Digital Affiliate Marketing - Coursework Example

Digital Affiliate Marketing Executive Summary Digital affiliate marketing includes making money through online website. It signifies that the companymay gain from linking with various websites which recommend services or products which relates to the organization or company. Nowadays, business is experiencing massive changes in its operation because of the presence of social networking site. The paper considers how different methods of digital affiliate marketing such as “pay per sale”, “pay per lead” and “pay per click” methods help the company to generate sale with the help of affiliate. The major players are the affiliate, the network, the consumer, and the merchant. Further, it takes into consideration the Customer relationship management in a digital environment; which is observed as a substantial response towards the tactical challenges faced by marketing today. It also considers different models as well as challenges in digital affiliate marketing. Lastly, it lays stress on focus of the companies on web commercialization. Table of Contents Introduction 4 Methods of Digital Affiliate Marketing 4 Benefits of Digital Affiliate Marketing 5 Customer Relationship Management (CRM) in a Digital Environment 5 Models of Digital Affiliate Marketing and their Benefits 6 Challenges in Digital Affiliate Marketing 7 Commercialization of Computer-mediated Environment 8 Conclusion 8 Reference List 8 Introduction Digital media signifies the meeting of communications and information technologies (Thomas and Housden, 2010). Many marketing approaches have been used for various purposes and to reach the target audience. The digital marketing practices which have come into practice are known as “Digital Affiliate Marketing” (Spurway, 2013). Affiliate marketing includes making money through online website. It is very popular nowadays because the organization can make good money if they exactly know what they are doing. It means that the organization may gain from connecting up with different websites which offer services or products which relates to the organization. Building a partner affiliation where one of the website creates traffic for the other and in return the first website gets payment is referred as affiliate marketing (Digitalbusiness, 2012). Digital affiliate marketing includes third party for creating “closed loop” advertising mechanism. Whether the digital affiliate marketing is an excellent investment for dealers depends on the judgement of the sales achieved through website (Nicklin et al, 2013). The major players of digital affiliate marketing are: the affiliate, the network, the consumer, and the merchant. With more customers doing online shopping, affiliate marketing guarantees maximizing traffic towards the web page that consequently turns to an enhancement in sales. The purpose of this paper is to provide the benefits of digital affiliate marketing and the advantages of its methods and models. Methods of Digital Affiliate Marketing The methods of affiliate marketing are: pay per sale, pay per lead and pay per click affiliate methods (Chaffey and Smith, 2013). Pay per Click Method: Pay per Click Method of affiliate marketing is one of the most popular techniques used for different purposes. From affiliate marketers to internet marketing experts, pay per click remains the method of selection for many. The thing which is required to know is that you are doing the things correctly, and then it will be very helpful. It allows the businesses to drag in potential customers at the accurate time. It also offers flexible, accountable, and quick method of attracting the enquiries and creating sales (Morgan, 2011). The main benefit of this method is that the commercial is placed with the web sites which are top ranked in the search category (Evans, 2009). Pay per Lead Method: In this method, the advertiser has to pay for every sale lead created, such as an advertiser may make payments for each visitor who have clicked the site and also filled the form (Brown, B.C., 2011). The professionals of real estate are mainly benefited who are specializing in the higher end marketplace areas. Leads are generally worth more when the service provided is within a territory or zip code (Richard, 2004). Pay per Sale Method: It is sometimes also known as pay per action method. Under this method, payment is actually based on qualifying acts such as registration, signups and sales. This does not incorporate the deals which are based only on clicks (Michie, 2006). The merchant gets paid only when the affiliate creates a sale. Commission can be in any form i.e. flat rates or percentage based on actual sale (H.Deitel, P.Deital and Steinbuhler, 2001). The major benefit is that it is the safest method to advertise the product because payment to merchant is made only once when the sale is done (Delhome and Champon, 2005). Benefits of Digital Affiliate Marketing Digital affiliate marketing provides various benefits for the affiliates in terms of selling the products of the original owner. The affiliate is not required to create their own product, don’t need to hold inventory and worry about the delivery, even not required own account in order to accept the payments. What the affiliate required is to find a product as well as to promote it effectively and then they receive commission for the sale or just for the click. Other benefits of affiliate marketing is that it answers the two main problem in single attempt i.e. vendors always require more customers, therefore they employ affiliates to assist them to find customers; and who don’t comprises their own product to sell could advertise merchandise as affiliate and by doing so they immediately have something in order to sell or advertise with little effort (Isibor, 2014). Apart from all these other advantages are: the website owner gets the commission just for generating the transactions like a sale or lead or for assisting the travel of web visitor by relating them to a website of an advertiser or a merchant. When the customers or visitors pass through the site of merchant, he pays to the owner of website for facilitating referral to them. So, it is very much beneficial for the website owner (Harden and Heyman, 2009). It is almost a sure method of generating money online but it is never considered as an all-smooth sale. It needs creative mind and strategic planning. A costly network could be capable to effectively advertise and promote the product and also turn the web-happy people who just surf the sight into a potential customer. In most of the cases the affiliate is rewarded in terms of commission for “pay per sale”; “pay per click”; and “pay per lead”. One key advantage of being in the business of digital marketing is that the delivery of the product is fast and there is also no need to bother about logistics and shipping (Spurway, 2013). Customer Relationship Management (CRM) in a Digital Environment Management of customer relationship has become the leading concept in digital media marketing during latest decades. Marketing will require undergoing immense changes to discover its ethical and functional role. Customer relationship management can be observed as a substantial response towards the tactical challenges faced by marketing today. CRM is further than just a marketing practice because it is applied as a strategic level in order to support the mission of company with the objective of becoming customer centric. The use of CRM requires a reformation of the company from product-centric to customer-centric (Fuglsang, 2008). Analysis of the company’s online marketplace helps them to know the customer behaviour to identify possible search terms through which the company can promote itself and also the sites of potential partners and media buys. The functioning of “Customer Relationship Management” symbolizes the key towards increasing the loyalty of customer in digital environment. Though customer relationship management have an indirect as well as direct impact on sales, customer satisfaction, loyalty, and profit; 70% of the online retailers are lacking in their operational strategies towards refining their relationship with customers (Shin, 2005). It was found that customers show their more loyalty towards the store based product in comparison to online loyalty because sometimes it happens that the product does not exactly matches to its features as explained on the site of the product. So, in case of affiliate marketing, product features must be given correctly in order to get customer and preserve their loyalty (Cuthbertson, 2007). The benefits of CRM in affiliate marketing is that the company get to know the nature and characteristics of the customers by capturing the data of customer, i.e. both browsing as well as transactions; with the help of their source. It helps the retailers of multi-channel to compare the store based and online loyalty of users. Models of Digital Affiliate Marketing and their Benefits Models explain the process through which the business is carried out among organization, suppliers, its customers, other stakeholders and distributors. Managers should constantly review that how the electronic communications modify existing models along with offering new opportunities. The models of affiliate marketing are: exposure-based model, recognition-based model, attitude-based model, and exchange-based model. Exposure-Based Model: Exposure-based model of affiliate marketing is one of the simplest structures of the type. The technologies of affiliate marketing make it probable to track lead, sale, and click per customer. Together with affiliate broker or media agency, the marketer normally selects media which can reach maximum people in the chosen demographic sector. This typically requires a better negotiating and planning to apply the model. Thus, the network of exposure-based marketing consists of moderately less number of associates or affiliates which are active during the short phase. Attention is just received every time a customer is exposed towards the online banner of marketer (Goldschmidt, Junghagen and Harris, 2003). However, some managers are looking for a substitute to exposure-based model which can assure more than disclosure and also delivers definite sales (Collins and Fiore, 2001). The benefit of this model is that it is more or less identical to traditional poster advertising, as publicity is attained simply just by being observable with the graphical component in the online media which are chosen based on the principles of demographic segmentation. Graphical component are more eye-catching and remains in the mind of customers (Goldschmidt, Junghagen and Harris, 2003). Recognition-Based Model: Recognition is considered when a customer shows interest just by clicking upon the site, and the merchant pays the affiliates each time a visitor is brought by them to the web page. Recognition is generally measured by way of click-through charges. This model is beneficial for companies as they find it exciting in order to determine how deeply a visitor goes in the website before really presenting a lead. Therefore, it evaluates the degree of recognition suggested by various affiliates. This can be easily calculated by inserting checkpoints on the selected pages, and this computes when a visitor approaches the chosen page (Goldschmidt, Junghagen and Harris, 2003). Attitude-Based Model: The attitude-based model of affiliate marketing is considered as the next stage of integration among the merchant and the affiliate. Attitude is calculated when end-user presents a lead which shows a want for the product and services of the merchant. When concentrating on the age bracket of leads, the merchant must make the things relevant and easy for end-customer. This is generally possible in two manners: when the link of merchant is made accessible on the site of affiliate with a directly-related content, or/and when the link is integrated by the affiliate leading towards generation of lead, on the website. The marketers and affiliates, both are benefited with this model because both enjoy success by generating the leads when the graphical elements as well as functionalities are strongly integrated (Goldschmidt, Junghagen and Harris, 2003). Exchange-Based Model: It is one of the most incorporated forms of digital affiliate marketing because the user by no means leaves the site, however performs the operation by way of micro-site that is completely integrated in affiliate site. The benefit of this model is that the marketer has to only consider the conversion charge from the clicks to transactions/sales on a constant basis (Goldschmidt, Junghagen and Harris, 2003). Challenges in Digital Affiliate Marketing The challenges which the digital marketers are facing today are: lack of sufficient metrics as well as measurement system in order to drive the marketing performance; frustration of effectively engaging the online clientele, who have very short interest spans, face ample choices, as well as are increasingly opposed to the advertising message (Mayar and Ramsey, 2011). Other challenges are disagreements of ownership as well as tensions between the team of digital marketing and various other teams for example IT, marketing, senior management and finance; and integrating and managing the information of customer regarding their behaviours and characteristics collected online (Chaffey et al, 2008). Education is also one of the challenges because there were so many people around the globe who still does not understand the term digital. So, lack of education among people makes the number of customer less in terms of online marketing (Ryan and Jones, 2012). The main strategy for these challenges is that the marketers or merchants or organization require different knowledge and skills related to the digital technology. Such skills comprises of computer literacy, decisiveness, analytical skills, leadership, creativity, communication, stress tolerance, and strong knowledge of marketing (Sahaf, 2008). Commercialization of Computer-mediated Environment As businesses are investing in the web commercialization, companies are experiencing spectacular shift in their standard business practices which is caused by appearance of global electronic market. Now the marketing issues are surrounded by the “commercialization of computer-mediated environment” (CMEs) such as Global Web and various electronic media (Csumb, 2008). The computer-mediated environment possesses exclusive characteristics such as hypermedia, machine-interactivity, and network navigation (Hoffman and Novak, 1996). In CMEs, the same phenomena, same environment, and same issues emerge quite differently with various levels of familiarity and technical skills (Rudestam and Read, 2010). The companies are benefited from the digital marketing technologies as it helps to increase the revenue and is also regarded as a budget-savvy method to draw more customers. The advertising done online is also cost-effective as it includes only paying a little commission to others just for promoting their business and mounting sales could be an outstanding investment in money and time. Moreover, the sales channel helps in extending the customer reach which the companies might not be able to perform on their own. Conclusion Marketing is extremely competitive in the digital world which is prevailing today. Adapting to innovative techniques of selling the product will determine the success of company as well as have a great effect on the future product or services. This paper focuses upon different types of methods of digital affiliate marketing and customer relationship management in a digital environment. Many techniques of CRM are used in digital affiliate marketing environment. Further, it explains how different models of digital affiliate marketing help the business in making their profits. Moreover, it also lays emphasis on the challenges of digital media and the focus of companies on web commercialization. Reference List Brown, B.C., 2011. How to Use the Internet to Advertise, Promote, and Market your Business or Web Site. Florida: Atlantic Publishing Group. Chaffey, D., Chadwick, F.E., Johnston, K. and Mayer, R., 2008. Internet Marketing: Strategy, Implementation and Practice. United Kingdom: Pearson education Ltd. Chaffey, D. and Smith, P.R., 2013. 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