With the digital market evolving, affiliate marketing has become a utilized business model to promote your SaaS product. In fact, it is worth $12 billion as of 2021. Moreover, the standalone affiliate programs contribute to 30% of the total revenue for an average business entity.
81% of the brands have launched their affiliate networks because of their positive ROI and performance-based nature.
But like any marketing channel, it has its pros and cons. Today we will explore all the benefits and disadvantages that this model offers for your SaaS company.
9 in 10 brands accept that affiliate marketing is an efficient strategy to make sales. It also helps in driving traffic and increasing the average revenue by 20%. For instance, Rakuten’s affiliate marketing strategy for Lacoste helped the brand to increase its revenue by 70%.
Whenever you add a business approach, such as affiliate marketing, it potentially affects your brand’s reputation, sales, image, traffic, etc.
We have reviewed every aspect of affiliate marketing and how it benefits or harms your marketing plan and sales.
When you launch an affiliate network for your business, the number of affiliate marketers you hire is indefinite. You can either hire 1 or work with 20. According to Forrester Research, more than 71% of the affiliate marketers are associated with more than 3 brands. At the end of the day, you only pay the fair share if they produce results (positive ROI) for your business.
Unlike social media marketers, affiliates do not get an incentive to reach a sale’s target. The commission-based approach helps you to invest your money right where it is necessary.
There are innumerable commission models when it comes to affiliate marketing campaigns. The publishers (affiliates) can earn money through diverse options, such as pay per sale, pay per lead, and even pay per click.
However, you get guaranteed results when your affiliate chooses ‘pay per sale’. Because that’s when you know you are paying for a genuine purchase. But, if the purpose of your affiliate marketing campaign is to increase your brand’s presence and exposure, then ‘pay-per-lead’ or ‘pay-per-impression’ is quite an option too.
Affiliate programs lure affiliates with their diver reward options. Here are common options that networks offer:
Pay-per-lead is what you can use to reward your publishers once a visitor fills a contact form on their websites. Getting access to people’s personal information is one way to grow your email list and make promising sales.
In this option, the profit cut (share) is based on the number of visitors. The affiliate marketer directs them to your website and gets the commission, regardless of whether the visitor purchases or not.
You can also pay some percentage of the sale’s price whenever a customer makes a purchase via the marketer’s website.
An affiliate marketing campaign’s cost is near zero. The affiliate companies grant you straight and instant access to a wide variety of affiliate marketers/publishers. While publishers look for a source of passive income, you look for personnel to enhance your brand’s exposure.
Furthermore, it is not as complicated as other entangling marketing campaigns. It can be as simple as giving your marketers a product’s affiliate link. Otherwise, you could also supply easy email templates and the product’s graphics to help attracts prospects and leads.
In an affiliate program, your publishers have to endorse your SaaS product openly to their fans and followers. Any customers you gain via affiliate marketing can potentially become loyal, repeated, and promising customers in the future.
Any repeat customer that you make through your affiliate program does not cost you another commission fee. So, in a sense, it is like a passive income for your business.
Don’t have extra money to generate traffic to your website? No worries. An affiliate’s website banner can increase your traffic overnight. If you talk about strong advisors, like ShareASale, CJ Affiliate, and Amazon Associates, they have established communities.
Therefore, affiliate programs increase the chances to broaden your sales audience without overloading your marketing budget.
As a retailer and affiliate network handler, you have the freedom to choose who your work with. It is the affiliates who apply to your program to come onboard. This gives you the opportunity to assess their skills, suitability, niche, and hand-pick as per your brand’s requirements. Affiliate marketers of your niche have the credibility to become your product’s brand ambassadors.
Unlike other marketing campaigns, you pay for performance and sales, rather than clicks. This ensures that affiliate marketing involves low risk. You won’t be investing money in generating leads and nurturing prospects. Instead, you will work to create strong relationships with direct customers. You come across the customers at the right time of the buyer’s sale. Therefore, you have more chances to turn them into loyal brand customers.
SEO is most-close to a retailer’s heart. Affiliate marketing campaigns go a long way when it comes to aiding your overall website’s SEO. You get numerous backlinks via the affiliate marketers’ social blogs, websites, and affiliate blogs.
However, this is effective only if you have high-ranked affiliate partners. The audience of high-ranked affiliates tweets and shares your product details so more people can come to know about the brand.
Marketing is an important aspect of your business; however, it involves lengthy processes of attracting customers. The marketing sector requires an extensive team to manage it for you. If you do not have access to a strong team, it can get in the way of business development.
Putting some percentile of marketing management on the shoulders of the affiliate partners frees up some of your time. Thereby, allowing you to focus on other aspects of your business.
Working with a trusted publisher or an affiliate company allows you to access numerous sales reports and dashboard details. By developing a relationship with your network provider, you can monitor data and make real-time decisions based on current statistics.
In addition to that, you can effectively strategize and make prompt marketing decisions through the dashboard. All you have to do is track how all of your affiliates are performing.
Affiliate marketing helps you to scale your newly-opened business at your speed. With minimum expenses, you can test different marketplaces and products through your affiliate partners. In fact, 99% of the brands build their credibility through affiliate marketing.
Tap into global markets using affiliate marketing. International-based affiliates are professional enough to use their local knowledge to promote your products strategically. It is a low-risk marketing strategy to find out whether your SaaS product will succeed in other countries or not.
If you do not have an international-based affiliate, the local affiliates you work with can partner-up with global affiliate teams. This will help your business to provide global exposure to your services and products in international markets.
Unlike other forms of PPC advertising, in which you never know how much each lead costs you, you can set per-lead-cost upfront. You can decide on a commission rate for each product. This will ensure your marketers that you know how much each sale will cost you before it is even made.
Unfortunately, affiliate marketing also comes with some disadvantages, such as:
Infrequent fraudulent practices are the reason why affiliate marketing has a bad name. Instead of earning commission fee ethically, many marketers produce fake leads and make money off them. For instance, eBay caught two marketers, or should we say, scammers who had made $28 million through different affiliate programs.
Here are some ways fake marketers commit fraud:
Therefore, it is better to do your homework before bringing a marketer onboard. Check the candidate’s website, content, and audience-reach to ensure he is a genuine one. Also, check their social media pages. If they have thousands of followers but few likes, they have probably bought fake followers.
It is integral to do your due diligence on your affiliate’s marketing/promotional activities. If they use unethical methods, such as email spamming and false advertising, your brand’s reputation is at risk. Unscrupulous tactics do not comply with GDPR terms.
Although brands give a handful of guidelines to publishers, you can never be too careful. It is always risky to partner-up with the one who could advocate your business negatively.
Yes, affiliates drive traffic to your website but it is infrequent and inconsistent. Often, marketers promote your products and services to the wrong audience to drive consistent traffic. However, this leads to a high bounce rate and low conversion rate.
Launching an affiliate marketing program might not be cost-effective, especially if you are a small business. It is quite time-consuming as you’d have to ensure if the attribution model works efficiently or not.
In addition to that, recruiting affiliates, and creating metrics and reports to monitor the channel can be quite challenging. Therefore, it is easier to sign a partnership with a third-party affiliate network. But you would have to pay a monthly fee.
Affiliate marketers might not treat your brand right or protect it the way it deserves. Imagine spending thousands of dollars in resources so you can conceptualize and develop your e-commerce brand. Then comes an inexperienced affiliate marketer with no respect for your brand. Even the minor mistakes by an affiliate marketer can distort your brand’s image. They might end up using dogy methods or committing serious marketing offenses.
The nature of affiliate aids your website by driving more audience. In other words, affiliates help you sell items to the audience you would not have connected with, otherwise.
If you take extra care in optimizing your affiliate links, backlinks from an influential website can improve your SEO. However, Google recognizes that websites are only using backlinks because they are getting a reward for using affiliate links. Therefore, all search engines do not count them as editorial backlinks. Just like Google, you should treat affiliate links differently from regular backlinks.
But you can always create dedicated landing pages so that large websites can use them instead of affiliate links. This ensures that Google will read dedicated landing pages as regular backlinks.
Affiliate marketing works for every business, regardless of how big or small it is. However, one needs to take extra considerations when it comes to big businesses. For example, you must only hire affiliates whose work aligns with your mission and values.
In addition to that, you might also consider establishing affiliate guidelines so their strategies don’t go against the brand’s messaging. For instance, you can prohibit your affiliates from using your product (affiliate link) in pop-ups.
Online marketing is thriving in 2021. Do not let the disadvantages stop you from launching an affiliate marketing campaign for your business. The affiliate industry is thriving and thousands of expert affiliates can help you get new leads and prospects.
In a nutshell, you must have quality affiliates to promote your products, because it can be a key course of action in your marketing funnel. This is where getaffiliated can help. We maintain high-quality affiliates in our network. Using AI and machine learning, we are able to detect fraud and also verify spammy domains.