Affiliate marketing companies are establishments that build and nurture a network of affiliates and merchants. They manage a platform that fosters co-marketing partnerships between the affiliates and merchants in their network. They also provide back end systems like cookie tracking functions, payment processing portals and so on. They also offer an online platform where their affiliates and merchants can use to view real time campaign results, communicate with each other, download and upload useful content materials for promotional campaigns, etc.
In most cases, these companies are compensated for the resources that they provide through fees that they charge based on the co-marketing campaign results of their affiliates and merchants. For example, if a customer referred by an affiliate decides to purchase the merchant’s product, then this buyer will use the payment processing portal that’s provided by the affiliate marketing company to the merchant. For each successful transaction, the company charges the merchant a fixed payment processing percentage. As part of the company’s service, their back end cookie tracking systems are able to credit the sale to the affiliate who referred the customer.
The company also provides affiliates with tools to view their current earnings, previous withdrawn payouts and pending payouts that have yet to reach the minimum release threshold. As for the merchants in their network, all sales less fees and affiliate commissions can be viewed by a merchant through the same online portal. They can also withdraw the money through any of the available methods offered by the company once they hit a certain threshold. Because of the complexity of this section alone, the company needs to constantly secure and manage their back end systems.
However, affiliates can also be known to others as affiliate marketing companies. That’s because these affiliates are organizations, commercial establishments, individual marketers and independent freelancers, resellers, service providers, app developers and so on. Just like the systems described earlier, they are also paid based on the results of their efforts.
This means an affiliate who promotes the product of a merchant in the same network that’s operated by an affiliate marketing company can earn a fixed commission for each sale that they generate for the merchant. They can log into the Web platform that’s provided by the company, in order to view their campaign results. They also rely on the cookie tracking system that’s implemented by the company, in order to ensure that they’re properly credited for the sales that they produce for the merchant’ products.
But in both cases, why are they paid based on the results of their efforts, even if these are entirely different when compared against each other? Here are some quick answers that can shed some light to this:
Primary Reasons Why Affiliate Marketing Companies Are Paid Based on the Results of Their Efforts
- Affiliate marketing companies are known to be capable of compelling more of the right affiliates and merchants to sign up and join their networks when they offer this pay per performance arrangement. But that isn’t just because their top competitors are doing the same thing, though that’s already a strong enough reason for many of them to go the same route when it comes to building their network of affiliates and merchants. Despite this, lots of companies are continuing to implement this into their business model. So essentially, how these companies compete against each other boils down to the value of their back end systems and front end platforms for their affiliates and merchants, in direct relation to the fees that they charge for each successful transaction performed through their payment processing portal.
- Affiliates are also paid based on the results of their promotional efforts because this presents merchants with more cost-effective options. This entices more merchants to use the services and platforms of these affiliate companies to forge mutually beneficial partnerships with their ideal TalkingAds ltd affiliates. This also entices more affiliates to join the network of the company and sign up as a co-marketing partner of their target merchants, especially because in many instances, they’re offered high commission percentages for each sale that they manage to generate for their merchant partners. For example, commissions can go up to as high as 60%!
- This provides merchants and affiliates with more control over their dealings. After all, paying an affiliate upfront even if they’ve already passed strict vetting processes still won’t allow the merchant to gauge the abilities of the affiliate to a certain extent in terms of accuracy beforehand. So this pay per performance system enables merchants and affiliates alike to nurture a fair and transparent co-marketing partnership arrangement. Since this is more enticing for both parties, affiliate companies are also using the same system for their offers to these groups.
- Affiliate marketing companies that effectively promote their networks and platforms even if they ask for an upfront payment usually need to bundle other valuable services. This is to lure more of the right affiliates and merchants to join their network. For example, many affiliate companies also offer program management services on top of their platforms, payment processing features, cookie tracking systems, payout monitoring and releasing, etc. Others bundle advertising and organic content marketing consulting services for both their ideal merchants and target affiliates.
It’s a sound business move on the part of affiliate marketing companies and affiliates alike to offer their services and resources under a pay per performance arrangement. This has been time-tested and proven to be the most strategic business model in this industry. This also provides merchants with much better and more cost-effective options for expanding their reach, growing their sales resources and scaling up their advertising and marketing campaigns without spending too much time, energy and money. Of course, this enables affiliate companies with much better ways to grow and expand their networks. On the other hand, affiliates are provided with more options when choosing the right merchants to partner up and forge mutually beneficial co-marketing deals with.