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With affiliate marketing now driving as many ecommerce orders as email marketing, more and more businesses are interested in leveraging the power of a referral channel. However, years of affiliate program analysis have proven that some products benefit more from referrals than others. Below are some factors to consider before taking the plunge.
Affiliates promote your product through specific methods like reviews, email marketing, and social media to their own traffic sources (visitors, subscribers, followers). With that in mind, you should explore the following questions before deciding to launch an affiliate program:
- Has my product already generated any type of online referrals yet?
- Are people already recommending or talking about my product / service in a positive way?
- Are my competitors offering an affiliate marketing program?
- Can I afford the costs associated with an affiliate program (such as competitive affiliate commissions and bonuses, affiliate network fees, etc.) based on my current ecommerce sales level?
Determine Your Niche
Some vertical markets are more affiliate-friendly than others. Remember that areas where people have interest or passion usually do the best, especially if the content relates to personal growth or hobbies. There are three niche areas that are widely-cited as “evergreen”: relationships (e.g., online dating), health/fitness, and wealth/money.
B2C (business to consumer) niches usually perform better. In the software and SaaS space, audio-visual editing tools, online security & privacy or productivity tools represent affiliate marketing sweet spots.
Be cautious of saturated markets such as PC utilities where strong demand results in increased competition.
What About SaaS?
A common question is whether or not affiliates are right for a SaaS or subscription-based service. In this scenario, affiliates will get their payout in smaller amounts while taking the risk of subscription cancelation, so affiliates are often less interested in promoting subscriptions.
Big Name Advantage
It should come as little surprise that affiliate marketing usually delivers the best results for established brands that have already reached a certain level of notoriety among consumers. Buying decisions are often based on name recognition and product trust which can be challenging for startups.
For startup companies who do not have name recognition, choosing affiliates who already have an established audience can jump start awareness. Just expect a slower ramp up of your program.
Setting up and running an affiliate program takes time and resources. It’s important to track your sales and keep your affiliates engaged. Need a jump start? FastSpring offers partially or fully managed affiliate programs for companies who don’t have an internal resource to allocate to affiliate program set up and management. Contact us for more information about affiliates or our managed programs. Visit the affiliate page for more info.