- The Benefit of Affiliate Marketing for Startup Businesses - June 23, 2015
Stretch your advertising dollars with affiliate marketing
One of the most common and most pressing issues that nearly all start-up businesses face is that of resource management. Unlike major corporations with an established infrastructure and access to significant funds, independent companies that are just starting out have to be much more careful about how they spend both their money and their time. And affiliate marketing can help a lot in this regard.
The key here, from the perspective of the humble start-up, is one of return on investment, or ROI. At the very core of how affiliate marketing works is the notion that advertisers need only pay on performance. There are no upfront setup fees, there are no on-going maintenance charges, and there are no fixed fees to keep the advertising campaign going. There are no surprises. As an advertiser, the business only needs to pay when a specific action is completed by the referral.
This could be requesting a free trial of the product or service, giving the advertiser a much needed “foot in the door” with a new customer. This could be signing up for a mailing list, empowering the advertiser with a constant line of communication with a new fan or follower. Or this could be completing a purchase or subscribing to a paid monthly plan, both of which naturally have a direct monetary benefit. It is entirely up to you what constitutes a conversion and this can be based on the current goals of your start-up business at this moment in time. As your company grows and matures, you may adapt your campaign or launch a new one entirely.
Contrast with the mechanisms behind more traditional forms of online marketing. Building up brand awareness through banner ads can be helpful, but it does not lead directly to sales. And many of those website visitors may not even notice or recognize the banner ad. Running a pay-per-click campaign can generate traffic, but it may not lead to conversions. And it can take a lot of work to get the high quality traffic that you desire. Growing a social media following can be good for buzz, but social media is inherently fleeting. These are people who see (and oftentimes only in passing) and not necessarily ones who buy.
And all of these traditional advertising systems force the company to run into sunk costs with little obvious ROI. That’s a challenge and it can be a very frustrating one, particularly for start-ups with limited capital to spend. With affiliate marketing, the return on investment is directly trackable and quantifiable. You can know for certain that with X number of dollar spent on an affiliate campaign resulted in precisely Y number of new customers or sales. There’s no ambiguity. You only pay when the referred website visitor converts with the specific action you define. And that’s money well spent, because customer acquisition can be so difficult.
The resource management, as a result, is far more efficient and far more effective. The task of generating and optimizing traffic that actually converts becomes the responsibility of the affiliate (publisher) and not the advertiser (merchant). This frees up not only financial resources, but also the resources of time, expertise and attention. The affiliates are the expert professionals who work tirelessly to get the targeted traffic you desire. It is their sole objective, because they only want traffic that converts.
With improved customer acquisition and a clear return on investment, affiliate marketing can be a tremendous tool for businesses of all sizes, including the humble Internet start-up with near limitless potential.