The proliferation of platforms and formats like short-videos have changed the influencer marketing game for marketers, brands and creators. In this fast-evolving space, keep up with the big trends and hot topics that matter in Storyboard18’s Weekly Shorts in collaboration with affable.ai, an end-to-end AI-powered influencer marketing platform. Track how creators, communities and brands are engaging with users and disrupting marketing to get a sharp and fast insight into present and future trends.
Affiliate marketing is a strategy where a brand pays commissions to third-party individuals, such as affiliates or influencers, to promote their products or services.
While affiliate marketing has been around for a long time, it gained popularity with the rise of digital marketing. Companies can pay affiliates for every lead, click, or sale generated. Commissions can range from three percent to 70 percent, depending on the industry and products involved and of course the end result. Naturally, a confirmed sale will get paid more than just a lead generated.
Amazon is widely recognised as inventing affiliate marketing. Nearly 45 percent of their annual revenue comes from affiliates. In the US, affiliate marketing accounts for 16 percent of global e-commerce sales, as of 2023 and the industry is pegged at nearly $17bn.
To understand affiliate marketing better, first one must understand the players involved. The four parties involved in affiliate marketing are:
1. the brand,
2. the affiliate marketer,
3. affiliate network, and
4. the customer.
To take advantage of affiliate marketing, brands must find the right affiliates, use the right networks, and reach the right customers. Affiliate marketing can be done using any digital channel.
As an example, we are considering Instagram, which continues to top the popularity charts in the world of influencer and affiliate marketing.
There are three types of affiliate marketing programs: unattached, relative, and involved.
1. Unattached affiliates don’t need to use or know the product.
2. Relative affiliates are industry experts who can vouch for the product.
3. Involved affiliates have personal experience using the product, and this type is regarded as the most effective, as social proof & personal recommendation is the biggest motivator for consumers. It also shields the consumer better from fraud.
Affiliate marketing has several benefits, such as low advertising costs and immediate exposure to an influencer’s audience. It can also build brand trust as customers talk about their personal experience with the product.
However, affiliate marketing is susceptible to fraud and lack of control over affiliates’ marketing methods. Brands can mitigate this by incentivizing for actual sales, including guidelines and rules, and monitoring the program.
Krish Iyer is the co-founder of BeTagged.