing, you’ll see more accurate data on the campaign, helping you see what works well, and what needs improving. For this to work, however, the goals of the campaign need to be clearly defined.
In affiliate marketing, the goal is usually to get the affiliate’s audience to buy the product or services of the merchant.
Examples of performance marketing are:
👉 Email marketing with clear “Call-To-Actions” (CTAs), usually a link to a product or sales page.
👉 Search Engine Marketing (SEM), Google Ads, for instance.
👉 Direct mail campaigns (promotional letters sent to your door).
👉 Affiliates using their own trackable referral links in their communication with their audience
To measure how well a performance marketing campaign is doing, marketers have created various metrics to analyse and track the campaigns.
Some of these metrics are:
✔️ In email marketing: open rate, click-through rate, conversion rate
✔️ In search engine marketing: cost-per-click, cost-per-impression, click-through-rate
✔️ In direct mail campaigns: conversion rate
You don’t need to know these by heart as an affiliate. At this stage, it’s enough to be aware that performance marketing and various metrics go hand in hand.
Is affiliate marketing the same as performance marketing?
Affiliate marketing is a type of marketing where an affiliate is promoting an offer from another company. Usually, the affiliate is paid on commission (or, based on performance). As such, affiliate marketing is a type of performance marketing. However, performance marketing is not a type of affiliate marketing.
For instance, a performance marketing campaign can be conducted completely in-house, and there’s no unconditional requirement for affiliated promoters to be involved. That’s why it’s wrong to state that affiliate marketing and performance marketing would be the same thing.
Because of the ever-changing nature of the internet, savvy affiliate marketers are constantly figuring out new ways to promote products. In the early days of the internet, the obvious choice for an affiliate was to promote through their own websites. Today, the possibilities to promote products are near-infinite. Some affiliates still use their own blogs, but most promote via their YouTube channels and social media. It of course depends on what you are promoting. If the audience for a product solely hangs out on Twitter, the affiliate will most likely promote there as well.
What are the perks of performance marketing for affiliates?
Performance marketing has many perks for affiliates, here’s a list of the best ones:
✅ Most affiliate offers are tracked using performance marketing principles. As such, you’ll find a huge catalog of products and services to choose from in your promotions. Finding an affiliate marketing program has never been as easy.
✅ Low-cost opportunities. Signing up for most social media is free, and if you already have a following you can simply start promoting offers on those platforms.
✅ No initial expertise needed. The best way to promote online is to be brutally honest. Just by actually purchasing the product and using it yourself, you’ll set yourself apart from other affiliates.
✅ Actually make money while sleeping. Your videos and blog posts will work for you no matter the time.
✅ High autonomy and flexibility. Work when you want, as much as you want. Promote the products you want to promote.
✅ Often the merchant has already created all the marketing material for you.
In this article, we’ve detailed the difference between affiliate and performance marketing and explained why performance marketing can be such a powerful tool for affiliates. With these tips, you should have some ideas brewing on how to proceed in your affiliate marketing journey.