Is Affiliate Marketing Worth It?

Everything you need to know to start an affiliate marketing program for your startup business.

From influencer partnerships to high-traffic media publishers, affiliate marketing is a cost-effective way to generate revenue, reach new audiences, and pay for results - not fluff. 

As the marketing landscape evolves, affiliate marketing continues to grow, with global spending expected to reach $15.7B in 2024.Recent data also shows that 16% of online orders in the United States come through affiliate marketing. Whether you're just starting your affiliate program or are looking to optimize and scale, No Revisions is here to build and develop a data-backed strategy, curated for your unique community, and most importantly - converts. But before jumping in, let's break down the basics of affiliate marketing.

Is Affiliate Marketing Worth It?

The short answer is yes. Affiliate marketing (when done intentionally with SMART goals in place) can drive immense revenue, traffic, brand awareness, and more for your business. A well-managed affiliate marketing program can become a leading source of income and traffic for your business through partnerships with influencers, media publishers, and review and coupon sites when viable.

But What is Affiliate Marketing?

Affiliate marketing is a type of marketing designed to entice content creators, media publishers, and other partners to promote and link to your brand's website in return for a commission on a sale or lead. 

Essentially, you're paying a referral/finder's fee on the sale your partner is helping to provide. Therefore, your ROI increases as you typically only pay partners for trackable conversions. These conversions could come from an Instagram story link, a linked keyword on a high-traffic blog post or article shared by a media publisher (think online magazines), or even a custom coupon link on a review site (think Capital One coupons). 

Flat fees are associated with more significant partnerships, but a small and effective program can be built through gifting, tapping into an affiliate network, and lead generation efforts.

Is Affiliate Marketing Right for Your Business?

Potentially! Ask yourself some objective business questions before embarking on the affiliate marketing journey.

• What's your customer retention rate? When a customer consistently contributes to your business's profitability (recurring customer/can authentically sing your praises), covering the recurrent commissions becomes more manageable. Additionally, as you reduce expenses related to acquiring new customers, you gain the flexibility to provide more generous commission payouts.

• What's your profit margin? Can you pay a (4-12%) commission cash fee on each sale? Many affiliate partners increase sales through custom coupons. Can your business give a discount and provide a commission on each sale while still generating a profit? Commission fees can vary, but upfront costs typically involve gifting or discounting your product or service so a new affiliate can start creating content/testing the product.

• Do you have access to good-fit affiliates (creators/publishers whose target audience is your own)? Have you spent time cultivating a community online? 

• Does your team have the capacity to manage an affiliate program? Affiliate programs perform best when nurtured over several months/years. Once an affiliate partner is in the program, you'll continue to develop a relationship with them, enticing them to link to your site more often organically.

• Is your product or service a good fit for affiliates, or would a referral program work better for your business? Affiliates typically sell to people they do not know (website traffic/social media followers), and referral programs aim to target personal relationships (family/colleagues/friends). Would your product or service perform well for affiliates? Analyze your market. 

How to Analyze Your Affiliate Marketing Competitors

• Who are your direct competitors? Identify at least two competitors with affiliate programs and two businesses outside your direct competition but with a similar target audience - this allows you to identify potential new affiliates and community members. Next, examine how each competing program structures affiliate commissions, their affiliate partners, and their affiliate campaigns.

• How are your competitors recruiting affiliates? Recruitment, developing relationships, and training your affiliates are all integral parts of a successful program. Investigate your competitor's application process, any lead magnets they may offer, their terms and conditions, and creative assets or coupons they may provide.

• What's their promotion strategy? Examine how your competitor's affiliates promote their links (Instagram Stories, Pinterest Posts, Blog Posts, LinkinBios, Sub Publishing Sites like LTK and online Magazines). Is your competitor also using their affiliate's content on their channels? Is your competitor resharing their affiliates's content? Investigate the link/URL to identify which affiliate marketing software your competitor uses.

How to Set SMART Goals, Budgets, and Commission Structure for Your Affiliate Program

Once you've completed a thorough competitor analysis, you can identify potential opportunities in the marketplace for your affiliate program. What was your competitor doing well, and where can you find an edge? These questions will help you develop a sustainable affiliate strategy.

• Create SMART Goals: Develop a set of (specific, measurable, attainable, relevant, and time-bound) goals for your program. For example, "Recruit and onboard two new influencer affiliate partners with proven success for a competitor by the end of the month." Learn more here.

• Set a Budget and Commission Structure: Analyze your profit margin to decide how much wiggle room you have for commission structure. We suggest starting low, but not too low, as you'll want to entice affiliates but leave yourself room to increase commission for priority partners. This could be anywhere from 4-10% for retail partners and over 20% for SaaS. Also, consider your AOV and margin, including discounts, as most affiliate partners perform best when offering a custom coupon. We also suggest setting a monthly gifting budget. Remember, the best affiliates are partners who genuinely love your product or service - they’ll need to try before they buy.

How to Choose an Affiliate Management Software or an Affiliate Marketing Network

The next step on your affiliate journey is choosing either a management software or a marketing network. To provide custom links, track cookies and progress (how your affiliate will be tracked online to deliver commissions), ensure timely payments, and organize and recruit partners, you'll need to join one or the other. What's the difference? 

Affiliate Marketing Networks:

• Facilitate Connections: An affiliate marketing network is an intermediary platform that connects your business with affiliates. Think of them as a liaison.

• A Network of Affiliates: The network already has a pool of affiliates, and you can tap into this existing network to find potential affiliates.

• Third-Party Oversight: They provide third-party oversight, handling tracking, reporting, and commission payments. Their software facilitates tracking clicks, conversions, and sales generated by affiliates.

• Commission Structure: Typically, the network charges merchants a fee or percentage of the affiliate commission for using their services. This is in addition to the commission paid to affiliates.

Affiliate Management Software:

• In-House Management: Affiliate management software is a tool to manage your affiliate program in-house without relying on an external network.

• Direct Relationship: You'll directly interact with your affiliates, recruiting them independently rather than relying on an existing network.

• Customization and Control: Affiliate management software can sometimes offer more control and customization options. You can independently set commission structures, design affiliate programs according to your needs, and maintain control over your data.

• Cost Efficiency: Affiliate management software can be more cost-effective, as you pay for the software but avoid the additional fees charged by affiliate networks.

Before choosing a software or network, get honest with your budget and bandwidth. Affiliate software is fantastic for a-la-carte and DIY programs as your team will have direct control over everything - but this means every part of the affiliate process (recruitment, onboarding, relationship building, coupon codes, tracking, payment) must be done manually. With affiliate networks, a well-versed liaison handles everything. They also have a deep Rolodex of trusted affiliate partners and understand the affiliate landscape. This option is excellent for a business with very little bandwidth but a larger budget, as networks charge either a standard monthly fee for their service or a portion of every commission. A few of our favorite options are Awin or Share-A-Sale for management software and Impact for a network.

How to Recruit Affiliate Partners and Start Generating Sales

Evaluate your current customer base and community before creating a cold-call recruitment strategy. Do you have customers with an active and engaged social media following that aligns with your ideal target demographic? Do you have repeat customers who are bloggers or content creators already engaging with your brand online? Does your business offer a Facebook group? Where is your company already tapped in, and how can that community support future sales? Check out these examples of high perfrming affiliate marketing publishers who use tactics like blogging and YouTube. Or read this overview of several well-known brands featuring affiliate programs.

• Determine what types of affiliates you'd like to work with.

• Influencers (Instagram, TikTok, Pinterest, YouTube, etc.)

• Bloggers

• Media Publishers/Online Magazines

• Coupon Sites

• Review Sites

• Write Terms and Conditions and Create an Editable Contract: Before connecting with potential affiliates, write your terms and conditions and a contract that can be repurposed/edited for all future partnerships. We recommend examining your competitor's terms and conditions, outlining specifics (do's and don't perimeters for affiliates) in your contracts, and partnering with your legal team. This contract should be signed by all affiliates before confirming a partnership. Not sure where to start when creating a contract?  Find a free template here.

• Design Recruitment Funnel and Onboarding Process: A successful program starts with getting the word out, authentically onboarding and developing relationships with affiliates, and smooth processes. We recommend marketing your program on your site and social channels, diligently screening everyone who applies, and creating a workflow from first contact to post-campaign. Ensuring your affiliates are set up for success is critical to generating sales. Find a list of recruitment tactics here.

• Create a Potential Partner List: Start generating a list of potential partners from each category you'd like to work with. You can begin researching their previous partners, results, and potential opportunities.

• Reach Out to Potential Affiliates: Once you've developed a list of potential partners, start reaching out with customized messages that outline the specifics of your program. This could be their first point of contact with your business, so make an authentic first impression.
  

How to Analyze Affiliate Marketing Success in Your Business

Now that you've enrolled a few affiliate partners, connected with them on campaigns, and set them up for success with custom coupon codes, assets, and gifted or discounted products, you can start analyzing returns. Confirm before partnering with affiliates that your tracking software is up to date and recording correctly. We suggest connecting Google Analytics to your affiliate software and running a few test campaigns behind-the-scenes.

Although the most critical ROI metric is revenue through affiliate links, you'll also want to analyze link clinks per affiliate, conversion rate, on-site traffic, and the standard social media metrics such as engagement and new followers. Continue to track each campaign through the set cookie window (typically 30 days), and keep an eye on your attribution window for detailed results. Learn more about analyzing affiliate results here.

Why Hire No Revisions to Manage Your Affiliate Program?

As seasoned affiliate managers, our team provides tested strategies to meet you exactly where you are. New to affiliate? Let's build your program together. Have you been in the affiliate game for a while but want to take your program to the next level? We'll audit and expand your program in no time. Want an a la carte strategy you can implement yourself? That's what we're here for - delivering results, not fluff. View our affiliate marketing services here.