Affiliate marketing (also known as “green marketing”) is a form of customer-generated marketing in which a third party, such as an affiliate marketer or referral network, buys the customer’s product/service/pricing on behalf of the customer and then sells them to the customer indirectly.
The initial benefits of affiliate marketing are still very real. Affiliate marketing puts you in direct contact with your customers, and they get to experience your product/service first hand. This is an essential part of any business model that relies on long-term relationships (which is why so many startups do it).
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But there are also some long-term benefits that are still not fully understood:
• Affiliate marketing has been shown to increase conversion rates. Perhaps more important, it has been shown to increase sales for some products and services (such as hotel rooms). This can be extremely useful for companies that want to maximize their ROI from affiliate marketing (e.g., hotels).
• Affiliate marketing can help you acquire new customers by driving traffic to your website through their referrals. Many referral programs allow their participants to earn commission from both the purchase of the item and from other parties who use those links. For example, if you have a free trial offer for a landing page optimization tool, the sale could drive traffic directly to your site through referral links pointing back to your landing page optimization tool page—allowing you to build up a list of buyers who could potentially become customers later on. This can be particularly valuable if you sell software or services that are too niche to be able or willing to buy directly from you; but too broad for you not to be able build up enough traffic in order for you to earn money from sales.