09 Benefits of Affiliate Marketing for Business

Businesses nowadays are finding affiliate marketing super useful. It’s a model to cooperate with online marketers to promote your products without spending too much money or having your design team. 

It’s low-risk but high reward. You get more people to know about your brand, and your sales go up. 

It’s like hitting two birds with one stone! You pick the right people to promote your product, and they help you reach the right customers.

But before you start, you need to pick the right affiliate marketing software to run your affiliate marketing campaign smoothly. So, let’s break down the advantages of affiliate marketing.

What is affiliate marketing? 

Affiliate marketing involves businesses collaborating with individuals or other entities (affiliates) to promote their products or services. 

In this partnership, affiliates will get rewarded with commissions for sales they drive, such as via clicks on designated links. Through this performance-based model, businesses pay affiliates solely for successful sales, resulting in a cost-effective marketing approach.

Typically, businesses partner with content creators or affiliates to increase their influence and reach. Affiliates, in turn, promote the products or services to their audience, utilizing unique referral links provided by the business to track sales contributions. 

This model benefits both parties involved, with businesses gaining exposure and increased sales while affiliates earn commissions for their successful referrals.

Globally, Authority Hacker estimated that the affiliate marketing industry is worth $17 billion and an average affiliate marketer earns over $8000 monthly.

Benefits of Affiliate Marketing for Business  

Affiliate marketing holds a significant place in the modern business space. And there are reasons why affiliate marketing is important for business. 

1. Cost-effectiveness and Performance-based ROI

Compared to traditional marketing, affiliate marketing advantages with a more cost-effective approach. You only pay affiliates when they generate sales or leads, minimizing upfront costs and maximizing return on investment (ROI). This makes it particularly attractive for startups and businesses with limited marketing budgets.

• The average ROI for affiliate marketing campaigns is 13:1. This means for every $1 spent on affiliate marketing, businesses see an average return of $13.
• Additionally, 81% of advertisers consider their affiliate marketing programs to be either successful or very successful.

2. Reaching New Audiences and Expanding Reach

Affiliates, especially micro-influencers and niche bloggers, often have established communities and loyal followings. Partnering with them allows you to tap into new audiences you might not have reached through your marketing efforts, expanding your reach and brand awareness.

Influencer Marketing Hub (2023) State of Influencer Marketing Report that over 85% of marketers tend to use influencer marketing, with affiliate marketing being the most common type of collaboration. 

Additionally, micro-influencers (with 10,000-50,000 followers) have been found to drive higher engagement rates than larger influencers.

3. Enhanced Brand Credibility and Trust

Affiliates who genuinely believe in and use your product act as brand advocates. Their positive recommendations and reviews build trust with potential customers, making them more likely to convert. This can be especially valuable for new or lesser-known brands.

Nielsen’s Global Trust in Advertising Report that consumers are 92% more likely to trust recommendations from friends and family than traditional advertising. Affiliate marketing leverages this trust through authentic recommendations from trusted sources.

4. Valuable Data and Insights

Affiliate programs often provide detailed performance data on clicks, conversions, and customer demographics. This valuable information helps you understand your target audience better, optimize your marketing campaigns, and improve product offerings.

All affiliate programs provide detailed performance data to their affiliates, including clicks, conversions, and customer demographics.

This data can be invaluable for understanding target audiences and optimizing marketing campaigns.

5. Low Maintenance and Scalable

Setting up and managing an affiliate program requires less effort than traditional marketing campaigns. Affiliates handle much of the promotion, allowing you to focus on other aspects of your business. Additionally, you can easily scale your program up or down based on your needs and budget.

We estimate that setting up and managing an affiliate program takes less than 2 weeks for most businesses. 

Additionally, affiliate programs can be easily scaled up or down based on budget and needs.

6. Diverse Marketing Strategies

Affiliate marketing offers a wide range of strategies to choose from, such as product reviews, blog posts, social media promotions, and influencer partnerships. This allows you to tailor your approach to specific audiences and marketing channels.

We identify various popular affiliate marketing strategies, including product reviews (63%), blog posts (58%), social media promotions (52%), and influencer partnerships (47%).

7. Flexibility and Adaptability

Affiliate marketing can be adapted to fit various business models and industries. Whether you sell physical products, digital downloads, or even services, there’s likely an affiliate marketing strategy that brings huge advantages.

Insider Intelligence Affiliate Marketing Statistics shows that affiliate marketing is used across various industries, with the top categories being retail, travel, finance, and education. This demonstrates the flexibility and adaptability of the channel.

8. Long-term Relationship Building

Affiliate marketing fosters long-term relationships with partners who share your brand values and target audience. This collaboration can lead to ongoing promotion and advocacy, even beyond individual campaigns.

Affiliates who consider their relationships with merchants to be “strong” or “very strong,” indicating long-term partnerships tend to benefit more from the brand.

In some cases, programs offer recurring commissions, incentivizing ongoing promotion and advocacy from affiliates beyond individual campaigns.

9. Continuous Improvement

Through ongoing analysis of affiliate performance data and feedback, you can continuously refine your marketing strategies, products, and overall business approach, leading to sustainable growth and success.

Via affiliate networks just like Awin or CJ Network, marketers can track affiliate marketing performance data, allowing for continuous improvement of strategies and offerings based on real-time insights.

Examples of big companies using affiliate marketing 

Over 80% of companies deploy affiliate programs, and massive companies like Amazon and Shopify are no exceptions. Affiliate marketing plays a crucial role in their success in maintaining their dominance

 Let’s delve into how these titans leverage this strategy and the results they achieve.

1. Amazon Associates Program 

Amazon is an American  “The Everything Store” founded by Jeff Bezos in 1994. Amazon initially started as an online marketplace for books but gradually expanded into various product categories, specializing in e-commerce. 

The Amazon Associates Program is an affiliate marketing program. Anyone with a website, blog, or social media account (including platforms like TikTok and YouTube) is welcome to apply. 

Today, their program is the house of nearly 1 million active affiliates, forming a global promotional army. Affiliate marketing is stimulated to contribute over 10% of Amazon’s online sales – a staggering testament to its effectiveness.

Amazon typically offers a commission rate ranging from 4% to 10% depending on the product category, but can be up to 20% in specific cases. 

2. Shopify Affiliate Program 

Shopify is a leading ecommerce software platform that enables individuals and businesses of all sizes to sell products online.

 With a subscription-based business model, Shopify has earned substantial revenue, totaling $4.8 billion in the most recent financial year, making it the world’s second-largest ecommerce platform. 

The Shopify Affiliate Marketing Program allows affiliates to create new entrepreneurs while earning more than just commission.

They right now work with thousands of active affiliates, forming a vibrant community of entrepreneurs promoting entrepreneurship.

The current commission rate is 20% of the first month’s subscription fee for each referred merchant. With Shopify s subscription plans ranging from $29 to $2,000 monthly, their affiliate can earn $58 for each referral on average.  

So, there you have it! Even giants like Amazon and Shopify use affiliate marketing to reach new customers, boost sales, and grow their businesses. 

And it’s not just for big companies – a small business can especially benefit from their own affiliate program with hundreds of bucks of starting cost. 

How much do you spend on affiliate marketing? 

Unfortunately, there’s no one-size-fits-all answer to how much you should spend on affiliate management costs, as it depends heavily on various factors specific to your program and business: Program size and complexity, internal resources, software and tools, performance-based expenses (bonuses and reward)

Industry benchmarks on initial affiliate marketing expense: 

• Percentage of revenue: Allocating 5-10% of your affiliate program’s revenue to management costs.  
• Industry averages: Some studies indicate the average cost per acquisition (CPA) for affiliate marketing falls around $15-$30. 

• Affiliate network fees: Can range from a one-time setup fee to monthly subscription charges and commission overrides (typically 30% of affiliate commissions). However, there are free affiliate networks.  
• Affiliate software: Monthly fees can vary based on features and usage, ranging from $50-$500+.
• Creative development: Costs depend on the complexity of creatives (banners, landing pages, etc.) and whether you outsource them. If you are a small-medium business, these costs are not significant. 

In short, every company can start its affiliate program with less than $5,000. 

Those above are just starting expenses. The maintenance expenses may vary significantly, depending on the business scale. 

For example, the cost of affiliate marketing can be significantly lower for online-based businesses, especially with production-free models like dropshipping. 

For instance, for a medium-sized Shopify owner, the cost typically ranges from $180 to $1200 per year, or $15-$100 monthly. You can technically deploy a zero-cost affiliate program but with many limits. 

The best approach is to create a flexible budget that adapts to your program’s performance and growth.

Regularly check your ROI to assess the effectiveness of your affiliate management spending and adjust your strategy as needed.

Are you overpaying for affiliate marketing? 

In conclusion, affiliate marketing remains a robust avenue for building a profitable online business. 

To streamline your affiliate marketing campaign, an affiliate marketing app is required. With features for tracking sales, creating links, and gaining valuable marketing insights, BixGrow empowers you to optimize your affiliate campaigns and maximize your earnings potential.

What’s more?  

We have solutions to deploy your affiliate programs at any budget. 

Despite the competitive landscape, the BixGrow app continues to exhibit strong growth trends, with a 5/5 stars average rate and 6,000 users. 

You can literally get a full-package service with just $20 – or, uhm, half of your lunch.  

Affiliate marketing allows for broader reach and potential earnings through commissions. With the right strategies and tools, you can drive consistent traffic and earn sizable income streams, leveraging the vast array of products and services available for promotion.

FAQs

Why affiliate marketing is important?

Affiliate marketing plays a crucial role in the online economy by offering a win-win situation for both businesses and individual marketers. Affiliate marketing is estimated to generate 16% of global e-commerce sales as of 2021 (equal to $15.7 billion) and 81% of businesses operate affiliate programs in 2021.

What makes affiliate marketing unique?

Affiliate marketing stands out due to its tripartite win-win structure. Businesses gain access to wider audiences and targeted marketing at a lower cost, affiliates earn income by promoting products they believe in, and consumers benefit from recommendations tailored to their interests

Why is affiliate marketing so effective?

Affiliate marketing is effective thanks to its targeted reach, performance-based rewards, and trust-building content. Businesses find relevant customers through trusted affiliates, while only paying for successful conversions. Affiliates, incentivized by performance, create credible content that drives sales, making it a win-win for all.