Affiliate Marketing Pros and Cons for E-commerce Sites

Nicole Grodesky
By Nicole Grodesky

If you run an e-commerce website, it is important to choose the right type of marketing strategies for your site and associated audience. You will have many different options when it comes to your marketing strategy and there are benefits and drawbacks to each. Here we will focus on and evaluate the pros and cons of affiliate marketing as a strategy for e-commerce sites.

What Is Affiliate Marketing?

A type of performance-based marketing, affiliate marketing uses other businesses, or affiliates, to promote products to consumers. The affiliate receives credit and rewards, typically a percentage of the corresponding revenue, for each sale their efforts drive. This strategy takes advantage of another company’s marketing efforts and audience to drive more visitors, and hopefully therefore sales, to the merchant’s site.

How Is This Different From Referral Marketing?

Affiliate marketing is very frequently confused with referral marketing, as they are very similar. However, there is an important distinction between the two. While both affiliate and referral marketing use third parties to increase the merchant’s sales, the difference between them lies in the financial motivations of each relationship.

Referral marketing relies on trust and personal relationships between the referrer and customers to drive sales. The referrer is sometimes an influential individual with a large audience following, or even another everyday customer of the website. In this practice, the merchant can reward referrals with discounts, product, or other benefits. Affiliate marketing, on the other hand, is purely a financial alliance. These relationships are typically between two companies or brands, though individuals can still benefit from affiliate relationships, and the reward is monetary in nature.

Related: 5 Key E-Commerce Trends Every CMO Needs to Know

How Does Affiliate Marketing Help My E-Commerce Site?

The idea of affiliate marketing is simple enough: you let other businesses or people market your products and send traffic to your site. In exchange, you pay them a percentage of any sales that are made that originate from those efforts. To keep track, you will give each affiliate a specific hyperlink to use on their site which is associated with their particular affiliate identification code.

The nature of this relationship helps your e-commerce site by driving more visitors to your page and reaching a new audience you might not otherwise connect with. Plus, you are able to take advantage of and access this new network of customers without any upfront costs unlike traditional marketing strategies which would require you to invest in new marketing campaigns for each new audience.

Do Backlinks From Large Sites Help SEO?

In terms of affiliate marketing, links from large sites can help your search engine optimization (SEO) if you take extra care in how you use and optimize their affiliate links. Typically, a backlink from a large site, such as The Wirecutter, would be great for your SEO. However, Google recognizes that the affiliate website has only the affiliate link in place because they are getting a financial reward for doing so, such as getting paid a commission when the link is used and product is bought. As a result, Google does not count affiliate links as editorial backlinks. Since Google treats affiliate links differently than regular backlinks you must do the same.

You can overcome this by creating dedicated landing pages on your domain for large affiliates to use rather than affiliate links. This way, the large affiliate can link to the landing page and Google will read the link as an editorial backlink. You can make use of therel=canonical tag in order to avoid penalties for duplicate pages.

Will Affiliate Marketing Work For Big Brands?

As a strategy, affiliate marketing can work for brands of any size, large or small, as long as you are willing to put in the time and effort to setup a proper program. However, for large brands in particular, you will need to take special considerations to ensure your brand is not damaged by affiliates. First and foremost, ensure any affiliates align with your brand’s values and mission. Doing so will make the relationship easier to maintain and will protect your brand’s reputation with consumers.

As a brand, you may also consider establishing guidelines with affiliates so their marketing tactics do not incorporate strategies that go against your brand’s messaging. For example, you may stipulate that affiliates cannot use on-site pop ups or unsolicited emails when marketing your brand. Creating such guidelines with affiliates protect your brand while setting expectations for the partnership and easing maintenance of the relationship.

Related: E-Commerce Best Practices

What Are The Pros And Cons?

As you can see, there are a number of factors to consider when evaluating affiliate marketing as a strategy for your e-commerce site. As with any marketing strategy, affiliate marketing can have considerable benefits while also leading to some drawbacks.

ProsThe primary benefit to setting up an affiliate program is low upfront costs. Starting and setting up the program may come with some fees, but once created affiliate marketing follows a pay-for-performance model. This means you will only pay an affiliate once they have driven a sale on your site. In other words, affiliates do not get paid until you do (or until you make the sale).

Affiliate marketing can also help you reach a new audience. By connecting with affiliates, you can put your products and brand in front of new potential customers that you might not reach otherwise. As a result, you will see an increase in traffic and sales on your site.

ConsThe cons of an affiliate program create a bit of a longer list. First, these programs take time and energy to setup if you are going to do it right. You will need to source and pitch affiliates that are in line with your brand’s values, negotiating a deal with them to ensure both parties receive adequate value from the relationship.

In addition, you will need to continuously assess the quality of these relationships and the number of conversions each is driving. The cornerstone of affiliate marketing is quality over quantity. Developing a few high converting affiliate relationships will be much more beneficial to your revenue than maintaining many low converting ones.

You will also need to be wary of affiliate theft. With some sophisticated coding, affiliates can create toolbars for consumers’ browsers which force affiliate codes and tracking cookies onto the user’s browser. Unbeknownst to them, if a consumer downloads one of these toolbars containing code it will give the marketing affiliate the ability to commandeer their searches, even if the user is attempting to go straight to your company’s website.

As a result, commission is paid out to the affiliate that is circumventing user intent and is actually responsible for that traffic. While this is rare, and would take an experienced coder to create, any affiliate manager should keep an eye out for overly aggressive affiliate conversions as compared to your normal conversions.

Wrapping Up

So, does it make sense for you to engage your brand in affiliate marketing? Generally, it is a beneficial strategy for any brand so long as you have the time and resources to develop, monitor, and maintain an effective program. This includes everything from selecting the right affiliates, tracking their conversions, and determining the effectiveness of your efforts. If you have the ability to do so, pursue affiliate marketing. However, if you are a small operation with limited time and resources, your efforts may be better spent elsewhere. As your company grows, you can consider affiliate marketing in the future.

 

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Nicole is a Senior SEO Strategist with experience in technical SEO, SEO keyword strategy, content strategy, and Local SEO. She has experience with enterprise level Local SEO initiatives that manages multiple business locations up to over 300 stores nationwide. Her Local SEO expertise is in managing Google My Business accounts and building local citations to create an authoritative local presence for business owners.