Revenue Sharing & Affiliate Marketing

Revenue Sharing & Affiliate Marketing
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  • 0:00 Affiliate Marketing
  • 0:28 What Is Revenue Sharing?
  • 1:04 What Is Affiliate Marketing?
  • 2:34 Applying Concepts
  • 4:50 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Affiliate marketing can be a great tool to grow your business or expand your revenue streams. In this lesson, we'll look at revenue sharing and affiliate marketing and how to apply both to your digital marketing plan.

Affiliate Marketing

You've dabbled in various forms of marketing since launching your new business, but you're still looking for that something extra to get your product in front of new audiences. The problem is, you don't know how to break in to those channels effectively and efficiently. It might be time to consider implementing affiliate marketing, which can put others to work for your business in a revenue sharing program that can yield high impact and little risk.

What Is Revenue Sharing?

As a marketing strategy, revenue sharing is defined as an organization that pays partners and associates a commission for funneling customers to the company, helping the company build its business. It is a good way to build partnerships with professionals in your same general field and increase your business' or product's reach.

By implementing revenue sharing, you are incentivizing an affiliate's efforts, giving them more motivation to work for you as they share a portion of the earnings. It can also be quite cost-effective from the business' standpoint because you do not spend any money unless your affiliates are helping you make money.

What Is Affiliate Marketing?

Affiliate marketing is a method companies use to sell its products or services by signing up affiliates (individuals or companies) who help promote the business' products or services and earn a commission by doing so.

Affiliate marketing has been around much longer than its current popular form involving the Internet. Think of a car salesman who offered you an incentive for referring another customer to him, or a home repair contractor who gave you a discount for sending three other family members to his business. With the advent of the Internet, online retailers found a new venue in which to offer an affiliate program, and it stretches across the country and around the world.

You can get involved in affiliate marketing two ways. You can create your own affiliate program and take on affiliates to whom you pay a commission for each lead or sale they facilitate. Or you can become an affiliate for another business, in which case, you earn a commission.

This can be a successful strategy for growing a business because the risk-to-benefit ratio is low. Best practices for implementing an affiliate marketing program include:

  • Being selective in choosing affiliates. Too many affiliates can be difficult and time-consuming to manage.
  • Choosing affiliates with an audience you're not already reaching. An affiliate program should open the door to new consumers you may not otherwise have been able to reach.
  • Varying your marketing tactics from those being used by your affiliates. If you and your affiliates are reaching out to customers in the same ways, you're likely overlapping in your marketing efforts, which is a waste of time and resources.

Applying Concepts

To be successful in creating an affiliate program with revenue sharing, you must start with asking yourself a few basic questions: For which products or services are you hoping to generate traffic and sales? What types of audiences are you hoping to get in front of, and where are the affiliates who can help you accomplish that?

To get started, consider the following concepts:

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