I always like to say that Marketing is one of the few subjects which are very strongly connected to on-ground realities. Marketing is something which is supposed to be pretty logical (barring consumer eccentricities) and can be rationalized even with common sense instead of numbers. The entire field of study is based around organizing these on-ground connections, and giving them some structure.
The specific type of marketing that I wish to discuss in this post is a prime example of the same. Affiliate Marketing, in its most basic form can be compared with two common things:
1. Outsourcing – the buzz word, which means referring your own work to someone else for a fee.
2. Commission – An agent can give you a service, and will charge you a commission for the same.
Affiliate Marketing is a concept wherein a manufacturer of goods chooses third-party ‘affiliates‘ or ‘partners‘ to do marketing for his goods, and bring him business. The affiliate incurs the marketing expenses and does his best to deliver as much revenue as he can to the manufacturer, who in turn pays him based on the business he geneates.
Affiliate Marketing rose to prominence with the advent of the Information Age, with the rise in Internet penetration, Search Engines, and, – most importantly for Affiliate Marketers – Search Engine Optimization (SEO). A new, more tech-savvy breed of Affiliate Marketers was born out of SEO, giving rise to Internet-based/Online marketing, which today forms the backbone of Affiliate Marketing.
So, how does SEO get involved in this? – There are many services out there which can put up advertisements on webpages – advertisements which contain some information on the product/service being offered, and links to take a viewer to the home page of the manufacturer, where he can get more details about the product/service and then possibly purchase the same. Now, for this to happen, the ads should be present on the right webpages. For instance, you would want the ads for a Nikon/Sony Digital Camera on a website which offers product reviews on cameras (that is the most likely place a prospective Camera buyer is expected to be and might click on your ad for the camera). On the other hand, if the ad is placed on a blog which focuses on book reviews, it is completely useless since rarely would the blog readers click on the link. SEO, with its numerous analytics tools, is able to connect relevant pages together, hence ensuring that the ads are placed on relevant pages.
So, the ad is placed on the correct page, what next? The next process would be for the customer to click on it, get to the manufacturer’s page and buy something. The “affiliate” who placed the ad would be compensated for his efforts in proportion to the business he generates (different revenue models are – pay per click, pay per sale, pay per minute etc.)
The above was an illustration of how SEO-based advertisements and services like AdSense are online forms of Affiliate Marketing. Let’s see some other forms as well:
1. Advertorials (Advertisement + Editorial): There must have been instances wherein you might have read reviews of products in newspapers/magazines which have been particularly appreciative of a product you did not think was so great. There is a good chance that the review might be written by a partner/affiliate of the manufacturer, driving business indirectly for the manufacturer. Of course, there are regulations to monitor it, and you will likely find the information mentioned somewhere in the fine print, at a place you are liable to miss.
2. Public Interest Advertisements: At times, advertisements about a product take on a more neutral tone, and come with a disclaimer that they are issued in public interest. Some times, such ads are done by the manufacturer, while at other times, an affiliate might be at work.
I am sure most of you might have seen the following ad, or one similar to it, featuring Brand Power:
Other such ads can be seen on the following channel: BrandPower
I wonder how many of you thought that this was a paid advertisement? Most of the customers believe that this is a very neutral third party advertisement, meant to help buyers choose, and is completely unbiased. While I don’t directly question the accuracy of claims, I intend to point out that it is nothing but an advertisement vehicle which is available to the manufacturers to use to promote their product.
(Excerpt from BrandPwer website, taken on 31st July, ’11 – ” Brand Power is an advertising product used by leading manufacturers and their advertising agencies as a different method for promoting their brands “)
Hence, there are many means by which marketers outsource their own work to other channels/players to do it for them. These third party affiliates then promote the products/services. Perhaps the most prominent reason why marketers use this method is the rationalization of marketing expenses since affiliate programs are usually based on strongly results-driven compensation and the manufacturer pays only for the performance/sales obtained (Readers might have read the oft-repeated quote about traditional marketing – “I know that half of my advertising budget is wasted, but I’m not sure which half” )
Affiliate Marketing, especially its online version is here to stay. It would definitely be interesting to see how it grows in the physical/offline space, and what other imaginative variants of using third-party vehicles emerge out of the proverbial marketer’s hat.