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Why affiliate marketing is so much better than influencer and referral marketing

14 August 2018

What is the difference between affiliate marketing, a referral program and an influencer campaign?  And which is best for the New Zealand market?

With the increasing importance of e-commerce and consumer confidence in the internet for making purchase decisions, an online marketing strategy is more important than ever. But, it can be difficult to know where to start and which approach is best.

Affiliate, Referral and Influencer Marketing – What’s the difference?

What is the difference between affiliate marketing, a referral program and an influencer campaign?

We have outlined the key benefits and challenges of affiliate, referral and influencer marketing below. Simply put affiliate marketing is tracked, so you only pay for performance. Referral marketing rewards members for referring new members, for example with account credit. Influencer marketing is a more traditional form of advertising that relies on recommendations from an ‘influencer’ with a large online following.

Affiliate, referral and influencer marketing can all be an effective part of your online marketing strategy. But, if you are starting to develop your online referral capabilities, we think joining an established affiliate network will offer the biggest bang for your buck with ongoing returns.

What is Affiliate marketing?

Affiliate marketing is a way to promote products and services to new customers through referrals.

An online retailer (merchant) typically pays a commission to an external website (affiliate/publisher) for traffic or sales generated from its referrals. These could be through direct ad sales or sponsored posts.

Benefits of affiliate marketing:

The key benefit of referral marketing is that it can generate sales, leads, impressions, clicks or earnings in an easily measured format. You only pay based on performance. This is a highly efficient form of lead generation because the retailer can choose to pay a specified amount for a specific action. The commission could be a percentage of each purchase (e.g. 10%) or a set amount ($Y) per lead.

Challenges of affiliate marketing:

One of the most challenging aspects of affiliate marketing is that it can be time consuming and laborious to attract affiliates to advertise your product, and you may have to compete for “space” or attention on popular blogs.  But you don’t need to do it alone, our referral marketing platform makes it easy by managing and tracking affiliates on your behalf.

Our referral marketing platform collects together leading global brands operating in New Zealand, local ecommerce powerhouses and ambitious dotcoms to build a comprehensive affiliate network.

What are Referral Programs?

Referral marketing is the digital version of word-of-mouth advertising.  It is a method of promoting products or services to new customers through referrals. Digital referral programs often operate on a system where members recruit members, or customers refer customers. For example Uber or AirBnB reward referrals with account credit.

Benefits of referral programs:

As a formal marketing strategy, referral marketing is a process to encourage and significantly increase referrals from word of mouth. Word of mouth advertising is often regarded as the ‘holy grail’ of marketing and sales as research shows that customers trust referrals and act on them. The basic principal is to encourage and reward current customers, and a wide variety of other contacts, to recommend products and services to their online network. Online referral marketing increases brand awareness, referrals and, ultimately, revenue on a pay for performance basis.

Challenges of referral programs:

Some companies try to build and manage their own referral programs in-house through manual systems and emails. This can prove time-consuming and laborious.  It can also be difficult to be certain of the success of a referral programme, as if you are providing a good product or service, your customers are likely to refer you anyway.

S.L.I.C.E. Digital’s internet-based referral marketing systems make it easy – our technology measures results and customer behaviour so you can effectively gauge the return on investment from your referral marketing spend.

What is Influencer Marketing?

Influencer marketing is a larger scale version of smaller affiliate marketing networks. It identifies specific people who have a large audience or online following. These ‘influencers’ discuss products and services and encourage their audiences to try them.

Benefits of influencer marketing:

In today’s digital landscape, someone with a million followers on Instagram holds incredible influence to drive interest in a product. Brands can experience great results in a situation where their brand or product intersects with an influencers’ followers.

Challenges of influencer marketing:

Influencer marketing has no success guarantee, and is harder to measure than affiliate or referral marketing. It can provide an initial boost in sales, but this won’t necessarily translate to the ongoing incremental increases you see in affiliate marketing. Audiences are also becoming savvier at recognising ‘paid for’ influencer recommendations, and they don’t carry the same influence as ‘pure’ or ‘true’ unpaid recommendations.

So which is best?

In our opinion, the key benefit of affiliate marketing is that it directly tracks consumer behaviour, so you only pay for performance. Influencer marketing can be risky as there is no guarantee of success. If you are providing a great product or service, your customers will refer you anyway, so referral marketing may have less impact than other methods.

A strong affiliate network can offer a magic combination where there is true synergy between the product and service you are selling and the affiliate network’s audience. Strong affiliate content will provide a steady stream of potential customers that will visit your site and convert with very little ongoing work or effort from you.

How can S.L.I.C.E. Digital help?

S.L.I.C.E. Digital is the only referral marketing and affiliate specialist based in New Zealand, and dedicated to the Kiwi market. Our robust tracking technology makes it easy to track consumer behaviour, and operates across multiple devices and browser types. We take the hassle out of recruiting and managing affiliate publishers by recruiting and sharing content on your behalf. We can also help you understand your sector from a publisher viewpoint to create a point of difference and maximise success.

If you would like to know more about affiliate marketing and using S.L.I.C.E. Digital to increase your sales and leads please contact us now to discuss the options.