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Affiliate Marketing Guide – the nuts and bolts

Learn the basics with this affiliate marketing guide. Quickly identify the pitfalls of affiliate marketing and how to avoid them.

6 min read

What’s QuickBooks got to do with affiliate marketing? A good question, but the fact is, we’re a business too and our in-house marketing team has some great ideas to help support you.

Let’s start with a definition. Affiliate marketing is the recommendation of another company’s products to its potential customers for a fee. How it actually works sounds quite complex, but don’t worry if you’re confused, as you’re not alone. And we’re here to explain it in simple terms.

Here’s how affiliate marketing works

  • The affiliate website displays ads promoting another retailer’s products.

  • A customer clicks on the ad.

  • The affiliate website provides a link from the ad to the retailer’s website.

  • The customer purchases the product.

  • The affiliate receives commission.

If you’re a small business with a product to sell, affiliate marketing might seem like a slam dunk. Similarly, if you’re a website or blog owner looking to monetize your site, this might be a lucrative option. Let’s examine the ins and outs of affiliate marketing and determine if it’s right for your small business.

Why affiliate marketing?

For advertisers, unlike standard online marketing, affiliate marketing gives you more control over how you spend your advertising money. By limiting the pay-out just to websites that perform, you aren’t “wasting” money on unseen or ineffective impressions (that’s the people who see your ad).

As a model it’s more aligned with cost-per-conversion advertising than cost-per-click advertising, meaning the affiliate gets paid only when the retailer makes a sale.

For website publishers, affiliate marketing is a way to get people to place ads on your site without having to employ a sales or creative team to build ads. The network that runs the affiliate ads will be in charge of reporting on analytics and keeping track of your site’s performance. While it may seem that this is an easy way to make some money, the truth is that affiliate sites have their own responsibilities and demands too.

Pitfalls of affiliate marketing, for advertisers

  1. You might end up competing with your own ads

    Most online advertisers use a mix of digital advertising options, including search engine marketing, pay-per-click, relationship marketing and more. Many affiliate networks use the same tactics, so you might end up competing with your own ads. While this might turn into a very interesting A/B test, chances are the cost of your other online display ads is high, and you don’t want to waste that money.

  2. You can’t fully control your brand’s exposure

    Because you aren’t necessarily vetting every website that’ll carry your affiliate ads, it’s possible your products or brand might be presented alongside questionable content. Also, some sites use less-than-reputable tactics, such as email spamming or false advertising and the consumer might come to associate you with these tricks.

    For the sake of protecting your brand, make sure you set very strict guidelines, especially around promotions and pricing, and hold your affiliates accountable if those guidelines are broken.

  3. You might end up paying commission to an affiliate that didn’t earn it

    While cases are few and far between, affiliate sites and networks have been known to defraud retailers out of money. One such tactic is to make it seem like a user visited the affiliate site before making a purchase, when in reality they didn’t. Another is leading users to your site under false pretences, such as the promise of a coupon or discount code.

    The best way to avoid this is by keeping close track of your analytics, especially in the beginning, and evaluating what sites are really working for you. You can also take a look at metrics, such as referring URLs, to determine if the affiliate has earned its finder’s fee.

Pitfalls of affiliate marketing, for affiliates

  1. You might end up doing more work than you anticipated

    While many people believe you can simply set up a website, place some affiliate ads and then press go, this simply is not the case. Like all online advertising, best practices apply, like including updated content and offering valuable information to consumers that Google’s bots can pick up on. If you simply put up your website and then leave it, Google will penalize your site in their search results, and that inaction will bring any of your organic traffic to a grinding halt.

  2. You might end up not making any money

    If your website is new or caters to a very specific niche, chances are your daily site traffic is pretty low. Steady, maybe, but it’s still low. This makes earning commission from click-throughs or purchases very difficult, as you’ll have a smaller pool to start with. Carefully consider if your site is equipped to generate the type of traffic that makes affiliate marketing worth it before committing any time or effort to it.

  3. You might end up not getting paid

    Make sure you do your research when starting off in the world of affiliate marketing. Does the affiliate network have a good reputation? What is the average monthly pay-out for an affiliate site? How much can you hope to make?

    While these questions and answers are very specific to your site, the campaign and the advertiser, the network should have statistics they can share. Also, be sure to read the terms and conditions carefully. You want to fully understand the requirements for earning and receiving commissions, as well as the restrictions and types of support you can expect.

Ready to go?

Even if this all seems feasible and your research yields a few good options, remember that affiliate advertising is not the perfect fit for every small business or website. To truly find success, you must:

  1. Diversify your affiliate campaigns. This is true for both affiliate sites and advertisers. Affiliates shouldn’t pin all their hopes and dreams on one advertiser, and advertisers shouldn’t assume a handful of sites will earn them success.

  2. Pay close attention to the type of products. Make sure the affiliate is a good match for the product and the product is a good match for the affiliate.

  3. Carefully monitor your results. Whether affiliate or advertiser, you want to be fully aware of your results. As an affiliate, are you getting paid decent commissions? Is there anything you could do to improve your success rate? As an advertiser, are you using the right websites? Do your affiliate sites genuinely provide you with qualified leads or customers?

If you decide affiliate marketing is right for you, look for a trusted affiliate marketing network. In many cases, this is the easiest way for retailers to get started. If you’re interested in becoming an affiliate, you can either go it alone, or explore your options in finding an affiliate network to join. Whatever you decide, affiliate marketing is here to stay, and you don’t want to miss out on the opportunity to bring in some money and increase your products’ online exposure.

Did you find this article about affiliate marketing useful? The QuickBooks Blog covers many other topics which you might want to read. It’s all part of the support we offer to small businesses.

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