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The incentives of Affiliate Marketing
Affiliate marketing is an important tool in online marketer toolbox. Companies big and small use this method to reach new audiences effectively. The principle is simple – Company A provides incentives to everyone online to promote their product. Usually a cut of the deal is paid to the affiliate. Companies such as Amazon provide dedicated links and widgets for these partners who in turn distribute them to their audience.
Besides Amazon and other well known brands, many found affiliate marketing a profitable business in other business line such as diet and nutrition and investment tools . In many cases a small operation of two to three smart people, with strong knowledge in SEO and PPC can make a lot of money in these activities.
Affiliate marketing is in many cases more a science than art. Where everything can be measured, smart affiliate marketers optimize their efforts again and again to reach the best conversion rate possible. The ability to instantly measure every activity as well as reassign resources makes it a very dynamic business.
Some in this business are using tactics that are ethically questionable such as fake blogs and spam.
Brands are interested in creating meaningful relationships with their audience, in order to make their brand affect buying decisions.
In short, while affiliate marketing is all about one night stands with customers, branding is more like a long term relationship.
Efficiency of Social Media
Social channels are all about creating meaningful connection with current and potential customers. Unlike other channels, here the brand is acting within the personal space of the customer. That’s because people go to Facebook and Twitter to talk with friends and family, and not necessarily in order to consume content. The content they do consume is usually recommended by friends, or sent to them based on their permission (such as joining a Facebook page of a product or a brand). In social channels it is all about trust – brands can increase the trust of their target audience while engaging with them and giving them value. These channels offer many for affiliate marketers as well. Do a little test: twit several times about forex and diet and see how hoards of great looking, well endowed women follow you and offer you to get rich and fit in less than 10 days. Many find it rude.
This is the risk for brands. Let’s say that Joann, 19 yo, beautiful brunette just offered me a unique diet that will make me the hottest guy around, and when I click the link I am getting to a reputable brand’s page – how would it make me feel re this brand? Would I continue to trust it? And let say that I am looking for info about a company and see that the only mentions on twitter are by Joann and her friends – would I trust that company? And if all the raving reviews about this company are from blogs that look like fake ones – how would that affect my perception of the brand?
Brands, Short Term Relationships and Incentives
Everyone wants to make money. This is not a shocker. But there are different ways to make money. Some companies are focusing on short term gain, and some are focusing on building and maintaining a brand. The brand strategy takes time and effort. Not only that but association with spam and other ethically questionable tactics can harm brands more than the value of increased exposure gained by using these tools.
While affiliate marketers aim is to increase conversion, brands are interested in creating brand equity – meaning, making their brand count. This is a basic difference in incentives.
So while our imaginary Joann could provide great conversion rate for the affiliate marketer, the brand she is referring to might suffer from that activity even if in the short run they will sell more of their products. And while it was always true, the trust based system of social media increases the potential damage for brands.
So What Can You Do?
It all boils down to strategy. If your company doesn’t care about branding – affiliate is the way to go. If branding is crucial, but so is affiliate marketing, consider separating brands, or find ways to impose at least some guidelines on your affiliates. It’s tricky but feasible. As long as you know what you lose and what you gain in each strategy, you will be able to find the best way to grow your business.