In order to paint a picture of the significance of affiliate marketing programs and their impact on e-commerce, picture a Venn diagram consisting of segments entitled ‘sole trader’, ‘established retail company’, ‘the world wide web’ and ‘profits.’ The point where these converge is affiliate marketing. Obviously this is an over-simplification but the point is it is a terrific example of one way the power of the internet to reach out to a potentially huge customer base can be harnessed by budding entrepreneurs.
E-commerce itself represents a marketplace continually shifting to accommodate fluctuations in market trends and customer demands. The impact of affiliate marketing on e-commerce has been immense – and it is continuing to grow. The beauty is in its simplicity – affiliate programs offer a portal for sole traders that allows them to hook into product streams relatively easily.
In a prevalent and long-established business model, retail often works by sales staff shifting products (say, cars), and then gaining a commission. The trader does not have to get involved in the costs of advertising or making upgrades to the units. For the car company, the up-front marketing is outsourced, lowering their own overheads. This ‘earn as you sell’ model is win-win for both parties, which is why it has been so readily adopted in e-commerce situations. So what would be the key elements underscoring this degree of impact?
Affiliate programs come at very little cost. For the affiliate, the products being marketing have already been created so you they need to order in stock. For the host company, the focus is to develop a community of marketeers who will be willing to endorse their products. Previously, this might have involved allocating a significant degree of budget to marketing campaigns. With affiliate marketing they can tap into affiliates’ social media community for what is effectively free advertising. It is in the affiliates’ interests to create as diverse a customer base as possible, and this is so easily done by writing positive reviews using channels like blogs, or social media platforms that can be streamlined towards tapping into worldwide markets.
In the e-commerce world, the ultimate business model is any enterprise that generates income while effectively running itself. Businesses don’t have to get involved with any sort of monitoring or management of the entrepreneurs who sign up as affiliates to their website. It is a straightforward process to set up a scheme that will flag up when a new affiliate signs up, or leads a customer to their site. Once this virtual audit trail has been put in place they will be able to see sales figures, too. Because there is no need to have any hands-on responsibility, they can let the business merrily tick over in the background, leaving them safe to consider other aspect of their business activities to focus on.
This combination of simplicity and lack of outlays is the prime reason why affiliate marketing has had such a forceful impact on e-commerce.
The whole affiliate marketing network scheme has had so much impact because this business model has arisen at a time when social media has revolutionised how we communicate with each other. Twitter, Instagram, Facebook, Pinterest and many others are all a facet of daily life for so many potential customers, meaning that vast networks already exist.
For the affiliate marketeer, advertising the products they are endorsing can be done imaginatively. For the e-commerce website, their affiliate programs reveal potentially untapped new markets.