How to Set Up Affiliate Marketing for Merchants in 2024: A Step-by-Step Guide

With affiliate marketing, brands and organizations can work with content creators for their products to be exposed to the creator’s channel in exchange for a commission. This can help brands and merchants increase sales and can be used together with other marketing strategies. This targeted traffic allows merchants to reach an audience that is already receptive to their messages, thus increasing the likelihood of closing a sale or generating a lead. A good affiliate program coupled with the right affiliate marketing software can help you achieve your organization’s sales targets.

In this article, learn how to set up affiliate marketing for merchants so you successfully achieve your goals. This will be useful to organizations that have yet to set up their own merchant affiliate programs or are looking for ways to improve their existing setup. The end result is that you will be able to find affiliates and partners that you can work with to grow your brand.

The affiliate marketing merchants industry has changed significantly in the past five years. Before, it was relegated to the side of an organization’s marketing mix. But today, brands invest in it as part of their marketing strategy. This increase in usage of affiliate marketing stems from the proliferation of blogs on the internet as well as the rise of influencers who can push products to consumers. Thus, it’s not surprising that the global market size for affiliate marketing platforms is predicted to grow to almost $16 billion in 2025 from nearly $8.9 billion in 2019, at a CAGR of 15.7%.

However, despite how profitable it can be, affiliate marketing does have some caveats. Among them is the risk of affiliate fraud.

Affiliate fraud can be carried out in many ways. First, scammers can make fraudulent purchases through a stolen credit card which can impact your reputation among payment processors. Second, scammers can use cookie stuffing, where a fraudster loads a modified cookie to an oblivious visitors’ computer. When the cookie is stuffed in the user’s browser and they made a purchase, it will appear that they did so through the affiliate link, regardless of how they reached the page. Other less frequently used techniques include the use of bots and click farms.

What are the common challenges merchants face in affiliate marketing?

Affiliate marketing offers a great opportunity for merchants to expand their reach, but it does come with its own set of challenges. Here are some of the most common issues merchants face:

• Finding Quality Affiliates: It is crucial to identify affiliates who align with the merchant’s brand and target audience. Low-quality affiliates or those without the proper engagement can harm a campaign’s success. Merchants must ensure affiliates share similar values and have a trustworthy online presence.
• Tracking Affiliate Performance Accurately: Tracking affiliate activity, conversions, and commissions can be complex. Inaccurate or unreliable tracking can lead to disputes and inefficiencies in compensation. Merchants need robust software and tools to monitor real-time performance and prevent discrepancies.
• Managing Commission Structures: Deciding on fair and attractive affiliate commission rates can be tricky. While competitive payouts are essential for motivating affiliates, they should also be sustainable for the merchant. Striking the right balance can be difficult, particularly in niche markets.
• Maintaining Affiliate Relationships: Successful affiliate marketing requires nurturing long-term relationships with affiliates. Communication gaps, lack of support, or payment delays can strain these relationships. Merchants must provide regular updates, support, and incentives to motivate affiliates.
• Dealing with Fraudulent Affiliates: Some affiliates may engage in fraudulent activities, like misreporting leads or generating fake traffic. This can undermine the merchant’s efforts and lead to financial losses. Monitoring for suspicious activity and implementing measures like strict vetting is crucial.
• Staying Compliant with Regulations: Merchants must comply with legal and tax requirements, including affiliate disclosure regulations and data protection laws. Non-compliance can lead to fines and reputational damage.

When successful, affiliate fraud can cost one out of four dollars you spend on digital advertising. As such, it’s critical for brands to know how to set up affiliate marketing for merchants.

Step-by-Step Guide to Setting Up an Affiliate Marketing Program

1. Find Your Niche

The first step to setting up a successful affiliate marketing merchants program is to find a profitable niche. You will have to consider how easy or difficult it will be to place for a keyword, determine which keywords have high commercial value to you, and zero in on the interests of your target audience. Based on the latest affiliate marketing statistics, a majority of brands use affiliate programs, investing a good chunk of their budgets in order to roll them out as seamlessly as possible. As such, differentiating your products through careful niche selection is crucial.

Finding a niche can be overwhelming. However, you can narrow it down to three categories: passion, lifestyle, and problem. The passion category can accommodate hobbies. On the other hand, the lifestyle niche can be around a topic that people can identify with. Meanwhile, problem niches can propose a solution to solve a problem or pain point.

To decide on a niche, make a list of all the niches that interest you. Next, eliminate those that would be difficult to rank for keywords for SEO and commercial intent purposes. Once you have decided on your niche, put in the research to look for keywords that would rank well for your chosen niche.

2. Create a Marketing Blueprint

Before you start on your affiliate program, you’ll have to make an outline of what goals you want to achieve. Decide on the marketing strategy you will be employing and the results that you want to achieve with each step of your plan.

Your affiliate marketing program should also spell out how you will deal with your affiliate partners. It should detail how their performance will be evaluated.

In addition, it will also help if early on, you conduct competitor analysis. Find out their cost-per-action or cost-per-lead. With this knowledge, you can either match their commission on those channels or improve your own conversion rates. Higher conversion rates mean more customers and once affiliates realize they will get better paid to promote your products rather than that of your competitors, they will more likely choose to work with you.

3. Know the Costs of Affiliate Marketing

To start an affiliate program, you would need to consider the costs to manage the program, the cost of your chosen technology platform, and the cost of the creatives.

To ensure the smooth day-to-day operations of your affiliate program, you would need to hire an affiliate marketing manager. You can either hire this marketing manager in-house or outsource the function to a contractor. Whatever choice you make, you would have to take into account the prevailing salaries for affiliate marketing managers. Recent estimates put the average annual salary of affiliate marketing managers at $89,098 or $43 per hour.

Handling multiple affiliates requires the accurate tracking of payouts. Therefore, you might want to consider the costs of getting the best affiliate marketing platforms with the top-paying programs. Plans come from a range of price points from $29 a month to $299 a month. There are also other vendors that have a one-time access fee and minimum deposit.

Lastly, you would also have to consider the creative materials that you would have to supply to your affiliates. These will include landing pages, email templates, text ads, promo videos, and more. Providing your affiliates with engaging materials will help them generate revenue for you.

4. Create Terms of Service for Merchants

To avoid disputes, merchants and affiliates should draw up a contract where the rights and duties of each party are clearly spelled out. This is often referred to as the Terms of Service, Terms and Conditions, or Operating Agreement. Setting up rules and policies at the outset will help you avoid misunderstandings, and worse, disputes with affiliates further down the line.

When making your terms of service, make sure to include terms and conditions and provide a summary of the important rules that affiliates have to abide by. Moreover, the document must provide an explanation of your affiliate enrollment and acceptance process detailing the kind of content that would be unacceptable as well as the type of affiliates that you want to work with. To protect your brand, you should also have a trademark policy in place to ensure that your trademark is only used for expressly authorized purposes. In addition, you would want to set in place your content promotion policies to discourage affiliates from generating false leads, providing readers with inaccurate information, and other practices that can potentially harm your brand.

5. Set Up a Payment System for Affiliates

There are different types of commission models you can choose for your affiliate marketing merchant program, including the following:

• Revenue share model: The publisher gets a fraction of the revenue from sales generated by the publisher’s site rather than making a one-time flat fee for generating a sale or gaining leads. Revenue share programs also give affiliates the opportunity of earning passive income as they can earn dividends of a percentage reward of future sales, either for a certain period after a sale or acquisition or for the entire duration of the affiliate relationship.
• Fee-for-action model: The affiliate gets a payment after a visitor completes a certain action on his or her website. Actions can include driving sales, acquiring new customers, or generating high-value leads. This method gives brands a cost-efficient way to test new campaigns while only paying when the desired results are achieved. Fee-for-action schemes include pay-per-click, pay-per acquisition, cost-per-lead, or pay-per-impression.
• Pay-per-click model: Your affiliate will earn every time someone clicks on a link to your product or service from the affiliate’s website. The click doesn’t have to translate to a sale as compensation is for the traffic that the affiliate is bringing from his website.
• Pay-per-action model: Payment is based on a specific action that a visitor takes on the site. For example, payment could be made every time a visitor makes a purchase through the affiliate link or signs up for your newsletter. You could also choose a cost-per-lead scheme, where you pay for every successful lead given to you by an affiliate. Lastly, the pay-per-impression model requires you to make a payment based on how many times a viewer looks at an affiliate’s site.

For efficiency, you can automate link tracking and payouts through these leading affiliating marketing solutions.

6. Announce Your Affiliate Program

Now that you have ironed out the details of your affiliate program, it’s time to let others know about it. There are many ways that you can go about announcing your affiliate program. The most common ones would be to directly tap your prospects through email or even through a cold call.

However, before you do so, make sure you have an idea of how to approach your prospects. For example, if you are reaching out to influencers and bloggers in your niche, you have to first understand their target audience and what type of content they create. In this way, you can start your partnership on the right foot.

If you want to cast a wider net, you can also announce your program from your own website or your Facebook or Twitter pages, keeping in mind the best times to post on social media. Alternatively, you can register your program with an affiliate network like ShareASale, CJ Affiliate, and similar sites. This allows you to connect with potential affiliates across the globe to expand your reach. Keep in mind, though, that registration for these sites often comes at a price so you might need to adjust your budget accordingly.

7. Select Your Affiliates Well

Vetting affiliates ensures the quality of your affiliate marketing program. Some of the criteria you can consider are:

• Industry expertise. Since they are essentially your brand ambassadors, make sure that they are well-respected and can speak with authority in the niche where you will be marketing your products. You can find influencers and niche bloggers by doing a Google search of the relevant keywords or combinations thereof. In addition, you can also try loyalty and cashback sites which have a 43% share in affiliate marketing sales in the US.

• A professional-looking website. Potential affiliates should have a well-designed website that provides useful information to their target audience. A website that is down or under construction should raise red flags. An email address that doesn’t match the website domain or uses a P.O. box or a free email service should likewise be a cause of concern. Always know who you are working with to avoid being scammed.
• Engagement within their community. Potential affiliates must be active in their niche if you expect them to deliver results to your program. To get an idea of their engagement, check out how regularly they post on their website or social media, how big their following is, and how they interact with their followers.
• A definite method of promoting your products. Prospective affiliates should have a clear idea of how they intend to promote your product or service from the channels to use the methods to deploy. For example, will they create new content around your product or service, promote it among email subscribers, or just add a link to their resources page? Moreover, experienced content creators know their audience well enough to give you unique ideas on how to promote your product or service.

8. Offer Assistance to Affiliate Marketers

Data shows that 81% of marketers and 84% of publishers have adopted affiliate marketing as part of their tactic. In most cases, affiliate marketers already have a game plan to help you reach your target audience and get them to check out your offerings. But of course, it wouldn’t hurt for you to lend them a hand from time to time. After all, you know your products and services best, and providing affiliates with the information they need can only benefit your program.

For starters, you can prepare briefers, datasheets, whitepapers, or other documents that affiliates can review to learn more about your products and services. This will allow them to provide accurate information about your company. You may also want to give them access to any marketing materials like logos and official product photos to ensure that they can present your company in the best possible manner.

In addition, keep an open line of communication with your affiliates. You may do this by giving regular feedback about their performance or perhaps sending out newsletters for any updates about your offerings.

Lastly, if you want to kick your affiliate marketing program up a notch, you may want to consider giving out incentives and promotions for top-performing affiliates. This way, you can increase engagement and prevent churn.

Build Successful Affiliate Partnerships

Affiliate marketing is rarely a one-and-done affair. To be successful, you have to constantly monitor your program, make adjustments, and look for new ways to generate sales in your chosen channels. It’s also a team effort between the merchant and the affiliate, so merchants can definitely benefit if they provide ways and tools for affiliates to maximize their ROI.

As technology evolves, so too will marketers’ approach to affiliate marketing. For instance, the explosion of voice search means that affiliate marketers will have to adjust their tactics to suit a new format. With such a dynamic field, marketers and creators can expect to always be on their toes for new developments in affiliate marketing.

Key Insights

• Importance of Finding a Niche: Identifying a profitable niche is crucial for the success of an affiliate marketing program. This involves understanding keyword difficulty, commercial value, and audience interests.
• Marketing Blueprint: Creating a detailed marketing strategy with clear goals and competitor analysis is essential for managing and optimizing affiliate relationships and performance.
• Cost Management: Knowing the costs involved in affiliate marketing, including hiring a manager, using technology platforms, and creating marketing materials, is vital for budgeting and operations.
• Terms of Service: Establishing clear terms of service helps avoid disputes by outlining the rights and duties of both merchants and affiliates.
• Payment Systems: Choosing the right commission model (e.g., revenue share, fee-for-action) and automating payouts are important for efficient affiliate management.
• Program Announcement: Effective announcement strategies include direct outreach, website promotion, and registration with affiliate networks to attract potential affiliates.
• Affiliate Selection: Vetting affiliates based on their industry expertise, website quality, community engagement, and promotion strategies ensures the quality and effectiveness of the program.
• Support for Affiliates: Providing affiliates with resources, marketing materials, and continuous communication helps maximize their performance and the overall success of the affiliate program.

FAQ

1. How do I find the right niche for my affiliate marketing program? To find the right niche, consider the ease of ranking for keywords, the commercial value of those keywords, and the interests of your target audience. Narrow your focus to categories like passion, lifestyle, and problem-solving, and conduct thorough keyword research.
2. What should be included in a marketing blueprint for an affiliate program? A marketing blueprint should outline your goals, marketing strategies, and expected outcomes. It should also detail how you will manage affiliate relationships, evaluate performance, and conduct competitor analysis to stay competitive.
3. What are the costs associated with starting an affiliate marketing program? Costs include hiring an affiliate marketing manager, choosing and subscribing to a technology platform, and creating marketing materials like landing pages, email templates, and promo videos. These costs can vary widely depending on your specific needs and scale.
4. Why is it important to have clear terms of service for an affiliate program? Clear terms of service prevent misunderstandings and disputes by defining the rights and duties of both merchants and affiliates. They include terms and conditions, enrollment processes, acceptable content, and promotion policies, protecting both parties’ interests.
5. What are the different types of commission models in affiliate marketing? Common commission models in affiliate marketing include the revenue share model, where affiliates earn a percentage of the revenue from sales they generate, and the fee-for-action model, which provides payment after a specific action, such as a sale or lead, is completed. Additionally, the pay-per-click model rewards affiliates for each click on their link, while the pay-per-impression model bases payment on the number of views an affiliate’s site receives.
6. How can I effectively announce my affiliate program? Effective announcement strategies include reaching out directly to potential affiliates via email or cold calls, promoting the program on your website and social media, and registering with affiliate networks like ShareASale or CJ Affiliate to connect with a broader audience.
7. What criteria should I use to select affiliates for my program? Select affiliates based on their industry expertise, quality of their website, community engagement, and clear promotion strategies. Ensure they have a professional-looking site, active engagement with their audience, and a solid plan for promoting your products.
8. How can I support my affiliates to maximize their performance? Support affiliates by providing them with detailed product information, marketing materials, and continuous communication. Offer regular feedback, updates, and incentives to keep them motivated and aligned with your goals.

By Jenny Chang

Jenny Chang is a senior writer specializing in SaaS and B2B software solutions. Her decision to focus on these two industries was spurred by their explosive growth in the last decade, much of it she attributes to the emergence of disruptive technologies and the quick adoption by businesses that were quick to recognize their values to their organizations. She has covered all the major developments in SaaS and B2B software solutions, from the introduction of massive ERPs to small business platforms to help startups on their way to success.