So, your marketing team is considering new, fresh strategies to increase brand awareness and revenue. Social and content marketing can get you pretty far, but your team is thinking of affiliate marketing to go the extra mile.
Affiliate marketing is a popular way to build influencer partnerships, boost brand awareness, and generate a passive revenue stream. But how much revenue potential is there compared to the upfront investment you need? Here, we’re diving into when affiliate marketing is worth it, when you might encounter speedbumps, and how much your business (and affiliates) can earn.
Affiliate marketing is a business strategy that involves a brand partnering with influencers who have an audience similar to the brand’s ICP. The brand and the influencer sign a contract stating that the influencer will post website or social media content promoting a brand’s products or services. For every person who converts through the influencer’s link, the influencer earns a commission from the sale.
With affiliate marketing, three people win:
Authenticity is the key to success in affiliate marketing. Brands should research influencers to find the best fit, and the recommendations and reviews should come from a genuine place. An authentic affiliate review will drive more conversions and success across the board.
Research shows that annual affiliate marketing spending will reach $8.2 billion by 2026. People want to shop based on trustworthy recommendations, and more and more consumers are turning to influencers they feel like they know. Affiliate marketing is an excellent way for your business to throw a hat in the ring.
There’s a common misconception that affiliate marketing is too much of a “get rich quick scheme” and effortlessly partnering with the biggest influencers in your niche and getting rich is unrealistic.
But it’s important to remember that nothing worthwhile comes easily.
The reality is that affiliate marketing grows most effectively when businesses start small and build with realistic expectations. Choosing influencers in your current customer base, pursuing microinfluencer partnerships, and connecting on social media with lesser-known creators might not be the big swing you want. Still, it’s how you make the biggest impact in the long run.
Once you begin gaining traction with a few affiliates, the work to grow the partnership has just begun. You need the right dashboard, KPI tracking, and affiliate marketing management systems to monitor your affiliates’ performance and help them continue to improve.
Aside from the online tracking, you need to establish brand resources for your affiliates and regular feedback loops so they can tell you what’s working and what’s not. You have an opportunity to offer support. Think of your affiliates as a type of employee. To make the campaign a success, you want to build trust, rapport, and a loyal partnership.
Bumps in your affiliate marketing program might come as a surprise, even with the most stringent planning. Challenges you may face include:
After doing the right research, providing brand resources, and monitoring your affiliate program, your affiliates’ earnings could grow significantly. The more energy and motivation your affiliates have, the quicker they scale.
According to a Linktree report in 2022, roughly 59% of beginner influencers who have been in a program for less than a year earn nothing. But again, it depends on their motivation, the brand fit, and the size of their audience.
A survey conducted by the Influencer Marketing Hub states that 3.78% of respondents managed to earn $150,000 annually with affiliate commissions, and 7.94% earned $100,00 to $150,000.
The largest group of respondents (57.55%) generated less than $10,000, but it’s important to remember that affiliate commissions are also a side income for affiliates and not their primary source of revenue.
So, if one of your affiliates earns roughly $10,000 annually, what does that mean for your business? Unfortunately, it depends.
That said, the average affiliate commission rate is anywhere from 5% to 30% for every sale. So, in our example, if one affiliate earns $10,000 per year and gets a 20% commission for every sale, that means they brought in around $50,000 for your business.
And that’s just one affiliate. When you have 3, 5, or 25 affiliates to balance, revenue scales quickly beyond the effort you put in.
Getting started with your affiliate marketing program doesn’t have to be the daunting task you may be envisioning. With Simple Affiliate, you can get up and running quickly, automate payouts, easily digest the data, and scale easily when you’re ready.
Book a demo with the team at Simple Affiliate today so you can start earning before you know it.
