Amazon Affiliate Marketing Program

A Brief Introduction to Affiliate Marketing for Ecommerce

A Brief Introduction to Affiliate Marketing for Ecommerce
Written by publishing team

Affiliate marketing is a promotional model that connects merchants with independent marketers who are willing to invest time and money to sell the merchant’s products.

In other words, affiliate marketing connects the company that has a product to sell with the marketer who can sell it.

Affiliate marketing depends on performance. Thus, advertisers only pay when affiliates offer a specific action to the customer. In an e-commerce context, this action is usually an online purchase, which makes affiliate marketing very cost-effective.

Payments to affiliates

The affiliate payments approach just described is often called pay per sale. It is by far the most popular form of affiliate compensation. Some estimates suggest that more than 80 percent of affiliate programs pay per sale.

Amazon has had a robust affiliate marketing program since 1996. It was one of the first programs of this kind and is now among the largest in the world.

For example, Amazon, which operates one of the largest e-commerce affiliate programs in the world, pays affiliates a percentage of each “qualifying sale.” The exact percentage varies, but according to the Amazon Associates website, affiliates can earn up to 10 percent.

The term “Qualifying Sale” (or synonymously, “Qualifying Buying”) is important in the context of affiliate marketing because the advertiser (e-commerce merchant) predetermines what constitutes a qualified sale. When an Affiliate agrees to promote a Merchant’s Products, that Affiliate accepts the Merchant’s definition of a Qualifying Sale.

Due to the interdependence of what “qualified sale” (or “qualified purchase”) means, it is important for advertisers to carefully determine how the affiliate will be paid. Returning to the Amazon program, the company determines which sales are eligible for affiliate payments.

Below are examples of what may determine a qualifying purchase.

  • The customer clicks on a particular affiliate link.
  • The purchased product must be added to the cart within one session after the above click.
  • The customer must pay for the product purchased and received.
  • The customer does not return the product.

Affiliate ads

Once an affiliate marketer understands how to get paid, he will start promoting the advertiser’s products. Within the limits of the Program, the Partner may choose any number of advertising and marketing channels, including but not limited to:

  • Pay-per-click ads placed on behalf of the merchant,
  • digital banner ads on content sites,
  • Video ads on YouTube or the like,
  • social media posts,
  • or “advertising” promotional content.

This is why some experts refer to affiliate marketing as a model rather than an advertising channel, where a good affiliate may use several promotional channels to increase sales.

The trader should also understand that affiliates strive for a strong return on investment. They spend their own money and invest their resources to generate sales. Thus they will place ads and promotions where they work best, even if it means competing with the merchant’s private ads.

The affiliate marketer will invest their time and money in promoting the merchant's products in exchange for payments on eligible sales.  Affiliates make solid revenue from the ads they place and make a living, if you will, on the difference between what a merchant pays for each eligible sale and the amount of promotion it took to make that sale happen.

The affiliate marketer will invest their time and money in promoting the merchant’s products in exchange for payments on eligible sales. Affiliates make solid revenue from the ads they place and make a living, if you will, on the difference between what a merchant pays for each eligible sale and the amount of promotion it took to make that sale happen.

Affiliate Management

Managing affiliate marketing requires both software and time. Let’s look at the software first.

Advertisers – that is, online retailers – need a way to recruit affiliate marketers, track their sales, and process commissions for eligible sales.

Effectively, these advertisers have two options. They can use an affiliate network that acts as an intermediary, connecting the advertiser with affiliate marketers, managing tracking and paying for service fees. Or the advertiser can license the affiliate tracking software to publish on their own servers or as a cloud-based service.

In this second scenario, the software will do the tracking of affiliate payments, but the advertiser will need to recruit affiliate marketers and manage the payment process.

Both options require work. This is the “time” required to administer the affiliate program instead of the program being used.

Affiliates will need to understand the target customers of the advertiser, its products, and the advertiser’s brand.

To help, the merchant can provide “talking points” that describe the brand and products. The Merchant may also create an approved advertising banner and provide graphics and advertising materials.

The merchant will likely need to answer affiliate questions, agree to some affiliate marketing tactics, and even approve individual websites where banners may appear.

And just like any other form of e-commerce marketing, the merchant marketing team will need to track performance. Does affiliate marketing generate the required return on investment? Does it support store brand?

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publishing team