A Complete Guide To Affiliate Marketing Software
You see, affiliate marketing combines referral marketing with performance marketing. It rewards individuals (affiliates) for helping you achieve your business goals. Lord Farquaad, the evil despot who ruled Shrek’s land, used the same tactic. He used affiliate marketing to make it easier to set up, manage, monitor, optimize and execute his programs to capture all fairyland creatures. Gasp! Whether your goals are to get new customers, increase sales, drive traffic to your website, or capture and relocate fairytale creatures, Affiliate Marketing Software will help you get the job done with ease.
Read on to learn how Affiliate Marketing Software works and why it is a must-have essential in your digital marketing playbook!
In the 2001 Disney classic Shrek, Farquaad, the delightfully evil lord of the fictional kingdom Duloc, banishes all fairytale creatures from his realm. Since it’s no easy task to track down fairytale creatures, Farquaad enlists the help of the local community to find, capture, and deliver the creatures into his custody.
In exchange for the completion of Farquaad’s diabolical task, the peasants are paid in cold hard cash. There is a stipulation — the creatures must legitimately be fairytale beings (e.g., possess magic, supernatural abilities, or have anthropomorphic and/or monstrous tendencies.) If they fail to meet this criterion, then the deal’s off.
This performance-based partnership which pays an individual (the affiliate) to produce a result for another entity (Lord Farquaad), illustrates how Affiliate Marketing works.
These days, affiliate marketing programs can be facilitated by software that handles the entire process from onboarding to reporting to paying affiliates. It’s a technology that would’ve made Lord Farquaad’s job much easier! So, join us to explore the working, history, benefits, importance and future of Affiliate Marketing Software!
Affiliate Marketing Software is any tool or platform that enables businesses to manage an affiliate marketing campaign. The technology automates the processes inherent in an affiliate program, affiliate recruitment, campaign monitoring, reporting and commission payouts.
An affiliate program involves two key players — the affiliate and the business or merchant running the affiliate program. What links them together is a common goal or “offering.” That is, something the affiliate program manager or business wants to achieve — more traffic, more sales, or (in Farquaad’s case, the relocation of all fairytale creatures).
Pictured above, Lord Farquaad’s knights (representing affiliate program manager/business) collect Pinocchio (the offering) from a Duloc peasant (the affiliate). In this scenario, all aspects of the affiliate transaction are done manually. The peasant delivers the Pinocchio to the knights. The knights log the offering into a physical book and then pay the peasant his commission (in this case, a handful of coins.)
Affiliate Marketing Software could potentially automate this process. We’ll explain how in a minute but first, a brief history of how affiliate marketing came to be the fairytale marketing tactic that it is today.
A Brief History Of Affiliate Marketing Software
Referral and rewards programs — the foundational components of affiliate marketing programs — have been around for a long time. Yet, affiliate marketing, which is closely associated with internet marketing, emerged in the 1990s. Here’s how we got from then to now:
PC Flowers and Gifts, an Ecommerce website founded by a guy named William J. Tobin in 1989, was the first company to employ what’s become a common affiliate marketing approach. That is, recruiting lots of affiliates to sell his stuff and giving them a commission on every referred sale. By the early 1990s, Tobin had recruited thousands of affiliates to sell products and he was making fistfuls of money in the process.
An up-and-coming Ecommerce player by the name of Amazon launched a now-famous affiliate program called Amazon Associates in 1996. Amazon affiliates could publish custom banners on their websites or include affiliate links on their websites and marketing campaigns. Affiliates were paid a commission when their unique link generated a sale. Amazon managed the entire process via an in-house platform which affiliates logged into to monitor their performance and grab affiliate materials.
Affiliate directories sprung up as more companies followed Amazon’s lead and launched affiliate marketing programs. The first affiliate networks — Commission Junction and Clickbank — also launched around this time. Affiliate networks ran the back-end technology required to run web-based affiliate programs and were the precursor to today’s software as a service-based affiliate marketing tool.
Affiliate marketing programs began to mature. New technologies and channels such as mobile and social media become part of the affiliate marketing scene. Affiliate programs also became more refined, with quality affiliates sought over quantity.
Late 2000s to present
SaaS platforms and tracking technology emerged to serve businesses who want to manage affiliate programs directly (as opposed to through an affiliate network).
These days, if Farquaad wants to catch fairytale creatures, he doesn’t need an army of knights, he can implement affiliate marketing software to create, manage, monitor, and optimize his entire program - all from the comfort of his (very large) castle.
How Does Affiliate Marketing Software Work?
Affiliate marketing combines referral marketing with performance marketing. Affiliates who bring new customers, sales, or traffic to a business get rewarded with commissions.
Affiliate Marketing Software is the tool that makes this affiliate and business partnership work. It automates the process of creating, managing, tracking and executing all the moving parts inherent in the affiliate marketing cycle. That’s a mouthful, so take a deep breath and look at this pretty illustration of what the affiliate marketing process looks like in action.
The entire relationship between the business that owns the affiliate program and the individual affiliate can be managed using Affiliate Marketing Software.
When an affiliate delivers on a promised goal — say, depositing the three bears of Goldilocks fame to the appropriate affiliate manager — they get a commission. Affiliates use a variety of techniques to achieve the specified goals including paid ads, banners, content posted to their websites or in newsletters and social media. The most common type of affiliate marketing program uses a pay-per-sale model but some programs pay for traffic or clicks (e.g., pay per click), others pay per lead (and still others pay per creature!).
Affiliate Marketing Software contains a suite of common features to make this possible including:
Affiliate Program Management
This feature lets Lord Farquaad set up his campaigns, manage his affiliates, track program performance and customize the commissions (e.g., maybe he’ll pay more for talking animals versus sentient magical rocks).
Performance Dashboards And Reporting
Farquaad is a stickler for performance, so he loves this feature that enables him to analyze his affiliate program performance in real time. He can use this information to fire knights that don’t perform well and provide extra commissions to knights that do (win-win!)
The heart and soul of Farquaad’s affiliate campaign, customization features allow him to create custom campaign elements like landing pages, sign-up forms and logos. After all, his campaign must be worthy of his status!
When your affiliates succeed, you succeed! No one knows this better than Farquaad. Affiliate marketing tools enable businesses to create various affiliate program elements like links, landing pages, banner ads, and other assets that can be used to recruit affiliates. Affiliate tools also include any assets that are created for the affiliates themselves to use (banners, links, promotional text, images and more). For example:
Now, with that out of the way, let’s look at why Lord Farquaad (and most businesses) needs this tool.
Why Do We Need Affiliate Marketing Software?
Affiliate marketing programs help businesses achieve major objectives such as increasing website traffic, generating sales and getting more leads into the pipeline. This is a “two-heads-is-better than one" approach to marketing, with multiple affiliates greatly expanding the reach of a single business or entity.
Affiliate marketing programs are particularly effective for retail businesses. In 2020, categories like Toys and Software achieved affiliate revenue growth of over 100%, according to data from Rakuten Advertising.
Affiliate Marketing Software provides the foundation for successful modern affiliate marketing programs. Without this software, designing a campaign and executing it while managing all nitty-gritty becomes impossible. No matter the scale, objectives and intended reach of your campaign, Affiliate Marketing Software will be the wind behind your marketing team’s wings!
Yet, how high can you soar – we bet, almost as high as Elizabeth the dragon from Shrek. (Lord Farquaad could never capture her!)
The Future Of Affiliate Marketing Software
In 2020, the affiliate software market was valued at nearly USD 19 billion and it is expected to grow faster than Pinocchio’s nose, reaching nearly USD 32 billion by 2029. As affiliate programs continue to be embraced and utilized by businesses across all industry sectors, demand for Affiliate Marketing Software will increase.
In the future, emerging technologies such as Artificial Intelligence and Machine Learning will help businesses further automate and streamline the affiliate program process. Features like programmatic rules, A/B testing and intelligent optimization will make programs more productive for both businesses and their affiliates. Thanks to automated tracking and payouts, Farquaad’s knights can now take more time off while Duloc residents get rich from affiliate payouts. We do feel for the fairyland creatures though!
Advertisers can use Affiliate Marketing Software to scale, track and manage their affiliate marketing initiatives. Most solutions include a network that connects advertisers with affiliates, as well as the capacity to handle affiliate payouts based on performance. Affiliate Marketing Software is an excellent tool to increase sales, leverage affiliate marketing tactics and access a more comprehensive network of audiences. This solution will assist you in acquiring new clients, increasing sales, driving traffic to your website and even migrating fairytale creatures!
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