What’s the best way to set up an affiliate marketing program as an eCommerce brand?
Is it even worth your time, money, and resources to add this task to your already full plate?
We’ll spill the beans on all these questions in this complete guide to affiliate marketing for eCommerce businesses and merchants.
You’ll learn what affiliate marketing is, how it works, and why it’s in your brand’s best interest to set up an affiliate marketing program ASAP.
But before we walk through the step-by-step creation process, let’s make sure we’re all on the same page with a few basics:
What Is Affiliate Marketing?
Affiliate marketing is a strategy brands use to get content creators to promote their brand and its products/services to their networks in exchange for a small commission.
According to the latest affiliate marketing research [*][*][*][*][*]:
- The affiliate marketing industry is expected to reach an estimated net worth of $12 billion in 2022.
- Over 80% of brands have affiliate programs, and affiliate marketing generates 5% to 25% of online sales for big brands.
- 90% of merchants consider affiliate marketing an “essential” part of their overall marketing strategy.
- 40% of US merchants report affiliate programs as their top customer acquisition channel. Since 2020, 30% of shoppers new to a brand bought products through affiliate links.
Besides selling their products, brands can pay affiliates to drive leads to their website, get new shoppers to sign up for their loyalty and rewards program, register for a product demo, and much more.
Since they’re working on commission, affiliates have an incentive to help your brand reach its goals and exceed its marketing targets.
Who’s Involved In An Affiliate Marketing Program?
Every affiliate marketing program has these key components:
1. Sellers, merchants, eCommerce brands, etc., create or sell the products. They include major retail brands, independent eCommerce businesses, smaller sellers on Etsy, and more. This group fulfills the orders affiliates bring in and pays the affiliates their commission.
2. Affiliates promote your brand and products. Affiliates come from all walks of internet life; they might be freelance marketers, content creators, or social media influencers. Affiliates feature a brand’s products on their website, social media channels, blog, YouTube videos, and via other types of content. They may even run their own paid ads on your brand’s behalf.
3. Consumers in your affiliates’ network. These potential customers will see your products and follow the affiliate’s link to purchase them (or make a different type of conversion when they get to your site).
4. Affiliate Networks (optional). While your brand can use affiliate marketing software to track your program (more on this later), many decide to outsource this task to an affiliate network. They’ll do all the heavy lifting here, so you can keep running your business.
So now that you know all the key players, let’s talk about:
How Affiliate Marketing Works for eCommerce Brands
If you do a quick Google search for how affiliate marketing works, you’ll find billions of results for how to become rich as an affiliate marketer. However, the process is a bit different when you’re a merchant.
So here’s how affiliate marketing works for eCommerce businesses:
1. Brands Create an Affiliate Marketing Program
Once you iron out the details of your affiliate marketing program (more on that later!), your brand can announce its affiliate marketing program to all interested parties.
Customers who love your brand, influencers, marketers, and well-established affiliates can then request to become an affiliate of yours. You can also recruit affiliates whose audiences overlap with your target customer.
2. Affiliates Start Promoting Your Brand and Its Offerings
Once approved for your program, your brand will issue each affiliate a unique referral link. This special code is how your brand will identify which affiliates are responsible for driving traffic or encouraging sales.
Every time an affiliate promotes for you, they’ll include this unique referral code in the link their network will click. Affiliate links often look like this:
https://www.yourbrand.com/product-category/item/?a=UniqueAffiliateCode
Affiliate network software automatically generates special affiliate URLs, which can be customized per affiliate and campaign. These links send users to the specified location on your brand’s site, which might be a particular product page, sign-up form, etc.
Here’s the most important part:
Once clicked, the affiliate link stores a tracking cookie in the user’s browser.
3. Consumers Take Action; Affiliates Get Credit
When a user clicks an affiliate link, they’ll be directed to your brand’s website.
If they make a purchase or follow through on one of your conversion goals thanks to an affiliate promotion, that affiliate will receive credit for the outcome.
The cookie will tell your brand which affiliate referred the shopper to your site.
These cookies typically expire after 30 days. So shoppers don’t need to make a purchase right away; as long as they do so within that 30-day window, the affiliate will receive the commission.
A successful conversion in most affiliate marketing programs is generally defined as a customer making a “qualifying purchase.”
But it can also include other conversions, like we mentioned earlier. You can ask your affiliates to get people to sign up for a webinar, join your email list, write a product review, etc.
If you’re using affiliate software or an affiliate network, all these transactions will be automatically recorded for you.
4. Your Brand Pays the Affiliate
So how do affiliate marketers get paid?
Brands have many options to “reward” their affiliates for a job well done. Iconic brand Target gives their affiliates a flat 8% commission on every qualified purchase made from an affiliate link, for example [*].
The most common affiliate commission structures include:
- Free or discounted products. A rare model, you may be able to entice affiliates to promote your products if they receive them for free first.
- Pay-per-sale (the most popular affiliate marketing model). Affiliates receive a commission for each sale they generate.
- Pay-per-click. Affiliates get paid for clicks they generate, regardless of whether a sale was made.
- Pay-per-lead. Affiliates earn commission based on the number of leads they generate for your brand.
As you can see, different payment models may work better at different times in your brand’s growth strategy. For instance, if you’re launching a new product, you may want to drum up extra leads and clicks before launch day. When your product hits the proverbial shelves, you can switch your model to pay-per-sale.
It’s all about finding the best incentive and using it at the right moment.
Also, many affiliate marketing programs operate on a “last-click” model, which states that the last affiliate to refer a customer scores the commission. But you can certainly tailor your attribution model as you see best.
Makes sense, right?
So now let’s get into:
How Affiliates Market Your Brand’s Products (And Why This Matters)
Your tribe of affiliate marketers has loads of ways to promote your brand and its products. These are the most popular:
Onsite Affiliate-Created Content
Content creators often partner with brands in the same niche to discuss and promote products their audience would find helpful, valuable, and relevant.
For example, a home decor website might create and share content about emerging design trends, new furniture, decorating tips, what to score at an upcoming flash sale, etc.
Partner with a content creator and your products might be featured in their:
- Blog posts
- Product reviews and comparisons
- Product roundups and gift guides
- Tutorials and how-to’s
- Email newsletter
- Hype posts to get readers excited about new product launches or collaborations
All this content helps your brand rank higher in search engine results pages, driving traffic and warm leads to your store.
Social Media and Influencer Marketing
An influencer is a person, brand, or account that has a large following and holds a lot of sway over their audience. They can motivate those in their sphere of influence to take action, especially if they’ve already done so themselves.
Influencers promote their user-generated content (UGC) on social media sites like Instagram, YouTube, TikTok, Twitter, etc. They’ll feature a product and add their affiliate link for their followers to check out and buy using:
- Social media posts
- Live videos
- Account takeovers
Marketing on social media is now more powerful than traditional advertising, thanks to the rise of UGC and social media influencers.
According to stats, 74% of consumers trust their social networks to guide them toward purchase decisions. And a staggering 49% of people say they rely on influencer recommendations.
This is a dream come true for brands since influencers have a captive audience that’s already interested in what they have to say and promote. These consumers will be more open to clicking whatever links their favorite influencers share.
Videos (YouTube, Twitch Streams, etc.)
Tutorials, product reviews, unboxing videos, and hauls are huge on video platforms like YouTube and Twitch.
Streamers here will feature your products or use them during demonstrations and tutorials. If watchers want to achieve the same results, all they have to do is click on the affiliate URLs in the video descriptions or streamer bios to snag the same products.
Famous fitness guru Caroline Girvan links her Amazon affiliate store in every workout she posts on YouTube. Her followers can see the products she recommends and immediately purchase them from her storefront.
Podcasts
Podcasters hoping to monetize their content often turn to relevant affiliates their audience will respond to.
StarTalk, a popular podcast hosted by Neil deGrasse Tyson, sometimes offers listeners 10% off a Squarespace website with code STARTALK10. This unique affiliate promo code tells Squarespace where that traffic (or new customer) came from and incentivizes listeners with a discount.
Product Review/Comparison and Mass Media Sites
The perks of affiliate marketing have inspired many entrepreneurs and mass media companies to make it their full-time business.
Take Wirecutter for example.
The New York Times bought the consumer-focused site in 2016, and it now attracts around 12 million readers a month. Consumers get access to the latest product news, reviews, deals, and expert buying advice.
Wirecutter makes it very clear that they’re part of several affiliate marketing programs at the top of their page, which includes earning commissions from Amazon, Best Buy, and more.
According to The Wall Street Journal, Wirecutter’s affiliate program has been so lucrative that it earned The Times a whopping $42.8 million in revenue just in the second quarter of 2021 alone.
How? Because consumers can find product recommendations, holiday gift roundups, daily deals, and product comparisons across every market niche. And Wirecutter gets a piece of that action when consumers click their affiliate links.
It’s no wonder so many entrepreneurs are creating their own niche-specific product comparison sites like this. If your products are featured on these sites, you’ll boost brand awareness and traffic to your store. Further, if your products outshine the competition, your shoppers will spend less time researching, and you’ll shorten their time to purchase.
Display Advertising
Affiliate marketers with strong advertising or PPC backgrounds often run paid ads for the products they’re promoting. They’ll run these campaigns across different channels, monitor for the best outcomes, and then scale and repeat.
Coupon Sites
Coupon sites are trending among affiliate marketers since everyone likes to score a deal for their online purchases. Here, affiliates post their links on coupon sites offering shoppers a discount. Once shoppers click that link, they may or may not earn the discount; however, the affiliate will still place that tracking cookie in their browser.
As you can imagine, coupon sites create the potential for fraud, as many of the promo codes shoppers click don’t actually work. These affiliates will earn commissions under false pretenses, which may hurt your brand’s online reputation. You’ll need to vet your affiliates about the channels they use to avoid this (more on this later).
All these options give affiliates myriad ways to promote your brand and its products. So setting up an affiliate marketing program is like having an army of marketing gurus in your corner working day and night on your brand’s goals.
4 Benefits of Affiliate Marketing for eCommerce Brands
So why should your eCommerce brand partner with a few affiliates? Because it can:
1. Optimize Every Customer Touchpoint Along Your Buyer’s Journey
Affiliates can promote your products everywhere your customers happen to be -- without being sales-y or pushy. Even though your brand may be optimizing these channels, they’ll feel more organic when your customers see your products “in the real world” of their social media feeds or favorite blogger’s newsletter.
Your brand will capture more traffic, boost sales, earn loyal customers, and so much more. And the best part?
Affiliate marketing is super low-risk.
You don’t have to spend any time or energy making this happen. Affiliates will take on all the heavy lifting for free until their efforts pay off. You only pay the affiliates when they contribute to successful conversions (which you’ll outline ahead of time).
You can also choose which products affiliates are allowed to promote to protect your profit margins from falling too low (more on this later).
2. Laser-Focus Your Marketing To Decrease Spend and Boost ROI
Using affiliates who already have an audience that trusts their advice means your marketing efforts have a higher chance of converting.
Think of it this way:
Your shoppers already trust their favorite trainer’s fitness advice. So they’ll be more likely to buy the post-workout drink, dumbbells, and yoga mat she uses and recommends -- especially when she provides the links to these products for them.
3. Expand Your Brand’s Reach and Awareness
If you’re looking for new customers (and what brand isn’t?) or hoping to break into a new demographic or market, affiliates are one of the best ways to boost your brand awareness.
Let’s say you built your brand on selling women’s sneakers. But now you want to start adding kids’ shoes to your product lineup.
You could market your new kids’ line to your existing customers. Yet there’s no telling whether your female customers will be interested in them.
In this case, your brand could partner with affiliates in the parent space. These affiliates will get the word out to moms and dads and tell them to add your brand to their radar.
You’ll reach never-explored audiences and get more consumers familiar with your brand, both of which help generate more interest and, eventually, revenue.
4. Gain Valuable Market Insight
If you want to get the most out of your affiliate marketing program, it’s best to partner with affiliates who create content on your least-utilized platforms.
For instance, if your brand devotes most of its marketing spend to Instagram or Facebook, adding affiliates who primarily use YouTube and Twitch can help round out your outreach efforts.
Further, if your affiliates start boasting incredible conversion metrics on these channels, your brand may want to consider focusing more on those platforms.
On the other hand, if you notice less-than-stellar results on these other affiliate marketing platforms, you’ll have concrete evidence about what your core customers don’t respond to.
No matter the outcome, all of this intel will strengthen your marketing strategy moving forward. And all these reasons prove having an affiliate marketing program is a no-brainer.
So let’s roll up our sleeves and find out:
How To Set Up an Affiliate Marketing Program as a Merchant or eCommerce Business
Here’s a step-by-step game plan to set up an affiliate marketing program as a merchant or eCommerce brand:
1. Decide What You Want To Start Promoting
Because you’ll be giving away some of your profit as commission to affiliates, it’s crucial to pick the right products you want them to promote.
Your best bet? Choosing products with higher profit margins. This way, you give your business a little more wiggle room and avoid losing too much on the sale.
One caveat here: If you determine that your profit margins are too slim to cut another party in, affiliate marketing may not make the best sense for your brand at this time. We’ve seen too many brands spend a ton of money on famous influencers who promise to help them rake in piles of cash, but then fall short.
Crunch the numbers and protect your business first and foremost.
2. Determine Your Affiliate Goals and Commission Pricing
What are you hoping to accomplish with an affiliate marketing program? Do you want to drive more leads to your site or sell out preorders for your next product launch?
Your marketing goals should influence the targets you set for your affiliate marketing program. And that includes your budget constraints.
So how much room in your marketing budget can you spend on affiliate marketing? Stats show the majority of brands allocate around 10% of their marketing budget on affiliates.
To figure out a commission model that makes sense for your business, you’ll need to take a few numbers into consideration, such as your budget, average customer lifetime value (CLV), average order values, the potential revenue these affiliate sales may bring in, and more.
Industry averages show the most common payment models for affiliate programs have commissions between 5% and 30% per sale.
In the image above, you can see how affiliates in the Amazon Associates Program earn between 1% and 20%, depending on the products.
Consider experimenting with a few different payment models (like we discussed earlier) and commission rates until you learn what works best for your brand.
3. Research Affiliate Management Apps, Software, and Services
You’ve probably been wondering how you’ll manage the affiliates in your program while also running your eCommerce business. Luckily, you don’t have to take on this task if you don’t want to or lack the time, expertise, or energy.
Affiliate management software handles all the technical aspects of your affiliate program, from recruiting affiliates and generating their unique URL links to tracking their commissions and paying them out.
Many companies also provide analytics and reporting tools to help brands evaluate the effectiveness of their affiliate programs (so they can improve them).
Another benefit of utilizing this assistance? Protecting your brand from affiliate fraud.
Fraudsters can engage in cookie stuffing, use bots and click farms, or even make fraudulent purchases with stolen credit cards to boost their commission numbers.
So the two most popular options here include:
Affiliate Networks
How they work: When your brand signs up to partner with an affiliate network, that company will act as a middleman between your brand and their network of affiliates.
Recruiting affiliates: Your brand will have access to a “marketplace” of affiliates in the company’s network. Search for the ones you think will best speak to your target consumer, or allow affiliates to reach out to you on the platform.
The top affiliate networks typically have over 100,000 affiliates. Awin boasts over 200,000 affiliates, CJ Affiliate has over 70,000, and Amazon Associates has almost 1 million active affiliates in their ranks around the globe.
Affiliate Software
How it works: Your brand can subscribe or purchase affiliate software to manage your program in-house. Some software may simply plug into your store for easy startup. The Shopify App Store has almost 250 affiliate marketing apps you can install and try out, for example.
Recruiting affiliates: Take this route, and your brand will need to recruit affiliates all on its own, which may leave very little room to form meaningful partnerships. That’s why many brands that use affiliate software decide to hire an Affiliate Manager.
4. Select the Right Affiliates for Your Program
A brand’s affiliate program is only as good as its affiliates. And if you partner with the wrong affiliates, you won’t see the strong return you may be hoping for.
Find affiliates in your niche to make the most of your program. These affiliates or influencers already have audiences who may be interested in the niche your products fall in.
For example, if you sell whimsical cat trees, you’ll want to partner with affiliates in the pet space and cat-parent world. This may include cat food companies, cat toy reviewers, and even influencers who have social accounts dedicated to their furry loves.
To do this:
- Perform keyword searches of your products and related items to see which websites are also talking about them. Product review sites, niche blogs, etc., should all pop up.
- Check hashtags on social media to see which accounts use the same search terms your brand does.
- Ask your customers if they’re interested in becoming affiliates. These people have already proven that they like your products, so they may be interested in promoting them to their networks.
- Announce your affiliate program on your website and social media channels, encouraging people to reach out to join your affiliate team.
When reaching out, make sure to mention your brand and the types of products it sells, the campaign goals you have, and the commission rate range for new affiliates. Link to your store, so potential affiliates can get a feel for what you’re selling and your marketing messages.
Finding solid affiliates is just the first step. You’ll still need to vet them to ensure your audience will respond to their promotions.
To choose the best affiliates for your brand:
- Consider the type of content your target consumers respond best to. If a potential affiliate only uses Pinterest, but your customers rarely do, the partnership may not yield any results.
- Gauge their experience, tone, and authority. Affiliates should be able to articulate your products’ features and have strong copywriting skills (or video presentation chops). Try to find people whose opinions are highly respected in their niche.
- Assess their outreach channels. If affiliates mainly promote from their website, is it in working order? Is it thoughtfully designed with user experiences in mind? Littered with annoying ads? What about their Instagram? Are there carefully curated posts or a mix of inappropriate or off-brand content you’re not enthused about?
- Scope out their community engagement. Potential affiliates must be active on their chosen platforms and regularly engage with their communities. Check how regularly they publish posts, respond to comments, or add new followers/subscribers.
- Ask for their ideas. Before you commit to an affiliate, see if they have any ideas about how they will promote your products. You want affiliates who know what their audience will respond to and how to make that work in your brand’s best interest.
Follow those tips, and you should have more high-converting affiliates than bad apples. And that makes it much easier to:
5. Manage and Support Your Affiliates To Conquer All Your Goals
Managing your affiliates starts with setting the right expectations.
So if you’re not using an affiliate network, you’ll want to create terms of service for your affiliates. This clearly outlines the rights, rules, performance evaluation metrics, and duties of all parties involved to help avoid disputes later down the road.
Monitor your affiliates and check in quarterly. It’s not the best idea to take a set-it-and-forget-it approach to your affiliate marketing program. You’ll want to monitor key metrics to gauge the performance of those in your program, such as:
- Your total affiliate sales
- Sales per each affiliate
- Average order value vs. average order value from affiliate marketing
- Payout-to-sales ratios
- Gross profit margin
Regularly communicate with your affiliate network to support their needs, update them about brand goals and news, and hear feedback. You want to build strong relationships with your affiliates as if they were members of your marketing team.
Create supporting content for your affiliates to use on your behalf. This might include whitepapers, product demo videos, tutorials, webinars, infographics, preferred hashtags, landing page copy, etc. Anything that could make selling your products easier should be in your affiliates’ hands.
With all that checked off your to-do list, you’ll have a well-oiled affiliate marketing machine working around the clock to exceed all your goals. Kudos!
Now Your eCommerce Brand Is Ready To Set Up The Best Affiliate Marketing Program!
As you’ve seen today, affiliate marketing is an eCommerce brand’s best friend. It can help your business drive more traffic to its site, boost brand awareness, generate sales, and bring in more revenue.
When these new shoppers reach your store, give them the confidence and trust they need to make their first purchase by adding customer reviews and ratings. Then reward them with a loyalty program that keeps them coming back for more.
Follow these tips, and your brand will accelerate growth and reach stellar heights in 2022 and beyond!
