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Affiliation marketing, or ‘affiliate’ marketing as it is also known, is one of the commonly used online sales tactics today. So common, that it is more than likely that you have purchased some products through an affiliate marketing tactic. But what is affiliate marketing and how do online businesses use it? 

E-commerce is undoubtedly big business these days. With the COVID-19 pandemic shutting down many retail storefronts globally, record number of customers are increasingly switching to online shopping.

Consequently ,more and more businesses are looking for ways to drive sales to their websites as competition for online customers becomes increasingly intense.

This has led industry analysts to predict that the affiliation marketing sector is set to grow by 10% in the next few years. Given that the affiliate marketing industry is already worth $12bn globally, and accounts for 16% of all e-commerce orders in the US and Canada and around 9% in Finland. A massive surge.

But what exactly is affiliation marketing and how does it work?

Affiliate marketing is essentially a sales tactic that lets a product owner increase their sales by allowing other businesses like blogs or websites that target the same audience to advertise their products. These affiliates earn a small amount of commission depending on the value of the sale or based on a set rate agreed with them.

Essentially, affiliate marketing is a way of outsourcing the marketing of your product to ‘affiliates’ who share a similar audience to the one you would normally advertise to. The benefit is that, rather than getting targeted with a generic advertisement, affiliates have a deeper connection to the customer and are at least theoretically better able to drive sales.

The efficiency benefits of using an affiliate marketing strategy are not to be overlooked. Not only is it a time-efficient way of marketing directly to consumers, but also it is arguably much more cost-effective; given that ‘advertising' through the affiliate only costs you when they make a sale. This means that you only pay for the advertising that actually brings success, rather than paying for blanket advertising that may or may not work. 

For this reason, affiliate marketing also presents a much lower risk given that you don’t have to pay any upfront costs that do not guarantee a sale. This approach also has the benefit of being easily scalable, as whenever you want to increase your sales, all you have to do is reach out to more potential affiliates.

The benefits of integrating affiliate marketing into your e-commerce store are not to be underestimated. If industry reports are anything to go by, a well-crafted affiliate market program could see your sales revenue boosted by 30%.