WHAT IS AFFILIATE MARKETING?

Affiliate marketing has become a major strategic consideration for companies participating in e-commerce (Duffy, 2005).  Some merchants hire outside specialists to set and enforce policies for affiliates and others get their own marketing team to create these (Edelman & Brandi, 2015). There are 2 main types of affiliate marketing

1. Pay-Per-Click – Bloggers are paid by the number of clicks, impressions or leads their link gets (WordStream, 2017).
2. Commission Earning – Individuals (normally influencers) place affiliate links on their blog or page which contains a tracking cookie that remains active for a certain amount of time. This tracks sales that are made through the link paying individuals a commission for any successful purchase made (Paluca, 2017).

Figure 1: How Affiliate Marketing Works

Source: Commission Factory, 2017

Most of the large fashion brands including Boohoo, ASOS, Missguided and Topshop are now utilising affiliate marketing as one of  the best way to market products is through customers themselves. Bloggers contribute millions of pounds in consumer revenue to fashion companies and also earn a large commission for themselves (Paluca, 2017). While affiliate marketing can provide a good basis for cheap website traffic if used incorrectly can have reputational implications (Croft, 2007)

Figure 2: Asos Affiliate Marketing

Source: Asos, 2017

Figure 3: Missguided Affiliate Marketing

Source: Missguided, 2017

RISKS:

1. An easy way to make money? – Not necessarily, creating a programme like this can require a lot of work and there is much competition within the market. This is especially true within the fashion industry where most major players have affiliate programmes. It relies on fostering relationships with partners. Affiliate programmes bring traffic to a site but it is businesses responsibility to turn the traffic into conversation. Companies must be willing to put the work in (Olenski, 2014).
2. Exploitation -Affiliates can exploit shortcomings in tracking and attributions which could allow them to claim commission that they have not actually earned resulting in businesses spending unnecessary costs and reduced profit margins (Edelman & Brandi, 2015).
3. Marketers can use it badly – If an affiliate link becomes associated with sites or content that it should not be the brands reputation could be affected. Additionally, if brands become associated with shamed influencers brand reputation could also become tarnished due to association.  Additionally, it is argued that most marketers are paying too much for the clicks that they are getting (Croft, 2007).

BENEFITS:

1. Lower Risk – Affiliate marketing offers an alternative to traditional advertising techniques where businesses can be required to pay millions of pounds up front for a campaign that could not be successful. It is a performance based approach so advertisers only pay affiliates when a sale occurs. It is therefore seen as a lower risk form of advertising (Edelman & Brandi, 2015)
2. Flexibility – The flexibility of affiliate marketing enables brands to network with a range of global influencers who can promote their products worldwide thus, increasing their target market size. The UK boasts one of the biggest ecommerce trade surplus of many countries perhaps because of current economic uncertainty and the fall in the value of the pound. This has meant that retailers see the oversea shopper as increasingly desirable (Edwards, 2017).
3. Increased Sales – Affiliate marketing often results in an increased sales revenue as it allows brands to reach out to a new audience through influencers that have an established following which includes the brands target market. For example, Gymshark (a fitness clothing brand) successfully established fitness influencers such as gracefituk who has 582,000 followers as an affiliates.

Figure 4: Affiliate Marketing Example

Source: Instagram, 2017

FINAL CONCLUSIONS 

Overall, affiliate marketing can be a cost effective way to drive traffic to your website and is seen as particularly effective in the e-commerce, fashion world as it creates real and sustained ROI. However, in order to create worthwhile affiliate relationships companies must ensure that they turn the website traffic they receive into conversation (Bishop, 2016). Influencers within the specific industry can be the most effective form of affiliate as they have access to the specific target market the company is looking for.

REFERENCES:

Asos (2017) Asos Affiliate Programme. [Online] Available at: <http://us.asos.com/ASOS-Affiliate/w2p4n/?cid=13121&gt; [Accessed 21 Dec 2017]

Bishop, C. (2016) Think affiliate marketing doesn’t work for luxury brands? think again. [Online] Available at: <https://econsultancy.com/blog/67731-think-affiliate-marketing-doesn-t-work-for-luxury-brands-think-again&gt; [Accessed 20 Dec 2017]

Croft, M. (2007) Are affiliates friends or foes?, Marketing week, Vol 30, No 48, p37-38

Duffy, D. (2005) Affiliate Marketing and its impact on e-commerce, Journal of Consumer Marketing, Vol 22, No 3, p161-163

Edelman, B. & Brandi, W. (2015) Risk, Information and Incentives in online Affiliate Marketing, Journal of Marketing Research, Vol 52, No 1, p1-12

Edwards, K. (2017) How Affiliate marketing is helping brands go global. [Online] Available at: < https://www.marketingweek.com/2017/04/18/affiliate-marketing-helping-brands-go-global/&gt; [Accessed 19 Dec 2017]

Missguided (2017) Missguided Affiliate Programme. [Online] Available at: <https://www.missguided.co.uk/affiliates&gt; [Accessed 21 Dec 2017]

Olenski, S. (2014) 4 Myths About Affiliate Marketing You Need to Know. [Online] Available at: < https://www.forbes.com/sites/steveolenski/2014/07/08/4-myths-about-affiliate-marketing-you-need-to-know/#62b67a51744f&gt; [Accessed 19 Dec 2017]

Paluca, K. (2017) What Fashion Bloggers Should know about Affiliate Marketing. [Online] Available at: < https://thirstyaffiliates.com/increasing-sales/fashion-bloggers-know-affiliate-marketing&gt; [Accessed 19 Dec 2017]  

WordStream (2017) Pay-per-click Affiliate Marketing: Why PPC affiliates need better keyword tools. [Online] Available at: < https://www.wordstream.com/pay-per-click-affiliate&gt; [Accessed 20 Dec 2017]