Affiliate Marketing

What is Affiliate marketing?

Affiliate marketing is a commission-based referral system in which website operators (affiliates) advertise the products and services of various companies (merchants). A potential customer is forwarded to the merchant’s website via links or banners. If the forwarded customer performs an action defined in advance, the affiliate receives a commission from the merchant. These actions could be, for example, the following:

• Click on the affiliate link
• Subscription to the newsletter
• Purchase of a product

Affiliate marketing is thus a form of online sales in which the affiliate is a salesperson for the merchant’s company. Through this affiliate program, the merchant uses the affiliate’s web presence to place targeted products there and thus increase awareness.

Affiliate Marketing – How it works in 3 steps

Step 1: The affiliate network

You may also know affiliate networks as partner program networks. There you will find different programs, affiliates and merchants. Affiliates who are registered in this network with their website can choose which program is suitable for them. Merchants can also find suitable affiliates for their products. An affiliate network thus serves as a platform to provide suitable offers for affiliates and merchants.

This is to ensure that the affiliate’s advertising space and content contributions have a certain relevance to the merchant’s products. Additionally, it increases the transparency and process of affiliate marketing by providing the technical infrastructure.

Step 2: the affiliate link

An agreement is reached between the two parties and the affiliate receives an individual affiliate link. This link is necessary to be able to assign the referred customers to a specific affiliate of the entire network.

If the affiliate mentions a product of the merchant or the merchant in the form of an anchor text, he sets this link so that the customer is directed to the merchant’s website.

Step 3: the purchase process

If the customer reaches the merchant’s site and buys the advertised product, the affiliate who referred the customer is paid a commission. If the customer buys additional items besides the advertised product, the affiliate receives a commission on the total amount of the purchase.

The merchant recognizes the affiliate by the cookies that are found on the customer when the purchase is completed.

Is it possible to cheat in affiliate marketing?

The most common form of fraud on the part of affiliates is to intercept traffic that would have come to the merchant’s site anyway. For this purpose, affiliates optimize their website content for typos in order to be placed high in the SERP for these keywords. In addition, copies of the merchant’s original website can be made and advertised via Google Ads. If prospective customers come to the website and click on any one item, they will be redirected to the merchant’s site through an affiliate link.

Merchants can also cheat without the affiliate necessarily noticing. For example, successfully referred sales can be indicated as cancelled, which would result in a missed commission.

Another method is to leave out the affiliate link after a site relaunch. This link is usually added to the backend of the website in order to be able to check which affiliate the customer came from. If this tracking possibility is not given, the affiliate cannot be paid. Whether intentional or not, the one who suffers is the advertiser who does not get paid for his service.

How to prevent fraud

Firstly, merchant and affiliate should communicate openly with each other, as both parties benefit from a successful partnership. Nevertheless, the following applies: trust is good, control is better. Fraudsters stand out from the crowd due to certain conspicuous features, which is why it makes sense to monitor certain metrics:

• Conspicuousness regarding a too short visit time, i.e. when the purchase path is “too direct”.
• Unusually high commission payments as well as conversion rate
• Geographic patterns of visits
• Unusual times for purchases

If these items are monitored regularly over time, outliers become easy to spot. These metrics can be monitored using a tool such as Google Analytics, for example.

Why is affiliate marketing so attractive?

Merchants carry little risk because they are only obligated to pay for a specific action. If the affiliate is not able to get the customers to perform an action, no costs are incurred by the merchant. Due to the wide range of possible affiliate programs, the merchant can choose the right affiliates related to the topic in order to market their own brand accordingly. It is in the affiliate’s interest to optimize their website throughout in order to attract many potential customers. If the affiliate puts the necessary work into his website, he will also be compensated accordingly. The technical implementation of an affiliate partnership is easy even for non-professionals.

At a glance: Affiliate marketing has the following advantages

• Free advertising space – you only pay if you benefit from it yourself
• Effective targeting of customers
• Competition promotes the quality of websites
• Accessible to a wide audience

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