Ecommerce affiliate marketing is a digital marketing tactic used by many ecommerce brands and retailers. It’s popular because a well-structured affiliate program can add value for both brand/product reach and down at the coalface of converting sales.
Not all affiliate programs are created equal though, and there are lots of options and potential pitfalls to consider when planning your own ecommerce affiliate program strategy.
I’ve been involved in successful affiliate campaigns for nearly a decade at several businesses— ranging from “stack it high - sell ‘em cheap” type approaches through to the far more curated, considered, and carefully positioned luxury fashion space.
In this article, we’ll take you on a deep dive into the world of affiliate marketing for ecommerce channels and how to position and, more importantly, scale a successful affiliate campaign within your business or organization.
- What Is Affiliate Marketing?
- How Can My ecommerce Businesses Benefit From Affiliate Marketing?
- Getting Started With Affiliate Marketing
- Figuring Out Which Affiliate Platform Or Program Is Best For You
- 5 Key Affiliate Program Tips To Consider For ecommerce
Hopefully, the below will give you some food for thought regarding the potential of an affiliate marketing program for your own ecommerce operation.
What Is Affiliate Marketing?
Affiliate marketing is when a business pays a commission or other incentive to an individual or other third-party website/bloggers for any sales generated by them promoting your products or services.
It’s akin to a third-party website being paid a commission on any leads they supply to your online store or landing pages that eventually convert into a sale.
Types of affiliate marketing
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.
But influencers are only one example of the types of exposure an affiliate campaign can bring to your business. There are many other examples of affiliate-based marketing for ecommerce applications such as:
- Featured products within product reviews or editorial content
- Price comparison shopping services (CSS)
- Sub-networks of other publishers
- Coupon-based listings.
How ecommerce businesses benefit from affiliate marketing
There are a number of reasons my clients and I like affiliate marketing.
1. Value across the conversion funnel
As marketers or ecommerce strategic thinkers, we have a vast arsenal of tools and channels at our disposal to achieve different objectives.
We have to 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.
There’s a lot going on so, to provide some form of structure within the early days of planning any new marketing activity for our online business, we (I know I certainly do) regularly look to position these tactics within our old friend the ‘Customer Conversion Funnel’.
Often, we tend to think of or hear others talk about a certain marketing channel or tactic as being upper, mid or lower funnel. The position is based on its propensity to create brand awareness, create reach for our product categories and product pages or, in an ideal world, generate a sale/conversion.
The beauty of a well-organised and strategically implemented affiliate programme is that it can be effective at all levels of your marketing/conversion funnel.
How affiliate marketing benefits upper/mid-funnel product awareness or discovery
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.
This typically includes users looking at blogs or listening to podcasts, social media, news/review articles, or shopping guides within renowned titles for a certain specific market vertical.
Publishers at the higher end of the CPC scale can also offer benefits, such as running their own paid advertising campaigns using paid search or banner ads or email marketing campaigns, to promote your items to their already engaged audiences.
This creates a win-win scenario of boosting your brand awareness as well as product/brand reach.
How affiliate marketing benefits lower funnel, higher-converting activity
Many publishing partners that can be enabled via an affiliate marketing campaign are also strong for typically higher converting tactics positioned towards the bottom of your marketing/conversion funnel.
These content publishers tend to directly target consumers in a purchasing mindset that are showing intentions of shopping more purposefully. As well as influencers, examples of these can are sites specializing in areas such as price comparison, Google shopping, and off-price clearance retailers.
2. Lower upfront costs
Another major benefit of affiliate marketing is typically commissions (‘Cost per Acquisition or ‘CPA’), are only accrued after a sale has taken place.
So, instantly, you can see the potential benefit for affiliate marketing vs more traditional marketing efforts, such as PPC (pay per click) or Paid Social Media/Search content, because those methods often require a substantial sum of investment up-front regardless of the outcome.
3. Lower CPA/CPC
In addition, depending on the category or publishers/bloggers, CPA/CPC for an affiliate marketing campaign can be very cost-effective vs other conversion-driven tactics.
For example, typical CPA is paid on net sales, exclusive of taxes & shipping, and ranges from anything between 2%-10%. This can rise to 20% plus for the best affiliate/premium content channels with very large traffic volumes and proven regular revenue generation for their existing affiliate partner programs.
Lastly, another benefit to the affiliate model overall is that it is within every involved stakeholder’s interest, both as an advertiser (the ecommerce store) and publisher (3rd party content creators), that an affiliate-based campaign works well.
This is true for both goals of strong customer reach in promoting the products/services and converting clicks and views into sales.
Getting Started With Affiliate Marketing
Now I may have piqued your interest you’re probably wondering how it all works. There are many ways to initiate an affiliate marketing program for your own ecommerce business.
The major mid-tier ecommerce platforms (BigCommerce, Magento, Shopify) have a multitude of plugins that allow you to 'self-host' an affiliate programme and engage with individuals or organizations directly, track traffic generated by them, and calculate any commission payouts on sales that are attributable to them.
There is a lot to be said for this approach within certain verticals or startup ecommerce websites. The drawback is that this 'self-host' process can necessitate a lot of manual processes, and can be difficult to scale quickly or spread internationally, multi-currency, etc.
It may be a useful tactic if you want to manage a direct relationship with lots of ‘micro-influencers’—typically individuals sending a lower level but highly relevant volume of referral traffic to your website.
But, as we’re aiming to focus on the enterprise tier of the affiliate space within this article, we will concentrate on an alternative approach that involves using various services and tools such as Rakuten’s LinkShare or the Awin network.
These types of tools are typically SaaS-based platforms that act as an aggregator to enable your affiliate goals.
They work by ingesting what’s typically a ‘Google Shopping’ formatted product feed that is then aggregated out to many publishers/content creators to form the backbone of your affiliate campaigns.
These platforms also act as a hub for you to offer your program out to publishers and content creators. This is actioned via the process of creating ‘offers’ with different commercial terms, dependent on what you wish to offer any given 3rd party publisher or content creator.
These offers are where I feel affiliate marketing comes into its own.
The ability to trade and offer different tiers of commission by certain brands or margin points can be a real win for any ecommerce business of scale.
Having the attribution of commissions managed for you is also a huge win in terms of your own resource being best utilized towards growing the business, rather than reporting all day on past sales.
How To Figure Out Which Affiliate Platform Or Program Is Best For You
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.
There are lots of key factors to decide on but, if using an aggregation platform such as the aforementioned services from the likes of Rakuten or Awin, then there are a few top-level points to consider.
Managed or unmanaged ecommerce affiliate programs
Most of the affiliate platforms operating within the enterprise space offer tiered pricing options for their fixed monthly services.
Typically, within the higher end of the monthly price tier, the offering will include a fully managed service with affiliate managers. These will help get your affiliate campaigns off the ground, work out the best level of affiliate commissions to offer specific publishers, and get you the best return on investment.
Your dedicated affiliate manager will help make introductions to potential affiliate partners with a strong match to your business, and provide analytics and reports on your marketing strategy and affiliate campaign performance.
They will also fight your corner within the world of affiliate, like helping you understand competitor analysis through tactics such as blind benchmark comparisons and sharing their past experiences working with other retailers.
A good starting point before looking outside is to first assess the skill set of your own team. Typical questions to ask yourself are:
- Do I have any experience in-house with managing affiliate programs at any scale?
- If I have resources, are they knowledgeable about the right publishing partners and sensible commission tiers to remain commercially viable whilst competing at the level I’m aiming for?
Your internal resources and time to commit
If you are thinking that internally managing your affiliate program is the way to go, and in doing so saving monthly platform subscription costs, be mindful of the time this will require from your team to be able to execute on your marketing strategy.
If not spending time on actively building relationships with publishers and content producers to negotiate the prominent positions for your online store and affiliated content/products, then there is a wealth of data that it pays to report on regularly and understand.
Not all affiliate publishers are equal and you need to ensure you are in touch with core metrics such as conversion rates, return rates, or AOV from a specific channel vs the agreed commissions.
As with any ecommerce process there is a wealth of data created, so the devil really is in the detail when getting the best return on investment from your affiliates.
Harking back to my first point, emphasizing the importance of understanding your market vertical within the affiliate space is crucial to the success of any affiliate program.
It’s not just about who else is in the space, but what publishers they’re using, their target audience, and figuring out the typical commission structure you need to be offering to be competitive and ensure key placements for your offering.
Like any sales process in any business, you can’t sell to people who don’t know who you are and this is all so true within the affiliate space.
Without utilizing some form of managed service from your platform provider, it can be difficult for beginners to get this data and can cost a lot more in trial and error through either lower sales volumes or overpaying on commissions.
Be mindful that affiliate marketing data is a lot more confidential than a typical PPC campaign carried out by a search engine provider.
There aren’t as many tools to help you research and understand the competitive landscape, so having a helping hand in the early days can really pay dividends later on.
5 Core Affiliate Program Tips To Consider For All Ecommerce Retailers And Affiliate Strategies
1 - Make sure you have a strong product feed in place from your website or ERP/PLM that you can amend and edit as you monitor and optimize your offering. Being able to filter certain products in and out of your feed can be very useful when agreeing on commercials with a platform/publisher. Especially as this can allow you to protect lower margin products etc.
2 - Think about events/KPIs or milestones within your existing marketing calendar and try reaching out to specific affiliate partners in advance to discuss opportunities as early as possible. Building an affiliate program can often enhance relationships with existing PR and editorial-based partners.
3 - Similar to the above, be mindful of when you typically go to sale or run any discount-driven promotions. Be sure your margins can cover what you need on return and any additional commission payment.
4 - Be prepared to potentially invest for placements on premium publisher websites or apps—sometimes a CPA isn’t always enough!
5 - Stay open-minded. Remember, a lot of affiliates are passing traffic back to your site so you still own the customer's purchasing experience and their first-party data (if they allow it). Affiliate marketing can be huge, and definitely benefits from the approach of casting the net as wide as you can to deliver early results. That activity can then be reviewed and optimized from there on in.
Affiliate Is Going To Go Interstellar
So, to wrap up, affiliate marketing can quickly add multiple benefits to your new or existing ecommerce business.
It's unique in that it’s one of the rarer performance-based strategies that, on the whole, is driven by payment post-conversion and at commission rates that can be surprisingly good value.
While it can take time to build a program to order active from a standing start, spending time upfront to research and understand the landscape of the affiliate market for your own market vertical can pay dividends.
Maybe reach out to a few publishers/content creators you would love to feature on and simply ask them if they operate an affiliate program and if/what any programs or aggregators they use.
Some of the larger affiliate platforms regularly host free webinars or podcasts that could be worth listening to on the daily commute etc.
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.
Please add any comments to this article with any of your own experiences within the affiliate space. It’s great to hear of others' experiences within the space.
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