Affiliate programs contribute to growth by creating a new channel for acquiring new customers without the need for advertising.
Ecommerce affiliate programs are arrangements in which an online retailer (the merchant or advertiser) pays a commission to affiliates (publishers or marketers) for driving traffic or generating sales through their promotional efforts.
Often affiliate programs are run by marketing teams, however, the product team has an important role in ensuring the program is planned, executed and optimized along the way.
Setting up and managing affiliate programs can be time consuming and expensive, which is why a lot of retailers use affiliate marketplaces and third parties to manage the programs for them.
Some examples of successful affiliate programs are Amazon's affiliate program, known as Amazon Associates and eBay Partner Network.
An example of affiliate program managers is CJ Affiliate (formerly Commission Junction), a large affiliate marketing network that partners with retail and e-commerce companies.
Affiliate program managers can be a time saving resource for both retailers and affiliates and do have fees associated with their service.
The size of your company and its potential number of affiliates will determine if build or buy is the best option. Companies usually start with buy (using an affiliate manager) and if the opportunity size grows or they need special management controls or options they transition to the build model.
Benefits of affiliate programs
Benefits of creating an affiliate program include Increased reach and exposure, cost-effective marketing, access to new markets and third-party validation at larger scale.
There are also benefits on the Organic SEO side with additional Backlinks.
Implementing affiliate programs
When considering creation of an affiliate program we need to think carefully and objectively about the cost and effort in setting up and operating the program.
Costs include initial investment and effort, commission costs, ongoing maintenance of the program, brand reputation risk and potential brand confusion if consumers see your products on different sites at different prices. There is also the potential for fraud including click fraud or fake referrals.
Although some retail companies become affiliates of other retailers, in my experience that generally the best affiliate partners are usually pure content sites where there is low possibility of brand confusion and relationship disruption.
Influencers as affiliates
Currently some of the top affiliate marketers are called “influencers”. Influencers have built audiences on social media such as YouTube, Instagram and TikTok or have their own email newsletters.
Affiliate programs are often managed by marketing teams with product managers playing an important role in helping select and set up the program as well as make sure the analytics and performance systems are established and automated to the best level possible.