When building a startup, you need a marketing plan in place that will help put your new business in front of potential customers. A tried-and-true method for generating revenue for startups is affiliate marketing.
Established brands and startup companies alike use affiliate marketing because the tactic tends to work. It doesn’t cost much to collaborate with other brands because they too benefit financially from working with you. As you work together to grow each other’s businesses, you can both tap into new audiences, expand your online influence, and put more money in your pockets.
Affiliate marketing might sound like an easy way for your startup to get traction with new customers, but in reality, it takes work. You’ve got to build relationships with other businesses, decide which affiliates can help you the most, determine what techniques will best work for your company, all while possibly pleasing potential startup boards.
In this article, we'll look at the moving parts behind the affiliate marketing process. Then we'll explore three popular affiliate marketing practices you should consider to help get your startup business off and running. Let's get to it!
Understanding the Affiliate Marketing Model
Affiliate marketing involves four components that fit a basic model:
- Merchants with a product or service to sell.
- Publishers (also known as affiliates) who work to sell a merchant's product or service.
- Consumers looking to purchase a product or service.
- Affiliate Networks that help partner merchants and publishers.
Merchants Have Products to Sell
The first component is the merchant who creates the product or service. Your startup company is the merchant that has a new product or service to sell. Merchants can be large established companies, brand new businesses, or anything in between.
Publishers Sell the Products
The second component of the model is the publisher that promotes the merchant’s product. Usually, the publisher has an established affiliate business or is influential on social media. Like merchants, publishers can be any size. But no matter what, they should have a large following to help themselves and other merchants.
Consumers Purchase the Products
The third component is the consumer, who will hopefully purchase what the merchant is selling. To accomplish the goal, the publisher needs to attract the consumer and encourage them to make a purchase. Many publishers tell the consumer they are selling a product for a merchant, especially since the FTC requires them to disclose the relationship with the merchant.
Networks Connect Merchants and Publishers
Finally, the affiliate marketing model may include a network. Many merchants and publishers connect through affiliate marketing networks.
Publishers can choose merchants, and affiliate networks often get a small percentage of sales made through the relationships they create. If you get involved in networks, you might have to set a budget not to get carried away with so many opportunities.
The Best Affiliate Marketing Practices for Your Startup
There are several different ways to do affiliate marketing. Here are the top three most common affiliate marketing practices.
1. Affiliate Marketing with a Location Focus
When you decide to use affiliate marketing, one successful way to build your startup is through the location-focused model. This type of affiliate marketing focuses on customers in a predetermined location. This marketing also looks for people who fit a niche market too.
To make this hyper-focused marketing plan work, publishers tend to target consumers who might not speak English and generally don’t use traditional marketing platforms. For example, in the location-focused model, merchants might offer a cultural product they want to market to people who live in a certain area or speak a specific language.
Rather than focusing on a global audience, like other affiliate marketing campaigns, location-focused campaigns have fewer competitors. It works well when the publisher already has a relationship with consumers in the location’s market. This marketing technique can also work when targeting groups like college students or other unique communities.
The challenge with location-focused affiliate marketing is that the audience is smaller, so publishers only market your product to a fixed group. But web traffic can change in local markets, especially if platforms change their algorithms.
2. Allow Influencers to Market Your Product or Service
The latest iteration of affiliate marketing focuses on influencers. In this model, the influencer is the publisher who showcases the merchant’s offerings in their social media posts. With the right influencer, your product could get in front of millions of followers.
The key to success with the influence model is finding the right influencer who can attract people within your niche market. For example, suppose you sell a product geared toward new and/or expecting mothers. In that case, you’ll want to seek out influencers who specialize in pregnancy, baby products, and parenting.
Then, as soon as your product shows up on an influencer site, your followers should start to grow shortly after. Consider how businesses grow after appearing on Shark Tank. Even if the Sharks do not invest in the product, their “influence” alone can help market and spread awareness for your product.
The challenge with influencer affiliate marketing is continuing to provide new information and products. If you offer a trendy product, you’ll want to keep creating new products so you can stay relevant to your consumers.
3. Niche-Focused Affiliate Marketing
If you’ve got a highly-focused niche market, you can work with publishers that attract that niche. The key to success is to create a solution to a problem within that niche market. Then, you share the solution on your website. Eventually, publishers will want to share your solution with the answer-seeking readers on their site as well.
Maybe you’ve got a solution that will help young baseball players reduce their strikeouts. To market your solution, you’ve got to create content that other publishers in the baseball niche want to share. Eventually, your product will get in front of parents, coaches, and baseball players who will share your ideas and indirectly help your company grow.
Of the three affiliate marketing strategies, this is often considered the easiest one to begin.
Last Minute Metrics to Consider Before Connecting with an Affiliate
As you start your dive into affiliate marketing, you need to consider several metrics and how they can help your business. Before you sign on to work with an established affiliate brand, learn about their reach and if they attract your audience demographics.
You can also help yourself by studying their engagement. The affiliate in question might reach potential customers, but do customers actually engage or keep scrolling? How often do customers stop to learn more and then make a purchase? If the numbers don’t look good, then you should look for other opportunities.
Another essential metric to consider is follower-growth. Has the affiliate added followers over time, or have they been stuck for a while? The affiliate might benefit from having your connection rather than you having them. Remember, you’re looking for someone that can help you grow.
Finally, take a good look at the affiliate values and niche market. You want to work with someone who can help you grow in your market. For example, if the affiliate appeals to people who live in warm climates, but you’re selling a product that people in cold temperatures need, you might not see much growth.
When deciding how to use affiliate marketing to help grow your startup, the best choice is always the one that fits your business and your budget. Fortunately, the three affiliate marking practices we've listed in this article are all budget-friendly, so it's simply choosing which method is best for you:
- Location-focused affiliate marketing.
- Influencer-sponsored affiliate marketing.
- Niche-focused affiliate marketing.
Over time, it's very likely that you'll venture into multiple affiliates marketing methods to increase traffic and sales for your startup business.