The Affiliate Marketing Business Model

 

Affiliate Marketing is a highly cost-effective and scalable method of online marketing. Unlike traditional forms of online marketing and advertising, where advertisers pay for advertising based on impressions (CPM) or clicks (CPC), in affiliate marketing advertisers only pay for specific results or actions. These results can be leads or sales, and it is entirely dependent on the brand’s strategy and their affiliate program terms. The affiliate marketing form of pricing model is often referred to as Cost Per Action (CPA), Cost Per Sale (CPS), or Cost Per Lead (CPL). Affiliate marketing allows brands very precise control over their marketing budgets. With other paid marketing channels, where the results are not guaranteed, brands have to spend marketing budget upfront and test different campaigns hoping to arrive at their desired cost per action. With affiliate marketing brands only pay for the outcome. As an affiliate it is up to you to be effective in your promotion of the brand’s product. If you are spending time creating content, publishing ads on your site or promoting brands on social media, and you are only getting paid when the clicks convert to sales or leads, it is in your best interest to promote brands that are going to convert well for your audience. With highly targeted promotions, and by selecting the most appropriate affiliate programs, you can actually earn more as an affiliate than you can through earn other forms of online advertising, such as programmatic ad placements or fixed sponsorships. The goal of affiliate marketing is to establish a mutually beneficial relationship between the brand and the affiliate partner while allowing the brand to achieve a high ROI on marketing dollars, and also compensating affiliates competitively for the time they spend promoting the brand.