If an online business has no visitors (‘traffic’), then there won’t be any sales. Therefore, it is important to identify and analyze the different sources of traffic. Most web stores receive traffic from the following channels: search engines (especially Google), affiliates, direct traffic and (to a lesser extent) via incoming links and sent newsletters.
In our knowledge base we discuss all of these traffic sources. On this page we’ll focus on affiliate marketing.
What is affiliate marketing?
Affiliate marketing is a form of online marketing where online businesses (advertisers) reward third parties (“affiliates”) for sales made by customers provided through the affiliate. Affiliates can provide these customers by placing ads from the web store on the website (s) they manage or by listing the shop in the newsletters they send. At the moment these customers place an order in the web store, the affiliate receives a fee. This is usually a percentage of the order amount, but it may also be a payment based the number of times a banner is viewed.
In most cases, there is no direct contact between the online business and the affiliate, the contact is made through an affiliate network. Well known parties are Acceleration Partners, Button & Impact Radius.
As an online business, you sign in to one of these networks and create a profile indicating what your offer is for participating affiliates (for example, 12.5% of every sales you make thanks to the affiliate) and you add promotional material, such as logos and banners. The affiliates can apply for your offer and you decide with whom you cooperate.
The affiliate network then ensures that the payments to the affiliates are properly processed and sales and leads are measured and managed with their software. Affiliate networks allow affiliates to promote multiple advertisers within one interface.
Affiliate Marketing Compensation Structure
Affiliate marketing is based on the principle of ‘no cure no pay’, which means that an affiliate is only paid if the visitors he provides actually lead to purchases. The most common remuneration structures for web stores are:
Cost per sale (CPS)
A fee is paid as soon as the visitor through the affiliate ensures direct sales in the store. The advertiser can pay as a fee a percentage of the sales amount to the affiliate.
CPC does not match the number of sales or leads generated, because a fixed amount – often no more than a few cents – will be paid per click on the promoter’s banner or text link that leads to the web store.
It’s good to realize that affiliate marketing can be a low risk additional revenue channel, but don’t get your hopes up to high: in our experience, the conversion of affiliate traffic is generally very low.
You can order a traffic scan in which the full visitor flow of your (new) web store is analyzed, from source to exit page. The report will provide you with not only the current status, but will also concretize the potential.