Affiliate Marketing: The Secret Sauce of Making Money Online

In 2014 consumers in the UK spent £16.5 billion through affiliate marketing and lead generation activities (also known as performance marketing), which was more than a 14% increase on the year before  (source: Internet Advertising Bureau UK) and represents a huge but little-known about opportunity for small businesses when done ethically. However, done the wrong way it can be disastrous for your credibility, not to mention illegal, so it is vital that you are aware of all the issues before deciding whether or not affiliate marketing is a good fit for your business.

The focus of this article is on creating an affiliate marketing strategy that is ethical and legal and provides your community with added value by introducing them to the very best products and services as well as bringing in additional revenue for your business.  But first, what exactly is affiliate marketing?

What is Affiliate Marketing?

Affiliate marketing, as defined by Wikipedia, is “a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.” A simple example of this that most people will be aware of is the Amazon Associate Programme which was launched in 1996 and rewards participants monetarily when an item is purchased from amazon.com using a trackable link. At Chat Marketing we are registered for this programme, so for example if you purchased a book that I recommended by clicking on an affiliate link that I provided, then I would receive a small commission from Amazon for the sale (approximately 5% depending on the item purchased).

It is important to note that the end customer (the person who buys the book in the example above) does not pay any extra for purchasing using an affiliate link, rather than going directly to the Amazon website and purchasing from there. The commission is paid by the company operating the scheme from their profits.

When recommending products and services that you trust and use yourself, it is essential to disclose any affiliate relationship. For example I could talk about ConvertKit (disclosure: we are affiliate partners with this company) and say how impressed I am with the software and how simple it is to use, because I genuinely love the product and would be talking about it even if they didn’t have an affiliate programme; but I also need to disclose the fact that an affiliate relationship exists between us. Done correctly, this is a win-win for both parties! You get introduced to a great product and if you like what you see and you decide it is a good fit for your business, then I receive a commission from the company at no additional cost to you.

Where problems arise though is if a blogger or any other online content provider tells you Company Z’s widgets are the best thing since sliced bread, without disclosing the affiliate relationship. This is a bit of a legal minefield as laws are different from country to country and you will see plenty of examples of people getting it wrong either deliberately or by accident.

In the UK it is primarily the Advertising Standards Authority and in the US it is the Federal Trade Commission (FTC) that police the regulations relating to affiliate marketing, so it is worth checking online for further clarification if you are in any doubt about using disclosures.

Product reviews and recommendations are considered advertising if there is any reward, e.g. financial or free goods, and so advertising codes of practice also apply, and it is important that marketers are aware of this. In the US the FTC states that disclosures should be “clear and conspicuous”, so that it is obvious to the reader that an affiliate relationship exists.

What Makes a Good Affiliate Scheme?

So what then makes a good affiliate scheme? It goes without saying that you should have prior experience of the product or service and think it is the best solution available. It would be highly unethical to recommend a product you did not believe in yourself. On top of that it needs to be right for your company strategically. Obviously you don’t want to be recommending products or services that compete directly with your own products or services, so it pays to think about complimentary services. Chat Marketing does not produce an email marketing platform, so ConvertKit is a good fit as an affiliate partner, as is GoToWebinar (disclosure: we are affiliate partners with this company too), the software platform I use for creating, marketing and hosting my webinars. I use both of these software tools because I think they are the best and I recommend them to my clients too, but they do not conflict with anything that I sell.

You should also consider what resources are going to be provided to you as part of the affiliate programme to help you market the product or service. All affiliate programmes are not created equal and some are definitely better than others. The good news is that most affiliate programmes are free to join so you can join a few to see what resources are available before deciding which ones to promote to your community. At the very minimum there should be affiliate links provided for each of their products and services and display banners you can use to embed on your website or in a newsletter . Some affiliate programmes go way beyond this though and have regular promotions for affiliate partners or provide training and other marketing resources to help affiliates become more knowledgeable and promote the company more affectively.

Starting Your Own Affiliate Scheme

We have talked so far about joining an affiliate scheme of another company but you should also consider whether your own business would benefit from establishing an affiliate scheme. This was one of the things that attracted me to the Infusionsoft platform, because it also enabled the hosting of my own affiliate scheme (watch this space!), so that satisfied clients would be able to promote Chat Marketing and be rewarded for their efforts.

The benefits to the organisation are obvious as you create a sales team from your best customers, but you need to be able to provide them with the resources that they need to help them easily promote your business, or they are likely to do nothing once they have joined your scheme and you have wasted your efforts in establishing the programme. From a practical stand-point if you decide to run your own affiliate scheme rather than outsource it to an agency or use a service like Affiliate Window or Clickbank, you will need the services of a graphic designer to help you create compelling banners, legal advice to help you come up with a suitable terms of service agreement and software to automate the programme.

Most importantly though, before you even start creating your programme you will need a well thought-out affiliate marketing plan to make sure you are getting the most from the opportunity. What products and services will you include in the scheme? How much commission will you pay? How often will you pay out and in what way, are all things that will need careful consideration before rolling out your scheme.

Conclusion

Becoming an affiliate marketing partner can be a useful source of additional revenue if implemented ethically and responsibly but it is important that affiliate partners are chosen strategically so that they complement your business.

Creating an affiliate scheme for your own business can be a great way to grow your business but to receive the maximum benefits it is vital that the scheme is properly planned before being rolling out.