Marketing on a tight budget

What is affiliate marketing?

Guidance

Affiliate marketing is a way to promote products or services through third-party publishers, known as affiliates. You pay an agreed commission when their activity leads to a specified result. These may include publishers, bloggers, comparison websites, influencers or other businesses that have access to your target audience.

You pay an agreed commission when an affiliate generates a specified outcome, such as a sale or a qualified lead. Some programmes also pay for clicks, although this is less common.

Affiliate marketing is a form of performance-based marketing because payment is linked to measurable results rather than advertising exposure alone. Before starting a programme, you should clearly define what counts as a valid result and how commission will be calculated.

What are the benefits of affiliate marketing?

There are several benefits to affiliate marketing, for example:

•    its cost-effectiveness
•    it can be a long-term investment
•    it is less risky, as there are no up-front costs for advertising on your affiliate websites
•    you don't need extra marketing staff
•    you never lose money - you only pay when an advertisement succeeds
•    you can track where your customers come from and how much they spend
•    you can determine the most successful locations for your advertising

Affiliate marketing can help you:

reach new customers
increase online sales
enter new markets
pay for marketing based on results
work with publishers who already have an engaged audience

What are the disadvantages of affiliate marketing?

Affiliate marketing is not risk-free. You may have platform fees, set-up costs, commission payments and staff time for managing the programme.

Potential pitfalls include:

misleading claims made by affiliates
poor-quality leads or traffic
lower profit margins from discount promotions
damage to your business reputation
inaccurate tracking of customer journeys

Setting up an affiliate marketing programme

Before launching an affiliate marketing programme, consider whether it is suitable for your products, profit margins and target customers. Set clear objectives for what you want to achieve, such as increasing sales, generating leads or expanding into new markets.

You should also calculate the maximum commission you can afford to pay while maintaining profitability. Choosing affiliates that are relevant to your target audience is often more important than recruiting a large number of partners.

Put clear agreements in place covering commission rates, payment terms and any prohibited activities. Affiliates should have access to accurate product information and brand assets, and they should understand the rules on advertising claims, discounts and use of your brand.

If your programme relies on cookies or other tracking technologies, make sure you understand your data protection responsibilities and explain how customer information will be collected and used.