In this Affiliate Marketing Roadmap for Brands episode of the Earned Media Podcast, Anna Gita, CEO of MaxWeb, one of the fastest-growing affiliate networks, explains what affiliate programs are and how they work.
I heard Anna’s keynote at The Berlin Meet Market. She spoke about the future of the affiliate marketing industry, and I was so taken by her message that I immediately invited her to be a guest on the show. Search engine optimization consultants may also want to check out my recent podcast with former Google Search Quality engineer Fili Wiese about Google's search quality guidelines. I met him in Berlin, too.
The rest of this post is not so much an overview of my conversation with Anna, but rather an Affiliate Marketing Roadmap for success that you can use to better understand the process, informed by her presentation. What follows are answers to frequently asked questions about affiliate marketing.
What’s the difference between Affiliate Marketing and Referral Marketing?
Anna Gita, CEO Max Web, delivering her keynote at the Affiliate Meet Market in Berlin.
While affiliate marketing and referral marketing are performance-based marketing channels, affiliate marketers earn commissions for promoting products through tracking links, while referral marketers do not. Referral marketing is acquiring links from editorial content and influencers on social media.
Affiliate marketers earn money in two ways. First, they earn commissions for sending traffic to an advertiser’s landing or offer page as long as the Earnings Per Click (EPC) exceeds the Cost Per Click (CPC). Second, they earn a Payout or commission if the traffic they send converts into a sale. Affiliate commissions are typically between 5-30%.
On the other hand, referral marketing is word-of-mouth marketing that relies on digital PR, branded content, or individuals recommending a product or service to their friends and family. Google Analytics defines referral traffic as the segment of traffic that arrives on a website through another source, such as a link on another domain.
Referral links can be acquired through press release distribution, media releases, product sampling, and other marketing tactics.
The main difference between affiliate and referral marketing is that affiliate marketing is focused on promoting products and services to earn commissions, while referral marketing is the collection of inbound links through unpaid activities.
How do I hire an affiliate marketer?
There are four main ways advertisers tend to source and hire affiliate marketers:
Join an affiliate network like MaxWeb: Affiliate networks are online marketplaces that connect merchants with affiliates. You can sign up as an advertiser and search for affiliate marketers interested in promoting your products.
Use a recruitment agency: Some agencies specialize in recruiting affiliates for advertisers, almost like hybrid employment/talent agencies. You can work with one of these agencies to find affiliates who fit your business well.
Attend industry events: Industry events, such as conferences and trade shows like Affiliate Summit West in Las Vegas, Jan. 23-25, 2023, are great places to meet affiliates and build relationships with them. It is also a good idea to approach keynote speakers and podcasters who focus on affiliate marketing because they may be able to help or make suggestions.
Connect directly with affiliate marketers: If you know of specific affiliate marketers you think might be a good fit for your brand, create your affiliate program and contact them directly. But you need a way to generate tracking links to measure traffic and conversions from different affiliates. At a bare minimum, you’ll need a tool like Pretty Links.
But before hiring affiliate marketers, thoroughly vet all your candidates to ensure they’re a good fit for your brand. Look for affiliates with a proven track record, the right audience, and good work ethics. It's also wise to establish clear terms of service and expectations to ensure everyone’s on the same page.
Outside the Affiliate Meet Marketing at Arena Berlin at Eichenstraße 4, where MaxWeb CEO Anna Gita delivered her Affiliate Marketing Roadmap keynote address.
How much do affiliate marketers charge?
What affiliate marketers charge varies based on experience, niche, and demand. Some affiliate marketers who are also bloggers charge a percentage of the sales they generate, while others want a flat fee or a combination of the two.
Commissions for affiliate marketers range from 5-50%, depending on the terms of the affiliate agreement and what’s being sold. Since their cost of goods is higher, advertisers selling physical products usually pay less in affiliate commissions than digital products, where inventory and distribution costs are negligible.
Top affiliates may also demand a fee for their services over and above their commission to cover the cost of creating original, dynamic blog posts or other expenses related to promoting the product or service.
Shop around and compare rates from different affiliates to get a sense of the going rate in your industry. You can also negotiate with affiliates to see if they are willing to lower their rates or offer other incentives in exchange for a long-term partnership.
Is there any audited research on how much gross revenue affiliate marketing programs generate?
As might be expected, the amount of gross revenue generated by affiliates varies by industry, the quality of the affiliate program, and market demand for the product or service being sold.
According to a survey by the Association of National Advertisers (ANA) and Forrester Consulting, affiliate marketing accounted for roughly 10% of total US digital marketing spend in 2020. The survey also found that the average affiliate marketing program generated $20 in revenue for every $1 spent on it.
Another study by the Performance Marketing Association (PMA) that was reported in Forbes found that affiliate marketing generated 16% of e-commerce sales in the US in 2020 and that affiliate marketers generated an average of $58 for every $1 invested in their programs.
Rakuten recently reported that Year-over-Year sales (2021 to 2022) on their advertiser network were the largest for the following categories:
Latest YoY affiliate marketing sales by vertical from Rakuten.
Can affiliate marketers get sued?
Affiliate marketers can be sued in certain circumstances, and it is also possible for advertisers to be held liable for their affiliate marketers’ activities.
This is one of the reasons it can be difficult for aspiring affiliate marketers to get approved to participate in affiliate marketing programs.
Here are a few examples of situations where an affiliate marketer might be sued:
False or misleading advertising: If an affiliate marketer promotes a product or service using false or misleading claims, they could be sued by the merchant or by regulators for deceptive advertising.
Intellectual property infringement: If an affiliate marketer uses another company's trademarks, copyrighted materials, or other intellectual property without permission, they could be sued for copyright or trademark infringement.
Breach of contract: If an affiliate marketer violates the terms of their contract with a merchant, they could be sued for breach of contract.
Fraud: If an affiliate marketer engages in fraud, such as selling counterfeit products or making false claims about a product or service, they could be sued for fraud.
In their Dotcom Disclosure Guidelines, the US Federal Trade Commission says affiliate marketers must disclose any financial relationships with companies they publish links to. But this regulation is very loosely enforced, and many affiliate marketers and direct advertisers ignore this requirement.
One of the main benefits of using an affiliate network like MaxWeb is managing this risk since they vet their affiliates. But suppose you don't have the protection of an affiliate network. In that case, advertisers should carefully review their terms and ensure they comply with all applicable laws and regulations to manage the risk of being sued.
What is the highest-paying product category for affiliate marketers?
While there are always exceptions, these product categories tend to pay higher commission rates to affiliate marketers:
Digital downloads: Affiliates who promote digital media products, such as video entertainment products, virtual reality experiences, ebooks, self-paced training courses, and monthly subscriptions, can often earn a high commission rate, as these products typically have higher price points and lower distribution costs.
Software as a service: Affiliates who promote SaaS products usually earn higher commissions since software products have high price points, cost very little to distribute, and the cost of inventory is zero.
Home improvement: This category took off after the lockdown, with everyone improving their home offices. Affiliates who promote home improvement products, such as fixtures, furniture, appliances, and home decor, earn high commissions, as these products tend to be expensive.
Luxury brands: Affiliates who promote luxury brands, such as high-end fashion, accessories, jewelry, perfumes, skincare, fine and spirits, and watches, also earn a high commission rate, as these products are expensive. To check if a luxury brand has an affiliate program, search the name of the brand plus “affiliate program,” you are likely to find a landing page where you can sign up if the brand is running an affiliate marketing program.
Which country has the most affiliate marketers?
The US is home to most affiliate marketers. Other countries where affiliate marketing is popular are the United Kingdom, Canada, Australia, and, interestingly enough, Germany.
