Understanding Affiliate Marketing and Its Benefits

Affiliate marketing has recently regained popularity in Indonesia. Unfortunately, not for the best. Some third parties capitalize on it for personal gain by promoting illegal trading firms. This act, of course, harms many people, despite the fact that this marketing model provides a win-win solution for all parties involved.  

What is Affiliate Marketing?

Affiliate marketing is a type of marketing collaboration in which the company compensates third parties who generate traffic to the company's products and services. The amount of commission paid to third parties will vary according to company policy. In Indonesia, the third party who does the marketing is known as an afiliator. William J. Tobin, the founder of PC Flower & Gift, pioneered the concept of affiliate marketing on the internet in 1989. Its popularity, however, only skyrocketed after Amazon launched its associate program in July 1996. Third-party Amazon associates can use the program to place banners or text links on their websites to promote products (books) sold on Amazon or direct them to the Amazon home page. When a web visitor clicks on a text link or banner to go to Amazon and buy a book, the third-party Amazon affiliate will receive a commission.  

How Affiliate Marketing Works and Benefits

Affiliate marketing is still alive and well and can play an important role in the world of online marketing. The benefits and convenience of affiliate marketing are the main draws of this marketing model.  

How Affiliate Marketing Works

Third parties who want to become affiliates can do so by going to the company's website, which has an affiliate program. Then, complete the registration process. After completing the registration process, the affiliate will usually be given a unique referral code. The code was used by the company's system to confirm if a customer made a transaction through the affiliate. Afiliator must also be able to effectively promote products or services from partner companies to entice consumers to transact. Methods vary as well because many channels can now facilitate these promotional activities. For example, writing reviews on the blog, placing banners on personal blogs or websites, and promoting on social media. There are three types of schemes commonly used by companies to give commissions to affiliates. They are:

1. Per Sales

The per sale scheme will only provide a commission if consumers from the afiliator buy the company's products or services.

2. Per Leads

The lead scheme will only provide a commission if the consumer from the afiliator completes an activity such as filling out a survey or subscribing to a monthly newsletter.

3. Per Click

The click scheme will only provide a commission from the increased number of company web visits that the affiliate brought.

 

Affiliate Marketing Benefits

Affiliate marketing can provide numerous benefits to those who run it. It is a win-win marketing model for businesses, affiliates, and customers. Advantages for the company:

• Can get creative marketing from afiliator at a low cost.
• Can save money because the company will only pay commissions according to the traffic conversion policy agreed in advance.
• Do not bear advertising costs because the afiliator is usually the one who advertises to reach a larger market.
• Can create terms and conditions to get quality visits, activity, and sales from the afiliator.
• Can create terms and conditions to minimize click and impression fraud.

Benefits for affiliates:

• Earn extra money while participating in the program.
• The flexibility of working hours and place because you can do it in your spare time and from anywhere.
• It doesn't take massive capital to prepare a marketing channel.
• Ease of establishing marketing channels such as social media, blogs, or the internet.

Consumers, on the other hand, can benefit from this program. They can usually get a direct discount on the product or service if they make a purchase through the afiliator's link.  

Tips for Choosing Trusted Affiliate Marketing and Affiliates

Despite the fact of numerous benefits provided to all parties involved, this does not imply that they are all beneficial. To run and reap the most benefits from affiliate marketing, the parties involved must first be able to conduct research. Consumers who do not want to become involved in a harmful affiliate marketing program must first conduct some preliminary research. As an example::

• Check the background of the afiliator who offers the promotion to determine their credibility.
• Check the companies affiliated with the afiliator to see if their business, product, or service is legal.

On the other hand, afiliator also need to research to not caught up in trouble because they are considered detrimental to many parties. Simple research that can be done is:

• Check the legality of the company's business to find out whether the company has an official operating license.
• Try the company's products or services to ensure the authenticity of their products or services and the benefits they can provide to consumers.
• Check the commission scheme of the company's affiliate marketing program to avoid being harmed unilaterally in the future.
• Check the terms and conditions of the affiliate marketing program to ensure that no other party in the future is hurt.

Meanwhile, to avoid future legal issues, the company has to comply with the laws in which country it operates. Aside from the fact that the company's products and services must be genuine and beneficial to many people, the requirements for joining and receiving commissions in marketing programs must not be detrimental to the parties involved.