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Affiliate marketing in its simplest form means that an online business pays an external website or source for driving traffic or sales through its referrals. The more traffic and sales that come as a result of referrals, the more the affiliates will be rewarded.
Affiliate marketing is one of the most well-known and commonly used marketing strategies by online businesses and it’s still as important now as it ever has been, with most of the top companies running affiliate marketing schemes.
Overview of affiliate marketing
Affiliate marketing has been around for around two decades now and in that time, there have been plenty of changes which it has managed to adjust to; in order to keep surviving and growing. It’s something that has to constantly move with the times, especially with the rapid advancements made in the online world.
This is clearly reflected in the online casino and gaming industry, where affiliate marketing has evolved and grown at a remarkable pace. This highly competitive industry has been able to employ this specific aspect of marketing perfectly, with its success clearly seen in global online casino entities like GVC Holdings PartyCasino.
It’s still important now, over 20 years on, for many different reasons. It’s potentially the most efficient way to advertise and it’s extremely flexible too. Many online businesses spend a lot on advertising and this often comes with a large upfront fee, especially for ad campaigns on social media that include videos for example. Putting together an affiliate program is not going to hit an advertising budget hard at all, as you can see here if you require more info.
Why is affiliate marketing important?
So affiliate marketing is important in the sense that it is a low cost solution. Companies don’t need to hire sales staff either. Neither will they need people to work in advertising. All of this will be conducted by affiliates who have signed up to the program, meaning the money can be put to better use elsewhere.
Because affiliates don’t make money unless the sales are successful or because they have driven good traffic to the site, it ultimately means that online businesses are only paying for what works. This is a lot better than forking out for ads on Facebook and Twitter where you have to stump up the funds beforehand.
Being high on the rankings on search engines such as Google is vital to an online business. If the company appears at the top of the first page, they’re going to get more people visiting their site and ultimately a lot of those will go on to become customers in some way, shape or form. Affiliate marketing helps to provide inbound links and it’s these links that are rated highly by search engines, thus meaning a rise in the rankings is likely to be on the cards.
How does it work?
In order for affiliate marketing to work, the publisher receives a code from the merchant or the corresponding affiliate network , which the affiliate embeds on his website. If this link is now clicked, the visitor is redirected to the merchant’s page and parameters are transferred that enable a publisher to allocate the generated sales. This assignment is called tracking and can be implemented using various approaches.
Session Tracking
With session tracking, every visitor to a dealer website receives an automatically generated session ID which is optionally transmitted via the URL (GET method) or via hidden form fields (POST method). The assigned session ID can also be assigned to the affiliate from whose website the referred customer comes. If the customer now buys from the merchant or meets other commission requirements, the customer’s action can be specifically related to the publisher and he receives his remuneration.
Cookie Tracking
Another tracking variant is tracking using cookies . A cookie is a small text file that is persistent / stored on the client side, which is stored on the visitor’s local computer when visiting a website and which contains information about the user or his behavior and personal settings relating to the website visited. In affiliate marketing, additional information is stored in the cookie about the publisher through whom the potential or referred customer came. If the user visits the corresponding website again, he can be identified using the cookie and thus, for example, a later product purchase on the retailer side by the customer can be remunerated to the affiliate.
Since cookies are stored on the client side, they can of course also be deleted relatively easily by the client. So-called flash cookies , which are browser-independent and have no expiration date, are intended to make deletion more difficult.
Tracking Pixel
Usually, a tracking pixel is a 1×1 pixel image in GIF format that is embedded in the HTML code. A tracking pixel is required when an affiliate network is used. Whenever a remunerated action is taken, the tracking pixel is called up and transmits further tracking data, for example through a cookie, which is important for the assignment to the affiliate. The small graphic is only an aid that made this type of tracking possible even before AJAX and, above all, works without the use of JavaScript.
URL Tracking
A special link that contains certain parameters or IDs with which it is possible to identify an affiliate exactly. It is the simplest way of tracking and, by assigning the ID to a remunerated campaign, enables the customer to distribute the commission to the correct publisher.
Possible advertising media
Banner
The type of advertising media used in affiliate marketing can be different. Banners , some of which are animated and in a wide variety of sizes, represent a clearly visible form of advertising.
HTML-Textlinks
In addition to banners, simple HTML text links are probably the best-known advertising media. These text links contain an affiliate link which then leads to the corresponding page of the merchant.
Widgets
So-called widgets work similarly to banners . In principle, these are small applications or games that are integrated into the publisher’s website and that are equipped with interactivity, which also distinguishes them from conventional banners. For example, a certain product selection can be made in advance via such a widget before the potential customer is then forwarded to the retailer’s website.
Product data
However, advertising material can also be the retailer’s product data , which is made available, for example, as CSV or XML files. These files can be used, for example, as the basis for the publisher’s own shop, with the individual articles then being linked to the retailer pages.
Advantages and disadvantages of affiliate marketing
The following is a brief overview of the advantages and disadvantages that affiliate marketing brings with it.
Advantages
- No costs in advance: A great advantage of this type of online marketing is certainly that neither the affiliates or website operators nor the merchants incur any costs in advance.
- For example, publishers do not have to first purchase or set up a shop system or purchase products. Conversely, an advertiser only has to pay commission when sales are generated and can use existing online sales channels.
- Huge selection of affiliate programs: Another advantage is the large selection of affiliate programs that are now available. Thousands of providers from various fields and industries are available to interested affiliates.
- High potential for optimization: Affiliate marketing has great potential in terms of optimization options. Those who invest a lot of work are usually rewarded with higher income.
- Targeted customer approach: Because publishers have the opportunity to only advertise products that they really want or that fit the topic of their website, the desired target group can be addressed very specifically. But also for merchants, the right choice of affiliates advertising their products is a good way of addressing the right target group.
- Easy technical integration: Finally, an advantage that should not be underestimated. The integration of the banners or text links is relatively easy and quick, which certainly benefits the popularity of this type of online advertising.
Disadvantages
- No secure income: A major disadvantage from the affiliates’ point of view is the lack of income guarantee. Alternatively, if you want to avoid this risk, you should sell banner spaces on your website.
- Lack of transparency: An important aspect is the problem of transparency. Without expressing a general suspicion here, nobody can really check whether all payments from the advertisers are correctly and completely settled. In return, there are certainly attempts by affiliates to gain unjustified commissions.
- Inadequate quality of the sales instruments: Especially with the pay per sale form of payment , publishers are extremely dependent on the retailer’s sales instrument, usually the online shop, meeting the demands of the customers they refer to. It is therefore of no use to anyone if many customers can be referred to the merchant’s website, but no product purchases are made because, for example, the shop is poorly usable.
Dangers and problems
The relevance of search engine results suffers
Nowadays, the majority of visitors to a website come through search engines. This leads to a bitter struggle between the publishers for the top positions within the results pages, as higher commissions can be achieved there for the mediated sales. However, it is rare to find websites that provide comprehensive information about a product on the top placements. To the detriment of the searcher, as the relevance of the search results may deteriorate significantly.
Duplicate cookies
Another problem is the duplicate problem that arises when a customer has saved several cookies from ONE partner program from different affiliates. That would mean that commission would have to be paid out several times for a certain campaign. The two approaches to the solution are Last Cookie wins or First Cookie wins . In practice, at least with the larger partner programs, the affiliate usually receives the commission whose cookie was last set.
Cookie stuffing
When cookie stuffing or cookie spreading is to set by affiliate cookies without the visitor seeing the goods offered by the merchants at all. This is usually done by means of an invisible IFrame, which contains the corresponding affiliate links, which then cause the cookies to be set for the visitor. It is now the case that the cookies usually have a certain lifespan, which if they are not actively deleted by the user (which usually rarely or never happens) lasts for some time.
If the user makes a purchase on the merchant website at some point within this period, this purchase may be attributed to the cookie spammer. This type mainly affects large and well-known merchants, who have a very high probability that a customer will buy something within the cookie validity period. There is also the problem that honest affiliates may be deprived of their commission because their cookie is being overwritten.
Who is affiliate marketing for?
Affiliate marketing is, it can be said, not for everyone. Website operators who have a highly frequented offer and thus generate a lot of traffic certainly have a good starting position. But many visitors alone are no guarantee for successful affiliate marketing. It should therefore primarily be about the right target group that visits a website.
Frequently, a website with a clear orientation that is tailored to a corresponding, albeit smaller, target group leads to greater success than websites that have a large number of visitors, but which are a very broad target group that does not generate much revenue.
In summary, it can be said that affiliate marketing then unfolds its potential if you feed the right traffic in sufficient quantities with the right affiliate links. According to statistics, 17 percent of affiliates surveyed in the US earn more than $ 20,000 a month through affiliate programs. The majority of affiliates achieve significantly less income with up to $ 500 per month.
Conclusion
Affiliate advertising or performance marketing will continue to grow and be important, this can be assumed due to the increasing advertising expenditure in the online area. In times of tough economic competition to which companies are exposed, it is extremely important for them to have a marketing tool that is as effective as possible. Since affiliate marketing couples the costs directly with the income, companies do not incur any expenses without generating sales, in contrast to the classic banner display.
However, for some time now, an EU draft law has posed a threat that states that cookies can only be set if the user agrees. The latently simmering discussion in relation to cookies and data protection has also made affiliate marketing the focus of attention again and again. Since tracking is not possible without cookies, which is the basis of performance marketing, this could result in enormous economic damage in the three-digit billion range.
Apart from the possible negative influences from laws and discussions, affiliate marketing will further expand its position by opening up new channels, for example through use in social media . Even large companies will probably have to resort to this online marketing instrument more in the future, as the so-called thousand-contact price (CPM) for classic banner advertising will continue to fall.
For website operators, affiliate marketing will continue to be a good opportunity to develop an interesting source of income, provided that you use the existing optimization potential, make an effort and stay on the ball.
Affiliate marketing allows the online business to not only save money but to diversify and earn money while they’re saving it too but they have the opportunity to put it to better use in other areas. It’s a proven marketing strategy that not only works and has worked over the last two decades, in spite of all the changes in the online world, but it also allows the online business to stay in control too.
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