What is Affiliate Marketing? The term ‘affiliate marketing’ refers to a partnership between a business and its affiliate who market that business’ products.  The owner of a website is given a commission in the form of a  flat fee or a percentage of profits in exchange for promoting the merchant’s product(s), or service(s). The aim of the advertising is to either boost sales or increase traffic to the merchant’s website. The website owner shares in the profits from the merchant’s online sales.

Types of Affiliate Marketing

An individual can generate a profit from affiliate marketing in several ways:

  • Pay per Click. The affiliate is given a specific amount of money each time a potential buyer clicks on a link to the seller’s website, as he exits the affiliate website
  • Pay per Sale. The owner of the website is awarded a specific percentage of every sale resulting from the affiliate advertisement.
  • Pay per Lead. A specific amount of money is posted to the affiliate’s account each time the affiliate’s ad results in a customer’s registration on the merchant’s website.

Pros and Cons of Affiliate Marketing

Affiliate marketing allows website owners to sit back and pull in the bucks with little or no effort. The merchant also benefits because if the affiliate’s promotions translate into additional profits and exposure, and the merchant does not pay if no result occurs.

On the other hand, the seller must be willing to enter into a profit-sharing situation with the affiliate, with whom he may or may not have more than a passing acquaintance. If an affiliate commits unethical act in the process of ferrying potential clients toward a website, it can tarnish the reputation of the merchant.

Although merchants and affiliates usually enjoy a pleasant and profitable partnership, some marketers do not deliver the promised fees. For this reason, website hosts should conduct careful research before agreeing to affiliate with a merchant. Affiliate marketing is enjoying a huge growth spurt. Remember the age-old idiom “one hand washes the other?” Affiliate marketing can be beneficial to both website owners and merchandisers.

Internet merchants use affiliate marketing to increase sales owners of websites become affiliates of merchants to generate commissions. A website owner can now choose from many programs to generate income. Not every website owner is successful, but many do generate profits by affiliating with online merchants. Many merchants are increasing their sales and their customer base with the exposure provided by the advertising on affiliate websites.

What is a Niche Market?

The terms “niche marketing” or “market segmentation” refer to identifying and targeting a narrow, specific slice of the marketplace. In many cases, niche marketing defines not just a demographic, such as Hispanic males, but instead further narrows the focus to a subgroup of the demographic, such as Hispanic males ages 35 to 55 years in a middle-class income bracket.

With niche marketing or market segmentation, you’re essentially breaking down the general population into very specific sub-demographic groups that define your targeted customer base. When you advertise to only this small group, you’re ensuring that the marketing falls into the hands of people who are most interested in your products or services.

In this way, niche marketing is highly effective and budget-friendly. You’ll spend fewer marketing dollars while reaching the ideal population segment, which boosts your ROI significantly.

Of course, small businesses and specialty retailers benefit greatly from niche marketing and market segmentation strategies. But larger companies are also using this marketing method to target consumer groups for individual products, brands and service lines.

For example, a car dealership may use niche marketing to target ideal population groups for certain types of automobiles. To market high-end, two-seater sports cars using niche marketing, the dealership might spend their marketing budget on advertising to wealthy men belonging to a select income segment, instead of to single mothers with children. Likewise, the dealership would market luxury SUVs to higher-income, married individuals with children.

Effective niche marketing relies heavily on identifying the unique need in a specific demographic segment. If you’re marketing swimwear that’s particularly chlorine-resistant, for example, you would need to narrow down the population base to the exact groups of individuals who have interest in the specific product. In this scenario, you might target your niche marketing toward competitive swimmers who are mostly training and competing in swimming pools.

You can narrow down the niche market for your own products or services by combining the following demographics to best characterize your ideal customer: race, gender, age, income, marital status, family size, geographical area, occupation, hobbies, family size, single-parent families, religion, and much more.

Depending on your type of product or service, you may have distinct niche markets within your industry. If you’re selling music downloads or CDs, for instance, you can narrow down market segments by music genre;  rap, country, heavy metal, bluegrass, etc., or if you’re selling women’s clothing and accessories you might define niche markets by sizes budget, brand, or demographic.

Properly researched and applied niche marketing and market segmentation can help your business obtain continuous and scalable marketing ROI.

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