Affiliate marketing is one of the oldest models for earning money online. Online referral marketing predates modern social media by more than a decade and a half. (Yes, the Internet has been around that long.)

But social media affiliate marketing takes this old concept to a new level. It allows brands to reach loyal followers of intensely relevant creators. At the same time, it opens the door for even new creators to start earning money from their work.

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What is affiliate marketing?

Affiliate marketing is a way for content creators to earn commissions by referring customers to brands. In turn, brands reach an expanded audience while only paying for real business results (not just exposure). This is known as a pay-for-outcome or cost-per-action model.

If you’re one of the 20.4% of Internet users who listen to podcasts each week, you’ve probably heard affiliate marketing in action. All those promo codes and custom URLs for sponsors are used to track the podcast’s affiliate sales.

Affiliate marketing programs can be an effective way for brands to work with large-scale content creators like major podcasters and social media influencers. But they also allow brands and creators to connect in a low-commitment way that benefits both parties. No DMs or media kits required!

Here’s how affiliate marketing works in a nutshell.

  1. A brand sets up (or joins) a referral system. Creators then refer traffic or sales for a commission, tracked through a unique user code or link.
  2. A creator seeks out affiliate programs that align with their content niche. They use affiliate links or codes when mentioning relevant products in their online content or social media posts.
  3. The creator (“the affiliate”) earns a commission when people buy the company’s products after clicking through their links or using their codes. The brand reaches an audience they would not have connected with on their own. Both parties win.

Over the last two years, the pandemic has driven more online content consumption and more online shopping. This has led to a major surge in affiliate marketing.

More than half of UK marketers increased their affiliate marketing spend last year and saw increased revenue in turn. The share of affiliates specifically publishing content on social media platforms also jumped significantly.

Digital marketing spend graph
Source: Pepperjam Affiliate Marketing Sales Index

Who can benefit from affiliate marketing?

As we said, affiliate marketing benefits both brands and content creators.

For brands, affiliate marketing is a way to work with creators and influencers while only paying for trackable results. For creators, it’s an easy way to earn money from your content, no matter how large or small a following you might have.

Ecommerce brands and merchants

The main benefit of affiliate marketing for brands is being able to reach an extended audience without paying for advertising. Affiliates only earn a commission based on the brand’s conversion requirements, so brands only pay for real business results.

In most cases, brands and merchants pay commissions on sales made when a purchaser clicks through an affiliate link. In some cases, especially for larger-ticket items, brands might pay for leads, app installs, sign-ups, or even clicks. Either way, the brand only pays for results that directly impact the sales funnel.

An affiliate program is an especially great way for brands to benefit from recommendations by nano-influencers. They might not be on the brand’s radar for a more traditional partnership, but their followers can be fiercely dedicated.

Critically, the level of trust in affiliate recommendations increases the value of each customer. Brands that use affiliate marketing see 88% higher revenue per shopper.

Content creators

A large variety of brands offer affiliate marketing, meaning content creators can earn commissions on products and services they actually use.

This makes it easy for them to incorporate product recommendations organically.

Are there products you’ve always wished you could partner with because you recommend them so much? Check to see if they have an affiliate program. If they do, you can start earning money from those recommendations without having to get the brand itself to notice you or agree to a partnership.

Of course, if you start driving tons of sales their way, they may well want to chat with you about a brand partnership.

A new way for creators to benefit from affiliate marketing is on the horizon, too. Instagram has launched a native affiliate tool.

As it’s still in the testing phase, it’s not yet available to everyone. But once it’s widely available, the native tool will make affiliate promotion on Instagram seamless.

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Creators will be able to tag products to earn commissions directly from their posts, rather than using affiliate links in their bio or a link tree.

How to set up an affiliate marketing program

Step 1: Determine your goals

What do you want to accomplish with your affiliate program? Are you strictly looking to make more sales? Drive leads into your sales funnel? Build brand awareness?

Clear, measurable goals help you understand how affiliate marketing will fit into your larger social marketing strategy.

You need to have the goals of your program nailed down before you can…

Step 2: Determine your payment, attribution, and commission models

In a nutshell, these are the factors that determine how much you pay affiliates, and what results you pay them for.

  • Payment model, a.ka.a. what you will pay your affiliates for. As mentioned above, the overwhelming majority of brands (99%) use a cost-per-action (CPA) model, like paying a commission per sale. Other options include cost per lead, cost per click, and cost per install. This is a choice social marketers are used to making from regular social ad campaigns.
  • Attribution model. If multiple affiliates are involved in sending a customer your way, who gets the commission? The most common model (86%) is last-click attribution. This means paying a commission to the last affiliate who refers someone to your site before they buy. But multiple affiliates might impact the sale as customers visit your site multiple times. So, you could also use first click attribution or pay affiliates who impact all stages of the sales funnel.
  • Commission structure: Will you pay a flat rate per sale or a percentage commission? What will the amount be? You should have a sense of how much it’s worth for you to spend on a new customer or a sale based on your budget for regular social media ads. Make sure you offer enough to motivate affiliates to sign up for your program and promote your brand.
Affiliate marketing payment and attribution models
Source: IAB UK Affiliates & Partnerships Group Buyside Survey Results

It’s a good idea to check out what the competition is doing. Try Googling your competitors’ brand names + “affiliate program” to see what you turn up.

Social listening can help here. Using Hootsuite, you can set up a search stream with your partner’s brand name plus “voucher,” “affiliate” or “partner.” Also look for and monitor hashtags like [brandname]partner or [brandname]affiliate.

Step 3: Set up tracking

If you feel a bit overwhelmed at the idea of setting up tracking for an affiliate program, you’re not alone. More than 20% of UK marketers don’t know how their affiliate activity is tracked. And more than half still use third-party cookies. This becomes increasingly problematic with changes to cookie tracking in most major browsers and iOS 14.

The easiest way to set up affiliate tracking is through an affiliate management tool. If you run your website through an ecommerce platform, check their recommendations for tools that integrate with their software.

For example, there are several options available in the Shopify app store. Some of the top choices include Tapfiliate and UpPromote.

You could also run your program through an affiliate network. A couple of long-running providers are CJ (formerly Commission Junction) and Rakuten (formerly LinkShare). One advantage of an affiliate platform or network is that it can help more affiliates find you. It’s also the simplest solution, as you don’t have to get into manual tracking and code.

That said, you can run a very basic affiliate program using UTM parameters and/or coupon codes. Just assign each affiliate their own unique UTM code and coupon code for tracking. Then pull results from Google Analytics.

No matter how you create and track affiliates, make it easy for them to incorporate their code into social posts. A coupon code with a discount is a great way to motivate followers to check you out while tracking affiliate sales.

Step 4: Find your affiliates

An affiliate program doesn’t do you much good until you have affiliates. When you first launch your program, you may want to reach out to creators to invite them to join. This process would look similar to contacting influencers for a traditional brand partnership. For tips, check out our post on how to find Instagram influencers.

You could also announce your launch on your social channels. After all, your most ardent fans are great potential affiliates.

Make it easy to find your affiliate program on your website, and repost affiliate content on your social channels. Remember, it costs you nothing to bring on more affiliates.

Affiliate marketing best practices for brands

Now that we’ve covered the basics of how to start affiliate marketing for your brand, let’s talk about some best practices to make your program stand out.

Make it easy for creators to promote your products

Affiliates are most likely to promote your products when you make it easy for them to do so.

Create resources specifically for creator affiliates. Keep them informed about your latest promotions and special offers that might be of interest to their followers. A creator newsletter, Slack channel, or Facebook Group can help keep everyone informed and keep your brand top of mind.

For example, Barkbox sends affiliates a weekly newsletter. This keeps affiliates “in the know on new promotions, exclusive affiliate offers, our latest monthly themes, BARK news, and more.”

Give creators tools they can use to make promoting your products easier. Have you got graphics resources they can access? Tips on which products are performing best, or that tend to perform best in a particular season? Suggestions for maximizing the value of each order?

Informed and engaged affiliates will help you make more sales.

Pay on a regular schedule that allows time to correct for returns

Affiliates – quite rightly – expect to be paid regularly and on time. But you need to allow time before payout to correct for any returns. Make the terms of payout clear in your affiliate agreement. Thirty to 60 days after the sale is generally a reasonable amount of time, depending on your return window.

If you’re using an affiliate management tool, your affiliates should be able to log in directly to track their own sales and pending payments. If you manage your program directly, you’ll need to keep affiliates informed yourself. An autoresponder triggered by a sale made through their code could be a good basic option to let them know when sales go through.

Monitor the ROI of your affiliate marketing program

Social media affiliate marketing works best when you track your results and evolve the program based on what you learn. Use analytics tools to track your progress and see what kinds of affiliate resources work best.

Once you see which of your affiliates are most successful, reach out to them to learn how you can better support their sales.

Keep an eye, too, on how much you actually earn from your affiliate program versus what you pay out. Are you earning more money than anticipated from affiliate sales? What about higher order value or lifetime customer value? If so, think about increasing your commission.

Affiliate marketing best practices for content creators

Let’s flip over to the creator side of the equation. Here are some important things to keep in mind when thinking about how to become an affiliate marketer.

Recommend products you use and trust

Affiliate marketing works best when it feels organic and natural. Use social media affiliate marketing to earn a commission on high-quality products and services you would recommend anyway. Ideally, these will be things you actually use.

For example, check out home decor YouTuber Alexandra Gater. She uses Instagram Stories to highlight products from her latest home makeover videos as well as her own favorite decor products. In her “Paint colours!” Story highlight, she includes affiliate links to purchase the paints she recommends.

Instagram Story pinned highlights featuring recommended products from an affiliate program
Source: @alexandragater

This is a completely natural way for her to earn commissions, and one that is helpful to her followers rather than feeling salesy. And that’s the key when you’re planning how to do affiliate marketing: create quality content that provides value to your followers. It’s not worth compromising your follower relationship for a potential commission on a sale.

Research your options

There might be different options to promote the same product. It’s worth a little research to see which offers the best commission structure and payment model for you.

For example, one of the best-known affiliate marketing programs is the Amazon Associates Program. There’s also the Amazon Influencer Program specifically for social media influencers.

(Fun fact: Way back in the early days of the internet, referral marketing was called associate marketing. As one of the earliest referral marketing programs out there, Amazon has retained that terminology. This is why their affiliate program is called Associates.)

Programs from big general retailers like Amazon and Walmart can be an easy way to get into affiliate marketing for beginners. These trusted brands give you access to a huge number of products.

So, for example, if you want to create an entire Twitter account devoted to merchandise related to The Legend of Zelda, Amazon is probably a good bet.

But for some creators, mega-retailers might not be the best choice. Thinking about how to make money with affiliate marketing for a particular brand or product category? You might see better commissions and conversions through the brand itself or a more specialized store. There’s also more opportunity there for developing a personal relationship with the brand over time.

Let’s get real for a minute: Is affiliate marketing worth it? Consider that it was the top source of income for more than 9% of U.S. influencers in a 2021 survey. That’s far less than the 68% who said brand partnerships were their top income source, but it’s still a significant percentage.

Remember, those are only the people for whom affiliate income was their top income source. Many more would incorporate affiliate programs alongside brand partnerships and other income streams.

Use a link shortener for cumbersome affiliate links

The most common way to track affiliate links involves UTM codes and an affiliate code. That can create some long and cumbersome links. A link shortener is an easy way to make the links less bulky without losing the tracking code.

Hootsuite uses the built-in link shortener Ow.ly so you can shorten links with one click.

Disclose affiliate links in your content and posts

Affiliate links need to be disclosed, just like any other kind of link or content that you get paid for.

It’s only fair that your followers know you will earn a commission if they purchase through your affiliate link. If you’re sharing content on a platform with a longer word count, like Facebook or YouTube, you can include a statement saying something like:

“I get commissions for purchases made through links in this post.” This is an example disclosure statement provided by the FTC.

On a platform like Twitter, where every character counts, this can be tougher. Some affiliates use hashtags like #affiliate or #affiliatelink to disclose the relationship. But the FTC says these tags may not be clear enough, since followers may not know what they mean. You’re better off using #ad.

Fortunately, posts created with Instagram’s native affiliate tool will automatically include an “Eligible for commission” tag. This is similar to the “Paid Partnership” tag on branded content posts.

Make working with content creators easier with Hootsuite. Schedule posts, research and engage with influencers in your industry, and measure the success of your campaigns. Try it free today.

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