This weeks guest post is from Isabella Marco, Agency Commercial Manager and Trent Olsen, Head of Sales at Commission Factory, Australia’s leading Affiliate Marketing program providers. The team give us the rundown on everything you need to know about Affiliate Marketing.
What is Affiliate Marketing?
Put simply Performance or affiliate marketing is where a publisher is rewarded by an advertiser in the form of a commission or bounty, only if the traffic they refer converts (completes a transaction/desired action e.g. signup).
Affiliates, also known as publishers promote a merchants products or service and get compensated for every sale they send to the merchant.
CPA (Cost Per Action) within the affiliate channel means the publisher who received the last click before the sale is made is rewarded with the commission, this means the merchant only pays when a sale is made. Affiliate Marketing works purely off a CPA model rather than CPM or CPC which means it can generate vastly superior ROI than these other channels.
In a basic affiliate model, you have the merchant who would be your client typically an eCommerce business, the consumer and the affiliate which could be anything from a content or blog site to a cashback or loyalty program (like Qantas Frequent Flyer or Flybuys).
The Merchant uses the affiliate marketing channel to drive new customer acquisition whilst incentivizing existing customers to transact and increase basket value. Merchants have the opportunity to build relationships with affiliates who have audiences of their own with untapped consumers that they now have the ability to reach.
The affiliate (publisher) uses the channel to monetise their site and create a new revenue stream. Many successful affiliates started off using just a few affiliate text links to start driving a small amount of revenue, some of these sites are now widely known online publications. Who are these affiliates/ publishers you may ask? Well, they could be anyone with a presence online some of the main types include Loyalty, Price Comparison, News, Content, Bloggers, Social Media, Product Reviews, Mobile Apps, Sub-Networks, Offer Driven and Cashback. Plus many niche affiliates that don’t fit into any categories, pretty much anyone with an audience can be an affiliate.
The consumer probably unknowingly shops through the affiliate channel, however, is satisfied with their purchase as they have most likely saved money or have been influenced by someone they admire.
For all this to take a place the sales must be tracked and reported. This is where an Affiliate Marketing Network comes into the picture, they facilitate not only the payment and tracking but most importantly the relationship between the Merchant and the Publisher. Almost any online business can be enhanced by running an affiliate program with the support of the right network, though the most common categories for Merchants are Retail, Clothing and Fashion, Beauty and Travel.
What’s the Affiliate Marketing Penetration in Australia?
Affiliate marketing in Australia is currently reaching its early stages of maturity. The market has seen expediential growth over the last 10 years and is now evolving into a more complex landscape. The growth is driven in large part by the measurable and effective ROI when compared to other channels. According to a study by IAB Australia, just over 1 in 5 of merchants are now receiving over 20 percent of their new customers from the affiliate channel.
Australia’s largest Affiliate Marketing network (Commission Factory) currently facilitates the Affiliate programmes for over 50% of Power Retails Top 100 eCommerce clients in Australia.
What’s an Affiliate Network and who are Commission Factory?
An affiliate marketing network connects the Merchant with the Affiliates and facilitates payment and tracking. They act as the mediators and provide tracking technology that reports all clicks and sales through the affiliate channel, along with a huge amount of other data and insights. They also offer a host of affiliate tools to get the most out of the channel including; hosting creatives and data feeds, technical support, customizable reporting, looking after affiliate payments, account management services and most importantly access to affiliates. Partnerships are at the core of Affiliate Marketing and affiliate networks like Commission Factory foster those relationships.
How do clients benefit from the channel?
Affiliate marketing is one of the most powerful and cost-effective customer acquisition tools available to anyone in the eCommerce space. The client decides what commissions to pay and which affiliates they would like to work with and unlike other channels expenses are low whilst providing excellent ROI. The average ROAS (return on Ad-spend) we see across Affiliate Marketing in Australia is approx. 15 to 1.
The main benefits include and are not limited to:
- Increased traffic, brand exposure and sales
- Low risk, low cost, high return
- Positive cash flow and spend
- Accountable marketing campaigns
Today nearly all online retailers have an affiliate presence and if they don’t it’s potential the revenue they are missing out on as many of their main competitors almost certainly do.
About the Authors
Isabella Marco is the Agency Commercial Manager at Commission Factory. With a background in Marketing and Commerce, Isabella is key to the development and delivery of the company’s commercial strategy.
Trent Olsen is the Head of Sales and Partnerships for APAC at Commission Factory. With more than 15 years of experience in Sales and Marketing Management, Trent is passionate about creating solutions that help a business grow.
Get in touch with the team at Commission Factory if you’d like to learn more about joining Australia’s largest Affiliate Marketing Network.