$136 billion in sales in 2016.
That is what Tech giant Amazon generated last year.
And you know what?
A big part of those sales were driven through Amazon marketing affiliates. Some estimate that up to 40% of Amazon sales are generated through affiliates. Even if that seems a bit high and for argument's sake it is assumed that only 5% of the sales would be generated through affiliates that would still amount to a staggering $6.8 billion.
Amazon is renown for having one of the best affiliate marketing programmes on the internet. In fact, it was one of the first companies (if not the first) on the internet to have one when it was launched in 1996.
While Amazon's rise to global dominance was down to a number of different factors, it is hard to deny that Amazon's affiliate marketing programme surely played an important role in getting the company sales and brand recognition.
And if you look around the internet, companies across the globe and different industries offer an affiliate marketing programme in order to grow their revenue and stay ahead of the competition.
Be it Kaspersky that offers cyber security for private people and small businesses, LiveChat that offers customer support and live chat solutions on your website or eToro a leading trading platform where you pay 0% commission.
It is not only for "online" businesses (which company today is not an online business?). In transportation you have Uber, in fashion you have ASOS, in travel companies like booking.com and Agoda and in China companies like Alibaba while in India you have Flipkart.
And why would they not have such a great marketing model in place? After all, a company only needs to pay an affiliate marketer after a pre-defined event has occurred like someone signing up for a newsletter, a free trial or as is most common a completed sale.
The great thing for the company is they only need to pay a commission when the performance is as agreed. If the affiliate marketer is sick or does not perform the company does not need to pay anything.
If you are not familiar with the term affiliate marketing then you might ask what is affiliate marketing? It is best explained with an example.
Here at Rise Africa Rise we generate revenue through affiliate marketing through mentioning various products through our blog, email newsletters and social media sites.
When, for example, we talk about products that you can use to build your business such as the online project management software Wrike, email marketing platform GetResponse or keyword research tool Kwfinder then we use an affiliate link to hyperlink those links.
This means that when you click on mentioned affiliate links and decide to buy those products we get a commission for referring you as a paying customer without you having to pay more. If you decide not to buy then we do not get anything.
That is why this marketing approach offers many advantages. Your company only pays a commission upon a predetermined event which in most cases is a successful sale. It is purely performance based. If an affiliate marketer is sick and does not work or goes on holiday, your company is not obligated to pay them if no sales are generated in that time. Unlike when you have employees who are sick or who are not performing at work. You still need to pay them.
Moreover, even if the traffic generated by affiliates does not turn into a sale right away you can put those visitors on a retargeting list (if you use paid advertising that is) and get them to buy at a later stage. If the affiliate marketer's cookie has expired by that time you have a new customer without having to pay any commission.
When you look at African companies operating on the internet, it can be a bit harder to find companies that use affiliate marketing to grow their business. Given the success that Amazon, Uber and many other household names derive from it this is quite a surprise. Especially as we are moving deeper and deeper towards a digital economy and online sales are continuously growing. According to McKinsey e-commerce revenues on the continent are predicted to reach $75 billion by 2025. Plus the next billion people coming online are mostly going to come online in emerging markets such as Africa.
African companies offering an affiliate marketing programme include Nigeria's largest online mall Konga, e-commerce giant Jumia, Travelstart in Kenya and Ghana's Web4Africa amongst others. In contrast, there seem to be very few African affiliate networks, especially outside of South Africa. In South Africa you have affiliate networks like Admarula, Affiliate or Offerforge, but beyond this you will need some persistence to find affiliate networks on the continent.
Given the rising levels of internet penetration, which currently stands at 29% with 362m people online, and the increasing digital literacy across the continent now is a great time for your company to start thinking about offering a compelling affiliate marketing programme.
According to Lico Gross, co-founder of South African Affiliate Network Admarula, until recently there have been relatively few affiliates with enough traffic to generate meaningful results for clients. Over the last few years more and more creative website owners, bloggers and social media publishers have appeared and they are changing the online landscape. Even the large, traditionally CPM publishers are starting to turn to affiliate marketing as a sales channel - they too are seeing its growing potential.
Affiliate Marketing can also present a great business opportunity for the many economically marginalized and entrepreneurial youths across Africa. It is a very low cost business to start. Some cheap hosting for a website from a company like Bluehost, access to the internet and the dedication to learn the required skills are all that is needed to succeed.
Despite the rising levels of internet penetration there is still catching up to do for African countries. South Africa is still 15 years behind the US and 10 years behind Europe. In order to have a healthy affiliate industry a certain level of internet penetration and e-commerce is required. Fortunately, South Africa's big brands are starting to set up online shops and with this opportunities for affiliate marketing programmes.
Cybercrime is a challenge that has made some players in the affiliate marketing industry reluctant to set up shop in South Africa and other parts of Africa. Fighting fraud is a big concern and something that needs to be addressed in order for affiliate marketing to become more established throughout the continent.
Furthermore, the technology to run affiliate programs efficiently and transparently was not available for a long time in South Africa. This changed when Admarula was the first network to bring this type of technology to South Africa and Africa.
While Africa is still lagging behind much of the world when it comes to affiliate marketing, there are encouraging signs that interested businesses can start taking advantage of this online marketing channel and see promising results. Affiliate marketing opportunities in Africa will surely increase as the move towards a digital economy continues.
More and more brands try and enjoy the financial returns of performance marketing. However, it will take time to make a mainstream impact. Performance-
based models like CPL (cost per lead) and CPA (cost per acquisition) are increasingly attractive as
they deliver tangible business results. The problem is they are not that well known.”
CEO & Co-founder Admarula
Given the explosion of different online channels in the past 15 years with the likes of facebook, whatsapp, twitter, instagram and many more you are probably asking yourself how affiliate marketing as a channel could grow your business.
While it depends on how you structure your affiliate marketing programme, you should consider these significant benefits:
No matter whether your company is a start-up or an established business performance based affiliate marketing can help your company grow your online revenue and achieve maximum return on investment on your ad spend.
By using an affiliate network like Admarula, advertisers get instant access to a network of qualified and approved publishers including websites owners, bloggers and social media affiliates – essentially an extension of their sales team. The beauty of the performance-based affiliate model is that these partners only get paid when the advertiser make a sale, so it’s a win-win for both parties.
Essentially, this means that clients don’t even need a budget, as the affiliate will earn a percentage of the sale and can keep on generating sales for the affiliate program for the lifetime of the product.
Some affiliates also work on a pay-per- click or pay-per- lead basis, which many companies use to
build up a qualified list of leads for their sales teams to follow up. The key element here is that
everything is performance based, meaning that the advertiser/client knows exactly what results they
are getting from each campaign and can calculate their ROI directly based on these results.
Affiliate marketing also allows advertisers to access an audience that they wouldn’t normally find on a big, main-stream website. For instance, a fashion blogger with a loyal following of fashion-conscious
readers can achieve better results for fashion retail brands with a targeted campaign, than a widely
targeted CPM campaign that doesn’t necessarily reach the right audience.
As with other marketing channels you need to constantly optimize your affiliate marketing programme for profitability. This includes testing your landing pages, your offers, your affiliates as well as many other variables.
African entrepreneurs and businesses interested in growing their revenues through the help of affiliate marketing have different options at their disposal.
One of the first decisions to be made is whether to have an in-house affiliate marketing programme or whether to outsource to a professional affiliate marketing network. There are several options in both directions. When evaluating the two options consider these factors:
When you join an established affiliate network much of your work like recruiting, approving and communicating with affiliates will be taken over by the affiliate network which can be a big benefit as it allows your company to focus on your core strengths. It may also save you from making a lot of unnecessary mistakes as affiliate networks are already experienced and know how the industry works.
When your company chooses to self-host the affiliate programme the effort involved is generally much larger. You have to select the right affiliate tracking software to track your affiliates, recruit affiliates, perhaps train them and communicate regularly with affiliates so they can perform at their very best.
In order to make your affiliate marketing programme a success you will obviously have to provide your affiliates with great ammunition in the form of banners, videos, screenshots, social media text and other promotional tools. The better the quality of the promotional material you provide, the easier for affiliate to get you paying customers.
You will have to provide these promotional materials no matter which option you choose unless you want to let affiliates work with their own promotional material. But the point is none of the two options will remove this effort.
Providing your affiliates the support they need to excel can take many different forms. You can provide them with valuable tips on how to promote your product and grow their income, you can create extra incentives in addition to the affiliate commissions and you can just supply them with important information about your company and product.
As such, it is difficult to give a conclusive answer as to how much effort is involved in running an affiliate programme. Too many companies set up an affiliate programme but do not put a lot of effort into running and managing it and as a result fail to leverage the true potential of affiliate marketing.
In general, however, outsourcing your affiliate programme to an affiliate network is likely to involve less effort than hosting your own affiliate programme.
The advantage of building your own affiliate marketing programme in-house with a software like Tapfiliate or Post Affiliate Pro is that it tends to be more rewarding and profitable when compared to outsourcing it to an affiliate marketing network. Starter packages are available from $69 per month for Tapfiliate while for Post Affiliate Pro they come at $97 at the time of writing. Both offer a 14 day free trial and when signed up you can cancel any time.
Furthermore, with an in-house programme you save the costs which affiliate marketing networks may charge your business. It is not unusual to charge fees of up to 30% of the commissions your company pays out to affiliates.
To make your in-house affiliate marketing programme top notch it may also be worthwhile to hire an affiliate manager who recruits affiliates, reviews their applications, supports them when questions arise and gives relevant information about any new promotions, products and other company updates.
If you want to hire an affiliate manager for your company who does all the work mentioned above, then this is obviously another cost factor that you should take into consideration when evaluating the self-hosted option. It is certainly recommendable to have somebody dedicated towards the affiliate programme as it is important to give affiliates the support they need to perform.
Ultimately, the costs of running an affiliate marketing programme have a lot to do the way you design it. If your company is just starting out and you choose to go with the self-hosting option without hiring an affiliate manager then self-hosting is likely to be the cheaper option than choosing to go with an affiliate network.
Irrespective of what option you choose, you also need to think about whether you have the necessary technology in place to handle the increased volume of traffic that affiliate marketers will be sending your way. Perhaps you will need more servers to accommodate larger volumes of traffic. Therefore, it is advisable to research the associated costs beforehand.
However, if you decide on dedicating significant resources to your affiliate programme then answering this question becomes more complex and subjective as you need to compare salary package of an affiliate manager to the costs of an affiliate marketing network.
One of the advantages of hosting your company's affiliate programme with a reputable affiliate marketing network is that it is an indication that your company is running a legitimate affiliate programme with quality products which makes potential affiliate marketers more confident in marketing your business.
Affiliates will also have someone to turn to should any issues with payments or other aspects of their accounts come up. Unless your company is a well-known brand it might not be so easy to convince potential affiliates of your company's credibility which can make it that much harder to attract affiliate marketers to your business.
As mentioned earlier, fraud is a daily challenge in affiliate marketing. That is why one of the advantages of joining an affiliate marketing network is that your company immediately gets exposure to their publisher base which has been pre-approved, fraud-checked, and which the network already has a relationship with - this takes years to achieve if you want to go at it alone.
Networks are trained at looking out for fraudulent traffic and pre-approving publishers based
on certain criteria to ensure good quality results for the client. If your company has no experience of detecting fraudulent activities this is a huge value add that affiliate networks can offer your business.
A network should be able to provide their clients and publishers with detailed self-
accessed reports on how each program is performing and allow advertisers to approve or
deny which publishers run their campaigns. This means total transparency but also access to
important data that advertisers need in order to calculate their ROI, cost of sale etc.
As already outlined earlier, running and managing a successful affiliate programme takes work and effort. Affiliate networks also offer additional perks to their publishers like training, seminars, newsletter and useful information on how to best run their websites and achieve results for the advertisers. If your company does not have any experience with this having an affiliate network do this for you is a big advantage.
There are things that take longer compared to when your company hosts the affiliate programme in house as the affiliate network acts as an intermediary between the advertisers and publishers. For example, there is usually up to 2-3 month lag from when the publisher generated the sale to when they get paid as the network first invoices the client and once the client has paid they can go
ahead and pay the publisher.
It is more difficult to have a direct relationship with your affiliates compared to when you host your affiliate programme in-house. As such you have less control and flexibility.
A crucial part of any affiliate marketing programme are going to be the terms and conditions that you offer to your affiliates. If your terms and conditions are not appealing to affiliate marketers it will be really hard to make your companies affiliate marketing programme a success.
This means you need to put a lot of thought into what those terms and conditions are. Here are some of the most important ones that you will need to think about:
When you are planning to introduce an affiliate marketing programme for your company, then you will need to think carefully about the terms and conditions that will form part of your agreement with affiliates. Here you can find common points that should be addressed in your terms and conditions:
In evaluating your terms and conditions it can be helpful to look at what top affiliate programmes on the internet offer - especially when it comes to determining affiliate commissions, cookie duration and payment options. That is where you can set yourself apart from competitors who also offer an affiliate marketing programme.
Also keep in mind that while terms and conditions are important, they can't cover you if your offer or products are below par. Good affiliate marketers will also take into consideration the quality of your products, sales funnels and what kind of overall experience your company provides to its visitors.
Even if you offer generous commissions they mean nothing for the affiliates if your products never get bought, because either the product is no good, your website loads super slow or you have a very leaky sales funnel.
Therefore, it is very important to think about what you are offering affiliates holistically. The whole package counts and not only the affiliate's commissions.
If you want to draw some inspiration from companies that self-host their affiliates with great resources to market their products take a look at DJI drones. They provide their affiliates with anything they can wish for including banners, videos, blog posts as well as giving you the option of creating your own promotion.
Their affiliate dashboard below is one of the best with a very user friendly design, lots of high-quality support materials (banner, videos, content etc) and of course immediate access to the affiliate performance data. Not many companies put so much effort and passion in taking care of their affiliates.
DJI drones created a starter guide for their affiliates to quickly help them to get to know all the facets of how their affiliate programme works and where all the important information and links can be found. You'd be surprised to find out how many companies actually put very little effort into creating an affiliate marketing programme.
How do you expect your affiliates to help you grow your business when you put very little effort into helping them get the most out of your affiliate programme? It's unlikely that you will get the ROI your company is aiming for without equipping your affiliates properly.
If your company is seriously considering in self-hosting an affiliate programme get some inspiration from the DJI drones affiliate programme. Other good affiliate programmes usually have a dedicated affiliate manager that supports affiliate marketers to maximize their sales as well as helpful email newsletters or training that teaches them about the best ways to promote their products.
Amazon was one of the first companies on the internet to offer an affiliate marketing programme and continues to do so up until today. And so do many other leading global companies like Uber, booking.com, alibaba and many others. The reason? It works!
So why should affiliate marketing not work for your company given the many advantages it offers? Sure, affiliate marketing may not be as established in Africa as it is in other parts of the world. But given the rising levels of internet penetration across the continent, increasing digital literacy and the growing numbers of website owners, bloggers and social media publishers that attract large audiences this is changing.
For your company, this also means that affiliate marketing is becoming an attractive marketing channel in Africa that can help you to grow your company's revenue. Use it.
Rise Africa Rise is your online guide to tech entrepreneurship and (social) innovation for African entrepreneurs, startups and businesses. Our aim is to provide you with valuable digital strategies, tools and insights to support you in building a world-class and competitive business in the 21st century.