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Affiliate Marketing The Network Effect

Some of the most respected investors in the world, often talk about the importance of a ‘Network Effect’.  From the likes of Peter Teal, Chamath Palihapitiya and Jason Calacanis, every single one of these world leading investors have mentioned in interviews, why strong network effects one of several critical pieces that make up their investment strategy!

So why is a network effect so important and how can affiliate marketing help a company to push toward it?

Lets start at the basics:

“The network effect is a phenomenon whereby increased numbers of people or participants improve the value of a good or service.”

Perhaps the greatest example of a network effect of all time, as been the Internet.   The internet started as a tool for the military and some research scientists to share information.   However, there are arguably no-one living in 1st World countries today, who do not have ready and easy access (if they choose) to the internet.    In fact, the internet is used around the Globe and underpins the entire; Economic system.  

To put it in a business context, take a look at some of the worlds largest companies that have strong network effects:

– Facebook – Is a social network

– Google – is a network of computers that give the algorithmic power for ‘search’

– YouTube – develops the network of video content creators with video watchers on its video platform

– Newer companies like Etsy develop niche networks in order to by and sell hand crafted goods!

In fact we could almost say that any large scale business, as some form of a network effect at play.  The question is, how important is it to the overall success of the product, and how well developed is the network.

Network Effect

So what does Affiliate Marketing have to do with developing a network effect?

The key success factors of your e-Commerce business are:

  • Awareness – of the product or service
  • Traffic – being sent to your website
  • Conversion – the percentage of people who turn from visitors to customers
  • Retention – how much those customers purchase over the lifetime of interaction they have with you

Affiliate Marketing’s Network Effect on AWARENESS

Assuming you have a program in place (If not click here for a list of Affiliate Marketing Platform Providers) and are up and running with your affiliate marketing program, the next step is to find some advocates, or partners who may want to share about your brand.      

These people could be:

– Top customers you already have

– Excited individuals who like to share about your products even without a formal program in place

– Other people who are influential in the defined market space that you operate in

The reason you would reach out to these people is they have followers who enjoy their content, or simply have friends and family who TRUST them.   When you offer them to be a part of your structured affiliate program, you are leveraging all of their connections, firstly to give your company awareness.  

 

Have you heard of top of mind in marketing?  How about being within the top 3 brands of recall?

 

Being SEEN is a huge first step to start imbedding in peoples minds that you are a leading brand and something to consider when they want to purchase a product or service like yours.  

 

Quick Game: Name 10 car brands.

It is highly likely that of the 10 car brands you just listed, the top 3 are the car brands that you think about most often and if given the opportunity would love to buy……

Imagine if you were in the top 3!  How would that positively impact your business.

Affiliate Marketing Connecting People

Affiliate Marketing’s Network Effect on TRAFFIC

Once you have some partners onboard and positing avidly about your company, it is highly likely that you will see a spike in website traffic.  This is easy to measure by simply having Google Analytics code in your site.  If you do not have this in your site yet we strongly suggest using Fiverr Services to get this set up. You can also use Fiverr to learn more about loads of subjects via courses they offer!

Sometimes your affiliates/ partners need to be incentivised to get them to post more and drive traffic to you.  So here are simple things you can do to help these partners and add value:

Re-post – this costs nothing to hit the re-share button to your Facebook Page or Instagram Story or Feed.   Your partner gets additional awareness and you get to re-use the content they have created.  Win-Win.

Sponsored Competition – If you want engagement via your affiliate, give them some additional incentive.  A FREE PRODUCT GIVE-AWAY or a discount for your service is a great extra win for their followers

 

CONVERSION Supporting the Network Effect for Affiliate Marketing

Potentially the most important metric that you need to keep an eye on is your conversion.  It is the key to unlocking success on your e-Commerce site.   As a general rule, 3-4% conversion rates on a basic e-Commerce site is a solid figure, however, if you can make this as high as possible it will have a huge positive impact on your company.

So why is conversion so important in propelling your Network Effect for Affiliate Marketing?

It’s simple.  Your Affiliates and partners, get paid, when a product sells.  This is called CPA or Cost Per Acquisition!   So it’s a logical sequence of events, the more traffic you get, followed by a higher % who purchase = higher affiliate commissions paid and happy affiliates.

 

Retention and the benefits for Affiliate Marketing

How you structure your Affiliate Marketing program is entirely over to you.  However one of the key benefits of the program is that an affiliate will continue to be paid, again and again, for customers who continue to buy with you.

Some of the most successful affiliate marketing programs are for subscription businesses.    It’s not mandatory to be a subscription business, but affiliates want consistent income from their referrals.  

We will be bringing out a book soon on advanced strategies for Affiliate Marketing which will expand on many of the points in this article.  So stay posted to Affiliatemepro.com for that book.  

Comments

  • […] who are ok to work with micro-influencers or other partners, can leverage networks and cause a network effect.      By the time a small brand becomes big, Advertisers know they have ‘missed the boat’ […]

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