The commercial industry within the last year and a half has taken many unexpected turns. The global eCommerce retail value experienced almost a $1-trillion-dollar increase between 2019 and 2020. The value increase accounts for the highest growth in eCommerce so far. And with consumer behavior changed due to COVID-19 leading more people online, Direct-to-consumer (DTC) brands now have a wider audience and an opportunity for an increase in revenue.
The audience base is growing so is the competition. But affiliate marketing investment can help you stand out amongst others.
What is Affiliate Marketing Investment?
Investopedia defines Affiliate Marketing as: “An advertising model in which a company compensates third-party publishers to generate traffic or leads to the company’s products and services.”
This advertising strategy involves the company rewarding the third party for the promotion of the company’s products. The parties involved in affiliate marketing investment are called affiliates and merchants or brands.
- The Affiliate: Affiliates are third parties who promote a product in a way that generates website traffic or leads and receives an incentive in return. The incentives are often in the form of commissions but can be different depending on the arrangement made with the brand. With eCommerce, the affiliate is expected to promote the brand on their social media platform or across multiple channels.
- Merchants or Brands: Merchants are the ones with a product to promote or sell. The product can be anything, but for affiliate marketing investment, it is easier for it to be a physical product in that physical products are easier to create promotional content, and merchants often have little involvement in the promotion/marketing of their products.
DTC Brands and Affiliate Marketing
As of 2020, the eCommerce market held an estimated value of over $10 trillion, and brands like SHEIN have taken over most of the market.
A report by Apptopia shows that SHEIN holds the reins to approximately 50% of the app market. Brands like SHEIN and Warby Parker have learned to effectively use affiliate marketing investment to their benefit; and consequentially, they have achieved affiliate marketing success.
Keep reading to discover how these brands leverage affiliate marketing investment.
- Exclusive/ Limited Time Promotions: A 2019 report showed that over 60% of consumers that purchase products expect sales or discounts. Irrespective of the state of the economy, sales are still highly valued. In that regard, DTC brands are partnering with affiliates to promote limited-time offers to their consumers, encouraging them to purchase.
- Reduced Marketing Cost: Advertising can dig into a business’ capital. To avoid the extra cost, DTC brands have learned to rely on affiliate marketing investment for product promotion. For most purchases made on SHEIN, consumers want recognition, and they do so by tagging the brand. This brand tag then acts as free advertisement via affiliates and pushes consumers further down the sales funnel.
- Brand Promotion: Affiliates are encouraged to make sales and earn commissions. Even without sales occurring, the brand can still win. Brands gain exposure and an introduction to a broader audience on every post that an affiliate makes promoting the brand.
Why Affiliate Marketing Investment is the Best for DTC Brands?
Affiliate marketing investment is a lucrative and beneficial marketing strategy mainly because it cuts advertising costs, but the benefits go beyond that. Some of its benefits include:
- Cross Channel Promotion: Retail brands spent $253 billion on advertising alone in the year 2020. Affiliate marketing investment reduces advertising costs drastically without skimping on advertising. Since affiliate marketing is backed by incentives, affiliates are not limited to a platform and can distribute their affiliate links to all their active social media platforms.
- Consumer Insights: A product’s performance provides valuable market insight. It gives merchants real-time feedback on the interest of consumers. The results generated by an affiliate promotion will act as a means to track what your consumers want.
- Trackable Results: The performance of an affiliate is crucial in affiliate marketing. Above, we mentioned that affiliate marketing investments provide consumer insights. The ease at which brands can track consumer interests is another benefit of affiliate marketing investment.
Results from affiliate marketing can be tracked through; the number of sales generated through promo codes, the amount of website traffic that stemmed from an affiliate’s link amongst others.
- Distinctive Features: Compared to other marketing strategies, affiliate marketing investment stands to be the best for the following other reasons:
- Low start-up cost
- Low management cost
- Low risk, high reward
- Higher return on investment than with direct advertising
- Flexible operation
Does Affiliate Marketing Work?
Marketing strategies that can provide high returns, open up your brand to a far-stretching audience of mirror-customers, and expose your eCommerce brand to little risk. Affiliate marketing investment is beneficial to DTC brands because it provides DTC brands direct access to their customers. It is an inside look into your audience’s interest. Therefore, placing you ahead of the competition.
Why Choose AllValue?
We suspect that you have decided to grow your brand with affiliate marketing since you have read to this point. The results of this marketing strategy are guaranteed, but it can seem daunting to a new business owner. For this reason, eCommerce giant Youzan created AllValue.
AllValue is an eCommerce software tool that can create and manage an affiliate marketing program. The program will connect you with the right affiliates for your niche while providing straightforward means to track the results.
Visit AllValue to create your affiliate marketing program and experience a service dedicated to providing positive results!