If you attend the Affiliate Summit West in Las Vegas this January, you will be among 6,000 participants from more than 70 countries. At some point, you may ask yourself, “Who are these people?”
The answer is that they are all digital marketers, networking and finding new ways to grow in 2018. They will talk about aspects of affiliate marketing that you may not have heard of before.
At the end of the day, you will understand the size of this industry and the number of affiliate marketing models out there. It is conferences like this that expose you to different opinions and strategies to help you improve your business.
In this post, I’ll describe two primary ways to compensate affiliates – cost per sale and cost per action – and the communities around each. I will also address three important segments of affiliates: Specialized Promoters, Mega Influencers, and Amazon Associates.
cost per sale
My primary focus for the past 12 years has been on the cost per sale side of the industry. This is what I usually write about here on practical e-commerce. The affiliates I work with are bloggers, influencers, reviewers, feed users, coupons, and generic sites that rank well in search engines with perpetual content.
Cost per sale merchants are small and large online retailers with multiple channels at their disposal. Sometimes they have stores or catalogs that have been around for decades. They pay affiliates a commission based on the final sale of the product.
It is up to the affiliates to decide how to monetize. Many of them will transition to different models and eventually settle on the method that is most effective for their audience, their means, and their talents. Some want to make money instantly and some will be happy with passive income every month.
The cost-of-procedure aspect of the industry – CPA – is moving fast and is very competitive. These are scammers, risk takers who will spend money to make money.
Industry veteran Ian Fernando talks about the days when he spent $8,000 on paid search ads to earn $9,500. He had to stay on top of trends and analytics because a CPC increase could mean a huge loss in a matter of hours. The goal, at the end of the day, was to get more good hours out of bad ones.
Fernando has now moved on to white label products. Buys physical products and finds affiliate partners for the right audience to promote subscriptions or trials for them. It has shifted from the dependent side to the commercial side but has remained in the stature of the CPA. He lives abroad and runs global campaigns, like many of his fellow CPAs.
There are thousands of entrepreneurs like Fernando and hundreds of CPA affiliate networks and agencies. These offers are usually flat fee payments for sales, leads, registrations, or installs.
The current hot market is cannabis product sales and trials, says Chris Trujillo, owner of CRM BlackBox, a marketing agency. These are not the typical products offered by cost-per-sale merchants, but they do mean fast money for affiliates that have decent traffic.
Trujillo said the cannabis subsidiaries are targeting older demographics in search of pain management. As long as states continue to move forward with marijuana legalization, this hot market is likely to continue.
Other markets that do well include dating, travel, and mobile gaming. Ten years ago, it was all about mortgage loans and ringtone downloads. Cost per action affiliates have to adapt to changing markets or else they will have no income.
Cost per action affiliates have to adapt to changing markets or else they will have no income.
Another subset of affiliate marketers specialize in promoting products to specific merchant niches. The best affiliates in these categories have built communities based on their expertise in certain areas.
CJ Affiliate by Conversant Network holds 120 niches in the business category, including web hosting, business loans, and domain registrations. ShareASale, a similar affiliate marketing network, has 129 programs listed in this category. The right partner can provide solid recommendations for these products and services. Affiliates can greatly influence consumer decisions.
Lon Naylor, from Learn Camtasia, is an example of a successful niche affiliate. Learn Camtasia offers training and tools for that program. Naylor is a video marketing coach. He said he earns 43 percent of his income through affiliate marketing. His community knows him as an expert and he responds when he introduces them to new products. In some cases, when he refers customers to monthly subscription services, he enjoys continuous payments every month for the life of that customer.
Affiliates like Naylor also use networks – such as JVZoo and ClickBank – that provide easy access to authors and business owners through e-books, video guides, and training materials in thousands of different product categories. Consumers can learn how to choose a digital camera or how to play the piano, as examples.
“Major influencers” typically have specialized expertise and have relationships with thought leaders, such as conference speakers and best-selling authors. Huge influencers can have hundreds of thousands of followers, who sign up for more information through email newsletters.
These emails sometimes address offers from friends of thought leaders, who collectively exchange email lists at times and pay each other commissions based on sales. Making a deal with a hugely influential affiliate might be a game changer, but there is absolutely no guarantee.
The majority of affiliates focus on the Amazon Associates Program, launched in July 1996. Commissions are limited compared to other cost-per-sale programs, but with more than 60 million Prime members and access to millions of products, it’s usually stronger.
Shoppers may just want paper towels but end up spending more while browsing Amazon. This benefits affiliates but they still have to analyze what works best for them: slightly higher commission rates for the work or lower percentages with minimal effort.
There are still other models of affiliate marketing. Be aware of different opportunities and creative promotions as you consider options. Attend conferences and learn more about what affiliates can do for your brand and what types of affiliates are best suited.