Affiliate marketing is a simple concept: you offer a percentage of the sales price to anyone who can help you close a sale. There are more than a few nuances to the situation, of course: especially with the advent of online tools, you can control which affiliates you’re willing to work with, what constitutes a sale and a variety of other factors. The important point is that for small businesses, affiliate marketing can be a relatively inexpensive way to increase your sales.
- Affiliate marketing lets you market inexpensively. The cost of marketing a product or service can cut into your margin of profit. But, as long as you know how much margin you can afford to offer up to affiliates, you can often get them to market your products less expensively than you can arrange for yourself. Depending on the payoff, some affiliates will even buy ads and take other steps to promote your product or service.
- Affiliate marketing helps build brand recognition. Even if your affiliates make relatively few sales, your product will be on their websites. They may write reviews, put up ads and take a variety of different steps to make sure that their readers are aware of your product (with the intention of selling, of course). But that sort of exposure can help create sales down the line, especially if a prospective customer sees your product all over a variety of websites.
- Affiliate marketing offers access to tastemakers. While it’s nice when someone refers a friend to your product, the fact of the matter is that people are more likely to do so when they have a financial interest. Tastemakers, such as bloggers, can be especially interested in affiliate marketing.
- Affiliate marketing can get you access to existing audiences. Many affiliates work hard to build up their own audiences, on blogs and through other media. The size of that audience can vary, but it’s not out of the question that you can get access to an audience in the tens or even hundreds of thousands with some careful planning. That sort of exposure, combined with the endorsement of the person who has brought a particular community together can be very worthwhile.
- Affiliate marketing can give you the initial connection to a new customer. If you offer products or services that allow you to build on one small sale to earn significantly more over the lifetime of that customer, affiliate marketing can be a cheap way to get access to new customers. Even if you have to offer up most of your profit margin on that initial sale to the affiliate that referred your new customer, it can still wind up being less expensive than advertising.
Affiliate marketing can take some work — you need to give your affiliates tools that will help them to be successful, whether that means logos or review copies. But the pay off can be phenomenal, especially if you can get the support of affiliates with wide audiences already in place.
Image by Flickr user Steve Snodgrass