Affiliate Marketing vs Influencer Marketing: Which one is less risky?

Over the past decade, both influencer marketing and affiliate marketing have played a significant role in driving sales and generating conversions for DTC (Direct-to-Consumer) and ecommerce brands, surpassing the effectiveness of traditional advertising methods like radio and television. Social media creators have become indispensable in influencing consumer purchasing decisions. These creators are the driving force behind both affiliate and influencer marketing. However, determining the most suitable approach for your brand requires a thorough comparison of affiliate marketing and influencer marketing to maximize ROI and drive sales.

Affiliate marketing vs. influencer marketing: The main difference lies in revenue sharing

While both approaches involve commissions for creators, the compensation models differ. Affiliate marketing focuses on driving traffic to a brand's website to complete a transaction. Brands compensate affiliates solely for generating sales, rather than for brand awareness, increased web traffic, or lead generation. Affiliates must continually work to boost their conversion rates and stay motivated.

In influencer marketing, brands establish long-term Key Performance Indicators (KPIs) such as clickthrough rates, user-generated content, and improved SEO. The influencer model centers around content creation to promote brands, products, or services. Marketers collaborate with influencers to leverage their credibility, authenticity, and sustainable inbound traffic. Influencer compensation includes commissions, product gifting, flat rate fees, or a combination of these.

Benefits of influencer marketing

1. Build credibility and trust:
   Influencers with loyal followings have established themselves as experts in their respective niches and serve as a source of inspiration for their fans. Audiences tend to trust recommendations and opinions from their favorite creators more than traditional marketing techniques. Studies show that collaborating with influencers on social media posts can increase purchase intent by over five times compared to posts without creator partnerships. Additionally, 40% of people reported making a purchase as a result of an influencer post.
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2. Highly focused and relevant:
   Partnering with the right influencer ensures that your brand's message reaches your target audience. For example, if your brand sells workout gear, collaborating with a fitness blogger whose followers are interested in fitness and training can significantly increase the likelihood of conversion. When people see their favorite creators using your brand's gear to achieve fitness goals, it greatly enhances their belief and interest in your product.
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3. Controlled approach:
   With influencer marketing, brands maintain control over the entire campaign. They oversee outreach, influencer recruitment, content strategy, and distribution methods. Compared to most other forms of marketing, influencer marketing offers greater control. If planned well, these campaigns have limitless potential for returns.
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4. Incredible results:
   Regardless of the industry, influencer marketing can work for all brands whose target audience is present on social media. Studies indicate that brands earn $6.50 for every dollar invested in influencer marketing and acquire customers faster compared to other marketing approaches.

Benefits of affiliate marketing

1. Easy to implement:
   Affiliate marketing is relatively simple and doesn't require a substantial amount of resources to set up. Once a brand establishes a mechanism for creating unique URLs for each affiliate, they can easily track conversions from each sale. However, it's important to note that successful affiliate programs typically require a well-established brand.
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2. Only pay for results:
   Affiliate marketing is a risk-free strategy since affiliates earn commissions only when a sale occurs through their affiliate link. Unlike traditional advertising, brands don't pay for impressions or clicks. Regardless of the number of clicks on an affiliate link, commission is only paid upon a sale.
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3. Increase website traffic and sales:
   Although affiliate links don't directly impact search engine rankings, they contribute to increased website traffic and higher chances of conversion.

What brands should consider when making a decision

Before deciding whether to pursue influencer marketing or affiliate marketing, brands should carefully evaluate the pros and cons. Here's a quick overview of what to expect from each approach:

Influencer marketing:

• Pros: Ability to reach larger audiences shared by influencers, the potential to build brand awareness, and leveraging influencers' trust and credibility, and ultimately also to generate sales because of its full-funnel power.
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• Cons: Properly vetting influencers can be time-consuming, content creation may need to be repurposed for other marketing strategies, and tracking results without the right tools can be challenging. This is something easily managed using the proper tool.

Affiliate marketing:

• Pros: Easy scalability by expanding the number of affiliates or networks, starting with minimal upfront costs, and flexible program structures.
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• Cons: Results may vary, some affiliates may employ questionable tactics like spamming or false advertising, and limited control over affiliate content. Plus, result and community engagement decrese on the long-term.

Tools you need to manage influencer marketing:

1. Discovery and recruitment: Utilize tools that help you find influencers aligned with your brand values and mission, and identify similar influencers. These tools should also allow you to assess each influencer's engagement rate and credibility scores.
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2. Campaigns management: As your influencer marketing program grows, consider using a tool that helps you manage all your creator collaborations in one place. This should include an integrated quoting system and individual creator profiles to facilitate managing long-term relationships with influencers.
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3. Reporting and analytics: To track the success of your influencer marketing campaign, find a tool that helps you measure ROI metrics and analyze the effectiveness of your program.

Tools you need to manage affiliate marketing:

1. Reliable affiliate link generation and tracking: Look for an easy way to generate unique links for affiliates and track revenue generated by each affiliate. Campaign briefs, including requested copy for influencers and product placement guidelines, are an added bonus.
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2. Smart discount code management: Choose a tool that allows you to manage discount codes effectively, disabling compromised codes and reconciling any owed commission resulting from fraudulent use.
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3. Custom branded affiliate pages: Building custom, branded landing pages to house your full creator campaign proposals enables you to maintain control over materials and messaging when nurturing affiliate relationships, without intermediaries.
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4. Integrated campaign workrooms: An affiliate management platform that integrates with your ecommerce shop is essential. These integrations provide real-time inventory visibility, allow affiliates to choose products, and facilitate shipping and tracking of those products through to the posts.

How brands can get benefits from both solutions

To overcome the limitations of affiliation, reduce risk, and maximize the potential of Influencer Marketing, Roundabout has developed a process called the "Optimized Ambassador Program."

This is a long-term strategy (starting from 1 year) that focuses on strengthening conversions throughout the entire funnel, encompassing both branding and sales. This is because expecting today's consumers to immediately react to purely sales-driven content without exploring, comparing, and analyzing what they can find online is an unrealistic expectation.

By setting up continuous work, you activate an influencers team each month, analyze results they achieve, then re-engage 50% of the best performers from the previous month and add 50% new influencers with optimized characteristics based on what you learned during the initial activity. Continuing with the same approach in the following months, and within the first 6 months, you will have:

• Tested, validated, and understood the exact characteristics of influencers that fit your brand
• Minimized the risk investment
• Achieved an effective ROI that allows you to scale your activities and results.

Many customers at Roundabout have validated and succeeded with this methodology. One example is Skinlabo, which managed to achieve an x8 ROAS in the first year of activity.

Determining ROI with affiliate marketing and influencer marketing

Determining the ROI of your affiliate or influencer marketing campaign is crucial for success. Establish clear goals before launching your campaign to ensure you measure the right metrics for determining success. Some common goals include increased brand awareness, more conversions, more engaging content, and increased web traffic. For detailed guidance on tracking and measuring specific campaign goals, refer to "How to Measure Influencer Marketing ROI: 7 Proven Tracking Methods boss-proof" which provides valuable resources and a guide to calculating precise ROI for your marketing campaigns.

Conclusion

Choosing the ideal strategy, whether it's influencer marketing, affiliate marketing, or a combination of both, depends on your brand's goals and bandwidth. When implemented correctly, both approaches enhance ROI, drive sales, and increase conversions.

However, poor management can have negative consequences. Selecting the right influencers and affiliates and having the appropriate tools in place to manage them effectively are crucial for the success of your programs. When all the pieces are in place, your brand could become the next household name on every consumer's lips. To learn more about creator and Influencer Marketing platform and how it can benefit your brand, please refer to our additional resources.

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