Many retailers are successful in the online market thanks to affiliate marketing. It is a low-cost and effective advertising channel that attracts more customers to boost sales and revenue. In fact, studies show that it contributes between 5% and 25% of the total internet sales of major brands.
It does so by allowing them to use other people’s networks to market their products and services. Retailers leverage the influence and reach of authoritative websites and influencers to drive traffic to their sites. With that in mind, let us explore how it supports online business growth.
About Affiliate Marketing
It is a marketing network where affiliates promote products and services of online businesses to earn a commission. They do it by encouraging their audiences to click the provided affiliate links to visit the store or website. So, when the referrals buy or join the site, affiliates earn commissions.
The affiliate marketing industry is growing steadily both in revenue and popularity. Evidently, statistics show that its market size will reach a whopping $21.1 billion in 2024 and $36.9 billion by 2030.
Many influencers are embracing affiliate marketing, considering it their great source of income. It is also darling to various virtual businesses like e-commerce stores and real money online casinos in Australia because it boosts their customer base. This has contributed to the industry’s steady growth.
The Impact of Affiliate Marketing on Online Retailers
1. Low Start-Up Costs
The low costs of joining or starting an affiliate marketing network attract many retailers. They don’t have to hire advertising teams or purchase ad space because they depend on affiliates. The influencers have to create content that markets their services and products organically.
This makes it affordable to all online retailers, including startups with small marketing budgets. They join affiliate networks or create their own and market their goods and services at lower costs. Also, it saves them from the high costs of other marketing channels. Luckily, spending less on advertisements leads to increased net revenue, which promotes business growth.
2. Drives Targeted Traffic
Another amazing thing about affiliate marketing is that it brings targeted traffic to your site. It is the dream of most online businesses, and the ideal affiliates help them to achieve it. Retailers who partner with individuals that resonate with their brands receive targeted website traffic.
It happens because the ideal affiliate’s audience is most likely interested in their products and services and will click on the affiliate link. Best of all, targeted website visitors can easily convert, which increases the chances of making sales. So, online businesses that handpick the right partners receive targeted traffic and make more sales.
3. It’s Low Risk
Affiliate marketing is a low-risk investment for online businesses because its costs correlate with the sales generated from the program. It is performance-based, and you only pay out a commission to affiliates after making sales through their referrals.
There are no wasted costs in this marketing program because you don’t have to pay them when they bring in no sales. This saves online businesses from losing money, which is common with other costly advertising channels. For instance, Pay Per Click requires upfront investment for your ads, regardless of whether they lead to sales or not.
4. High ROI
The return on investment of affiliate marketing is way higher than that of other advertising channels. Online businesses get more returns on each penny they spend on the program. In fact, studies show that the average ROI for every dollar a business spends on affiliate marketing is $15. It equates to a massive 1400% return on investment and has enabled many online businesses to boost their revenue.
On the other hand, affiliate software also improves the ROI by not having extra charges, such as finder’s fees common with affiliate networks. When the business buys the software, it only pays affiliate commissions without incurring additional middleman fees because they are eliminated.
5. Wider Reach
Affiliates help online businesses to widen the reach of their products and services. Using the right network, a company can target specific regions and demographics, which would have been difficult with traditional marketing channels.
Online businesses can now enter new markets easily with the help of affiliate marketing. Additionally, it increases brand exposure because retailers get a golden opportunity to tap into the audience of their affiliates. This improves brand visibility and enables them to reach large audiences they may not have been able to access.
6. Provides Social Proof
Affiliate marketing enables online retailers to build social proof. Many customers usually trust and buy from only reputable businesses with a strong presence on the market. It becomes difficult for new businesses or startups to attract or win them over.
However, affiliate marketing makes it possible because customers easily trust any business in the network. It shows that influencers believe in the company and its services or products. As a result, the affiliate’s audience gains trust in the business, enabling it to attract more customers.
Affiliate Marketing Promotes Online Business Growth
Many online retailers are greatly benefiting from affiliate marketing in various ways. They range from getting social proof and a high return on investment to receiving targeted traffic and increasing sales. It has enabled many brands to become successful in the online market, which would have been difficult to achieve through other advertisement channels.
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