Affiliate programs have been around since the 1990s, and the reason they’ve stuck around this long is because they’re effective. Affiliate marketing has always worked well in the B2C world, but for B2B companies there are challenges. When done right, it can still provide a healthy additional revenue stream.
Affiliate marketing is worth considering, but first you have to know how to do it right.
What Is Affiliate Marketing?
Affiliate marketing has three parties involved: the advertiser or merchant, the publisher, and the consumer. The advertiser is any company with a product or service to sell so they’re looking for someone else, i.e. an affiliate, to help generate leads and close sales. The publisher is a company that provides creative content in various forms, such as banner ads or text ads, to drive traffic to the advertiser’s website. If the consumer is redirected through an affiliate ad and buys something the publisher earns a commission on the transaction.
Affiliate marketing programs use first-party cookies to track and store user information and preferences. These cookies remember the ads or links that users clicked on, track whether or not a sale is made, and what publisher to send a commission to.
Why Use Affiliate Marketing?
Worldwide, the affiliate marketing industry is worth $6.5 billion covering a broad range of industries and there are many solid reasons why it has been so successful: Merchant companies don’t have to pay their publishers until a sale is made, and there is no cap on how much commission the publishers can make.
When properly incentivizing the right affiliate partners it can generate significant income. The right partners will advertise your product in the best places and draw a lot of traffic to your site for no cost. This is great for startups with scant advertising budgets. Affiliate partners also create inbound links to your site, and such linking can help increase your search engine ranking on Google.
Affiliate Marketing for B2B
Affiliate marketing programs are excellent for B2C companies, but the game is a little different when you get into business-to-business. B2B affiliate programs generate fewer sales, but the average dollar value of the sales is higher so the key to a successful B2B affiliate marketing campaign is web traffic and lots of it.
When looking for good partners, find those that are aligned with what your company does and who offer a strong track record as affiliate marketers in the past. Your first option should be to look up publishers running B2B blogs. A well-established blog with a large readership can draw a lot of eyes to your webpage, and they will be visitors who already have an interest in B2B.
You will also need to inform your affiliates of your company’s sales cycle. B2B sales cycles can be unpredictable but many tend to be longer than in the B2C world, so make sure your affiliates understand yours. It will help calm any expectations they may have about earning sky-high commissions overnight.
How to Get Started
If you think that affiliate marketing could be the right fit for your company, take some time to ask yourself a few questions first. Look at what products or services your company offers, and what you would expect publishers to offer you. How much revenue do you expect to earn with your affiliate program? Do your research and come up with realistic projections.
If it looks like the market is big enough, the next step is to talk with publishers and find the best affiliate partners. The importance of having the right partners can’t be understated as they can make or break your program. Find out about their past successes and failures as affiliate marketers, what their conversion rate is like, and what kind of incentive you would have to give them.
If you can find a good existing affiliate network, and the projected ROI looks like it’s worth it, you might be ready to start. Research your target market and focus your efforts on drawing the most traffic possible to your site. Make an announcement about your affiliate program and let the world know you’re looking for partners. When things get started, track the program with analytics.
Affiliate marketing is no replacement for a dedicated sales team, but it is another source of income that your company could take advantage of for little cost. In today’s competitive business world one more line of revenue, when done correctly, certainly couldn’t hurt.
Flickr photo via Creative Commons, user baggyjumper