Affiliate marketing is a form of performance-based internet marketing that saw rapid growth throughout the 2010s. As the calendar rolls over into 2020, affiliate marketing is poised for continued growth and is set to continue generating revenue for those able to capitalize on it.
There’s no denying that affiliate marketing is here to stay. By 2022, the affiliate marketing industry is forecasted to eclipse the $8 billion mark, nearly double what it was worth in 2015.
Today, affiliate marketing is one of the most effective ways to earn an income online, drive sales and increase brand awareness. In this article, I’ll discuss what affiliate marketing is in 2020, where the industry is headed in the coming years, and how you can get started as a content creator or vendor.
How Affiliate Marketing Works
Affiliate marketing is unique among internet marketing techniques because it operates as a distributed system. In other words, it spreads out the responsibility of making impressions and promoting products or services to third parties. In exchange, the vendor shares the proceeds of the sale with the affiliate marketer.
In a typical affiliate marketing scenario, there are three parties at play, and each of their roles must be understood to conjure a clear picture of the technique.
• The creator: Otherwise known as the vendor, the creator is a business or brand that offers a product or service and shares revenues with affiliates.
• The affiliate: The affiliate, or publisher, is a business entity or individual who advertises the creator’s product or service and receives a share of each sale that they help generate.
• The consumer: The consumer is the customer of the creator, who buys their product or service via an affiliate marketing channel.
Affiliates aren’t always upfront about the relationship they share with the vendor. In many jurisdictions, there are no rules or regulations binding affiliates to disclose their affiliate relationship with the seller.
Products or services purchased via affiliate marketing typically cost no more to the consumer than they otherwise would by any other channel; rather, the sales commission is baked into the retail price of the good or service.
The Payment Structure
Not all affiliate marketing programs resemble one another. There are three payment structures, and which structure is used depends on the personal preferences of the vendor and affiliate.
• Per click: The affiliate is paid a flat rate for every individual they redirect to the vendor’s website; performance is indicated by increased web traffic.
• Per lead: The affiliate is paid for every prospective customer who visits the vendor’s website and performs their desired action, such as signing up for a mailing list or free trial.
• Per sale: The most common of the three payment structures, the affiliate is paid a commission (e.g., 1% to 10%) of every purchase via the affiliate unique product link.
Three Affiliate Marketing Trends To Watch In 2020
• Influencers over bloggers: Affiliate marketers have, in days past, been influential bloggers who write and manage blogs with a dedicated, niche readerships. Although bloggers will always benefit from affiliate marketing relationships, I predict social media influencers will comprise a greater relative share of the affiliate market in the 2020s.
• Advanced reporting: Affiliate tracking and reporting tools are becoming significantly more advanced. New affiliate programs are abandoning the winner-takes-all approach to sales attributions and are instead migrating to a full-funnel, cross-channel approach that divides sales commissions between various affiliates at different levels of the funnel.
• Smaller influencer niches: In the 2020s, I expect social media influencers to gain a foothold in hyper-targeted niches, such as long-distance bicycle camping, fingernail beauty tutorials and ultra-frugal traveling. As niches become increasingly targeted, consumer bases are becoming more and more loyal and willing to convert on leads and impressions. Although the traffic isn’t as impressive as the major niche categories, the hyper-targeted ones will likely enjoy much higher conversion rates.
Getting Started With Affiliate Marketing
Are you an up-and-coming influencer or content creator with a growing audience? Or, perhaps you’re a lifestyle brand, e-commerce store or small business looking to reach a new market and drive more sales. Either way, affiliate marketing is a safe bet for 2020. Here’s how to get started.
• Content creators: To get the ball rolling, sign up for an affiliate program. Fortunately, there are very few barriers to entry when it comes to affiliate marketing. Some of the most popular affiliate marketing programs in operation today, and poised to grow through 2020, include Rakuten Marketing, Affiliate Window, ShareASale, MaxBounty and Amazon Associates Program.
• Vendors: If you have a product or service finalized and ready for sale, you can start finding affiliates to promote your product. Affiliate networks can hasten the process by putting you in contact with content creators and influencers in your niche. The eBay Partner Network and the Amazon Associates Program are two can’t-lose places to start, in addition to being trusted affiliate networks and agencies.
Affiliate Marketing: A Safe Bet In 2020
Both vendors and content creators stand to gain from the distributed networking power of affiliate marketing. No matter which side you’re on — vendor or content creator — there’s a bright future for affiliate marketing in the years ahead.
By working with a seller, affiliate marketers can gain a passive, yet highly lucrative, income stream. On the other hand, vendors can take advantage of the rising influence of content creators to access new markets and audiences with little to no effort required on their part. In 2020, affiliate marketing is a clear win-win situation.