In many ways affiliate marketing is similar to referral marketing. Both approaches use rewards as an incentive to get third-parties (existing customers or other businesses) to refer new customers. However, affiliate marketing relies solely on financial incentives, whereas human connections play an important role in referral marketing.
For each new customer or lead brought in, the business running the campaign pays the affiliate a referral fee.
Affiliate marketing is a form of marketing that sources new customers via other businesses, publishers, and third-parties (affiliates). These affiliates refer their customers or readers to other brands in return for a small commission.
Affiliate marketing is a popular choice for many businesses because it’s performance-based. You get to choose which actions or events count as conversions, and you only pay out when these conversions are completed.
For example, you could choose to reward affiliates with $2.00 for every email signup they secure, and 2% of successfully referred customers’ first orders. This way you can fine tune incentives to achieve the best results for your business.
Just like referral marketing, affiliate marketing is highly cost-effective in comparison to other marketing techniques. The payouts for successful affiliate referrals are usually much cheaper than the costs of running a full-scale advertising campaign, for example. Because of these benefits, affiliate marketing is expected to become increasingly popular.
By 2022, spending on affiliate marketing will reach $8.2 billion in the US alone. - Statista
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