Cut-up #12 // What is Affiliate Marketing?

10 facts about Affiliate Marketing:
1. In layman’s terms, affiliate marketing is this: web publishers generating leads and sales for you, in return for a bounty each time they do so. Most affiliate programmes are based around this sort of CPA model (cost per acquisition). This is essentially pay on performance, so you only reward affiliates when sales are made.
2. Publishers might display your banner ads to drive referrals. You don’t buy this advertising, you simply pay them when people click through and sign up.
3. Many of the most successful affiliates are experts in paid search. To this end, they can be viewed as an outsourced marketing team. Some ‘super’ affiliates spend millions each year on Google Adwords, and return healthy profits. They are skilled at trading on the margin between the costs of these ads and your commission.
4. Affiliate marketing networks provide their advertiser clients (aka merchants) with technology and services while acting as a gateway to large numbers of individual affiliates (the
publishers). Affiliates search the network to find ads relevant to their audience.
5. The appeal of affiliate marketing for merchants is increased sales, transparency of ROI, and the ability to pay commission to affiliates based purely on performance.
6. Affiliate marketing is becoming an established marketing technique, complementing and sometimes replacing other types of online and offline marketing as an important channel to market. It extends reach without the need for a marketing budget (bounties = cost per sale).
7. The majority of merchants involved with affiliate marketing operate through networks,paying a fee to the network for the sales and leads that are accrued by affiliates.
8. Econsultancy estimated that the UK affiliate market was worth £3.82bn during 2008, a 22% increase from £3.13bn in 2007. The sector continues to prosper and, in terms of online sales coming from this channel, was expected to be worth well over £4bn during 2009.
9. The market continues to enjoy robust growth in line with the phenomenal growth of online retail, which shows no signs of abating.
10. Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors. The three sectors expected to experience the greatest growth are the mobile phone, finance and travel sectors.