Affiliate Marketing
How affiliate marketing works
Within this example a 'merchant' is an online retailer with a transactional website where you can buy products or services. An 'affiliate' is an online publisher or partner who has access to traffic.
Affiliates are traditionally website owners who can send traffic, via links to your site. They do this on the basis that any sales generated from this traffic will earn them an agreed commission. This reward model is commonly known as Cost Per Action (CPA) and is more transparent and accountable than the older Cost Per Click (CPC) model.
There are many different affiliate types to work with and these relationships are facilitated by a merchant joining the network and using the promotion tools available. In every case the affiliate takes the risk of sending you traffic at no cost to you as you only have to reward them if their traffic completes a purchase.
- A consumer visits an affiliate's website (for example a shopping portal or directory)
- The customer finds a product (or retailer) and clicks the link to be taken to the merchant's site to review or purchase (this click-through stores a network cookie on their PC). *
- The customer completes the sale online. Tracking software records the key purchase data such as sale amount, IP, date and time, etc and reports this to Affiliate Window. The customer journey has now concluded.
- The merchant is able to allow a period of 'grace' to consider the sale complete and pays commission due to the affiliate for sales generated.
About Affiliate Window
Affiliate Window handle over 750 merchants, ranging from blue-chip brands such as Dixons, Boots and Vodafone, to niche specialist retailers looking to grow their online presence. The network is committed to developing market-leading technology to assist the performance of both merchants and affiliates.
Since 2000 Affiliate Window has been dedicated to the growth and development of the affiliate market place, in particular ensuring affiliate marketing becomes part of an integrated marketing mix for all merchants. We recognise the importance of generating incremental growth for our merchants, whilst ensuring our affiliate partners have the best possible tools and services to succeed.
Affiliate Window has over 75,000 registered affiliates in the UK. They range from niche content sites, with discreet audiences, to major shopping comparison sites and incentive scheme operators.
The value of affiliate marketing
Online shopping has been predicted by to account for 40% of all UK retail sales by 2020*. Currently households spend 10% (£980) of their annual shopping budget online typically on holidays, electronics, clothes and gifts items.
Affiliate marketing in the UK grew by an estimated 45% during 2007, taking the total value of online sales generated by this channel for that year to over £3 billion**. With a conservative estimate of commissions and fees paid out to affiliate networks amounting to £186 million, an increase of 40% on 2006. This covers both the affiliate commission and network override.
The same report** found that UK merchants involved in affiliate marketing drive 16% of their online sales via this channel and that 78% of them expected to be "more reliant" on affiliate marketing by 2009.
In light of these statistics and predictions it is clear that affiliate marketing should form part of an integrated and successful digital marketing strategy.
* USwitch – insert date and reference details
** The eConsultancy Affiliate Marketing Merchants Report 2007
