Affiliate Marketing

E-consultancy just released a research piece on the cost effectiveness of affiliate marketing. E-consultancy is a UK based internet marketing research firm. Their research is held in high regard by all, while their particular market is in the UK. They surveyed 700 merchants who were actively using the affiliate marketing channel and this is what they found:

Sponsored by buy.at, the UK’s largest independent affiliate network, the comprehensive research into how UK brands use affiliate marketing found that the majority of UK advertisers (merchants) say that it is either ‘very cost-effective’ or ‘quite cost-effective’ for acquiring customers. 44 per cent of merchants named it as ‘very cost-effective’ for driving customer acquisition compared with 34 per cent for paid search and just seven per cent for display advertising. (Release Date: 26 September 2007)

Internet marketing is changing the way people market their brands, because of the very detailed analytics allowed by marketing online. Advertisers are able to track their advertising spend in more detail than they ever could before. Every dollar can be tied to very specific returns. As more and more information and research is done, it is becoming clear that affiliate marketing is THE most cost effective way to market a business online for one very simple reason. It is performance based!

If an advertiser doesn’t get the volume or the sales expected they don’t have to pay a penny. They only pay when they get what they want. I am taking it for granted that an advertiser will know what they want. With customer acquisition it is very important for the advertiser to know the value of each customer and to pay affiliates appropriately, while making a strong profit.

Paying a percentage of sales makes things simple for smaller companies, because they already know their profit margin, and they just allocate a portion of that to affiliate sales. This is my preferred method of earning, because it is cut and dry. I generate $100,000 in sales. The commission rate is 10%. I earn $10,000. With this revenue sharing performance based marketing it is impossible for an advertiser to lose money. That is the beauty of affiliate marketing. A team of professional internet marketers who are only paid when they drive the conversions established by the merchant.

Performance based marketing is substantially more cost effective and safer than paid search. An advertiser could spend their entire marketing budget on search campaigns and not earn a penny if they don’t know what they are doing. This is why I advocate for outsourcing search engine marketing into the affiliate channel. This is a cost-effective way of doing paid search without any of the risk. If you are an advertiser with a closed search affiliate program, you don’t know what you are missing out on. Stop wasting your marketing budget on paid advertising and let the affiliates do it for you. It is safe, it is easy and according to this E-consultancy research it is “very cost-effective”. 

 It is no wonder that most advertisers are planning on increasing their spend in the affiliate marketing channel this year. They will continue to do so in years to come, as affiliate marketing establishes itself as the most cost-effective way of doing business online.