COVID-19 changed the way consumers buy their products. A report from NielsenIQ reveals that 67% of consumers are shopping differently after the pandemic than before, and that this figure is expected to grow. Learn more about how Scandinavian companies can increase sales by affiliate marketing in 2023 and beyond.
What is affiliate marketing?
Affiliate marketing began in 1989 with a man named William J. Tobin, who holds the proud title of being the world’s first internet marketer. He founded PC Flowers & Gifts and launched his program on the Prodigy Network. The model involved paying the company for every sale.
With affiliate networks springing up all over the place, refer-it.com was launched by Wayne Marciano in 1997. He was followed a year later by associateprograms.com, affiliateguide.com, ravenews.com and several others, all sharing information and articles alongside affiliate directories.
Affiliate marketing is in many ways similar to referral marketing. This can also be a cost-effective method for smaller companies with limited budgets. You can incentivize current customers to promote your brand and transform them into loyal affiliates.
How it works
A well-structured affiliate marketing program is a digital marketing tactic used by ecommerce brands and retailers which can add value for both brand and product reach and lead to more sales, but many people are unsure of what it is or how it works.
An affiliate marketing program can boost your brand awareness and open your business up to a wider audience and it is easy to get started on a limited budget. Affiliate marketing means that a business pays a commission or other incentive to an individual or other third-party for any sales generated by them promoting the company’s products or services. The third-party is normally a website or a blogger. The system is similar to the old salesman paid by commission on sales.
In other words, affiliate marketing is a performance-based marketing model that rewards affiliate partners for converting information into sales. The company can be either an online store or a brick-and- mortar operation (or both).
There are, however, lots of options and potential pitfalls to consider when planning your own ecommerce affiliate program strategy since not all affiliate programs are created equal.
Your own software program or affiliate networks?
Affiliates search for products they like and they promote these products and earn a profit from each sale they make. The sales are tracked through affiliate links from one website to another. Potential buyers are directed to see the product being sold through the links on the affiliate’s blog or website and ultimately redirected to the company selling the merchandise.
As a merchant, you may choose to host your own affiliate program to promote your products or connect to affiliate networks that can help you connect with marketers. They offer established databases you can use to reach out to influencers who can further your business.
As marketers or eCommerce strategic thinkers, we have a vast arsenal of tools and channels at our disposal to achieve different objectives, but the most recognizable example of affiliate marketing being used to great success in recent years has been the boom of the influencer space. Here, individuals known to your customer base use their social following and reach to sell products on behalf of a third party. This creates a win-win scenario of boosting your brand awareness as well as product/brand reach.
For their effort, influencers are rewarded with commissions from low single digits for products also available at retail locations, up to over 90% for digital products only sold online. The best niches for affiliate marketing are those with evergreen demand, a large fan base, or both combined.
It’s important to note that affiliate programs don’t just help merchants spread the word about their brands. They also benefit the affiliates, who are able to earn a somewhat passive income from their promotional efforts. In fact, there are individuals and companies that gain earnings solely from affiliate commerce.
A great affiliate program that promotes your products or services across your affiliate network is about way more than just sales and selling. They can be a fantastic opportunity to increase your reach and brand awareness via content publishers focused on the grazing/discovery type of user behavior.
Related: The Swedish One-Stop Shopping App
Traditional marketing is obsolete
Today, traditional marketing and advertising processes are much less successful and far more expensive than affiliate marketing. However, it is important to choose the right affiliates to promote your products. Selecting someone who shares a similar target audience will help ensure that you are reaching high-converting customers. It may also result in organic word-of-mouth marketing and further referrals to your business.
Good affiliates work on daily elements such as SEO and email marketing campaigns, whilst always looking for more strategic, longer-term plans and opportunities to find new customers. All this whilst keeping the return on investment (ROI) under careful control.
Therefore, you need to define the niche that you will be targeting. Besides, you need to find out if the market is interested in the product you sell. If most people aren’t interested in the product you intend to sell, your niche won’t monetize.
Affiliate marketing can be useful for businesses on a smaller budget, as it offers plenty of flexibility. The average affiliate commission falls anywhere between 5–30%, so you can decide on a unique rate that will bolster your business.
Another major benefit of affiliate marketing is typically commissions (‘Cost per Acquisition or ‘CPA’), are only accrued after a sale has taken place.
The telecommunications company Vodafone recently benefited from a successful affiliate channel. It was aimed at driving Samsung orders, and the company was able to make an impressive return on investment.
Theoretically, you can make affiliate marketing on any platform, even Instagram works. However, it’s much easier to build an audience and increase your affiliate sales via one of two channels: a blog or YouTube channel.
Are you familiar with the new term Phygital retail?
This recent term is a combination of the two words physical and digital, which means physical stores are combining their physical and digital sales strategies. A cohesive customer experience, both online and offline, is becoming increasingly important.
Affiliates can be used to bridge this gap and drive in-store promotions. Brick and mortar affiliate marketing is entirely performance-based, and therefore requires minimal start-up and maintenance costs. Affiliates do the marketing work for you, and you only pay when you get real results.
Once you’ve decided that you want to begin an affiliate program for your eCommerce business, it’s time to start deciding on which programs could be best for you as a business or your brand.
How Scandinavian Companies Can Increase Sales By Affiliate Marketing in 2023 and Beyond – Conclusion
On a personal note, I believe that, as ecommerce switches from a traditional wholesale model into a marketplace model, affiliate is going to go blow up even more over the next few years.
If you haven’t already, now is the perfect time to start exploring the potential benefits for your eCommerce business. Daily Scandinavian aims to give you updated information on how to succeed in affiliate marketing.
How Scandinavian Companies Can Increase Sales By Affiliate Marketing in 2023 and Beyond, written by Tor Kjolberg