The rise of eCommerce and social media have drastically altered the marketing landscape. Traditional marketing in fields such as print media is declining, with a 50% reduction in ad revenue witnessed in the last six years.1 Their place is now being taken by new strategies such as affiliate marketing and influencer marketing.
There is often a common assumption that affiliate marketing and influencer marketing are two names for the same strategy.
This is understandable to an extent, as both operate on very similar strategies, leveraging the reach of online content creators to generate sales and brand awareness. However, at a deeper level, they are very different from each other.
Let’s delve into the differences between the two, outlining definitions, functions, strategies, and the advantages of each.
Table of Contents
- What Is Affiliate Marketing?
- How Does Affiliate Marketing Work?
- Advantages of Affiliate Marketing
- What Is Influencer Marketing?
- How Does Influencer Marketing Work?
- Advantages of Influencer Marketing
- What’s the Difference Between Affiliate and Influencer Marketing?
- Affiliate Marketing or Influencer Program: Which One to Choose?
What Is Affiliate Marketing?
Affiliate marketing is a form of digital marketing where affiliate partners promote a brand's products or services in return for a commission. This marketing strategy first emerged in the late 1990s, during the early days of eCommerce.
The most distinctive feature of an affiliate program is the compensation model employed. Affiliate partners only get paid when they deliver actual results, usually in the form of sales. For this reason, affiliate marketing is considered a performance-based marketing strategy.
Affiliate marketing is very similar to referral marketing, another performance-based marketing strategy. The key difference between the two, however, is that referral marketing relies heavily on a business’ existing customers to generate leads or make sales. To learn more about the differences between the two, read our guide on affiliate vs referral programs.2
Affiliates try to drive conversions and brand awareness by seamlessly embedding affiliate links within their content. This content can take various forms, ranging from blog posts to TikTok videos.
Despite the emergence of newer forms of content such as TikTok videos, Instagram stories, and YouTube shorts, blog posts continue to dominate the affiliate industry. According to the latest affiliate marketing trends, 65% of affiliate sales are generated through blogging.3
For those interested in understanding the nuances of affiliate marketing in detail, we’ve compiled this guide to affiliate marketing that explains all that businesses and content creators need to know before investing time and resources in affiliate marketing.4
How Does Affiliate Marketing Work?
Affiliate marketing works by leveraging the wide reach of digital content creators, called affiliates, to promote a brand’s products and services to the widest audience possible. A successful affiliate campaign requires access to five things:
- An online platform that connects brands/advertisers with affiliate partners
- A hub to create and share ad content and offers with partners
- Software tools to set and manage commission rates
- A system to track the performance of affiliate partners
- Tools to collect performance metrics of ad campaigns
While creating such a system in-house is possible, it might not be practical from a cost perspective. A far better alternative for most brands is to rely on a third-party affiliate platform. Commission Factory is an example of a leading affiliate marketing platform in Australia and Southeast Asia.
With an industry-leading platform such as Commission Factory, brands have easy access to all the tools they need to deploy an effective affiliate marketing network. Over a thousand affiliates join the Commission Factory each month, creating a diverse pool of potential partners for brands across sectors and niches.
The platform is user-friendly and has tools that offer fast and accurate tracking in real-time. It also integrates seamlessly with all major eCommerce shopping carts and tag management software.
Once a brand signs up with Commission Factory as an advertiser, the next step is to build a profile and connect with suitable affiliate partners. The entire system works based on unique referral links or tracking codes.
On the other side of things, when content creators sign up as affiliate partners for a program, they receive a unique link or code from the business. Affiliates use this link/code to promote the brand’s products or services on their website, landing page, blog, or social media handle.
When a potential customer uses that link or code to complete a sale, the affiliate marketing platform will track and record it.
Since each affiliate partner uses a unique link, the software system can quickly identify the affiliate partner behind the sale. The tracking software will credit the sale to the affiliate partner and pay the commission automatically via fast payment methods like PayPal.
Successful affiliate marketers can easily earn handsomely each month on the Commission Factory platform, promoting products of more than 800 global and regional brands. Since it is a highly retail-oriented platform, the commission rates are higher than average at 8-10% of the sale value.5
Advantages of Affiliate Marketing
Affiliate marketing is popular because it creates a mutually beneficial arrangement between brands and their marketing partners. In 2023, global spending on affiliate marketing is expected to approach $14.3 billion.6 This number is only expected to go up in the near future, reaching $15.7 billion in 2024.
Here are the main reasons why affiliate marketing is so popular among brands and content creators:
1. Low Startup and Ongoing Costs
Unlike traditional marketing, affiliate marketing campaigns don’t have steep starting costs. Advertisers don’t have to pay money upfront to buy ad slots, or pay affiliates for every click on an ad irrespective of whether or not it results in a sale. There are no recurring costs in creating and maintaining an affiliate network either.
2. Low Risk
Most marketing campaigns with high upfront costs carry significant financial risk. There is no guarantee that a costly ad campaign will bring the desired results. With affiliate marketing, brands pay only after a sale has occurred, thus nearly eliminating the risks associated with traditional digital marketing.
3. High ROI
In 2021, US businesses spent $9 billion on affiliate marketing and generated $71 billion in sales. That translates into an exceptional ROI of 1,200% on every dollar spent (PDF download). Most other marketing strategies struggle to match this kind of ROI.7
4. Efficient Targeting
Through a thorough vetting process, advertisers can select affiliate partners who display the most synergy with their brands. For instance, a business selling PC components can find bloggers and websites that cater to the PC enthusiast's niche.
Such partnerships enable brands to create highly effective networks that deliver their ads to the right audience at a minimal cost.
Flexibility is a factor that appeals to both brands and affiliate partners. Advertisers can tweak the budget and scope of their program or reorient the focus of their advertising campaigns without any major expenditure or loss. Likewise, affiliate partners enjoy a chance to earn a steady income without a strict 9-5 schedule, while working with multiple business partners.
What Is Influencer Marketing?
Influencer marketing is a form of online marketing where businesses partner with influential individuals for brand promotion and sales. Brands pay for product placement and visibility on the content published by social media influencers.
Influencer marketing pre-dates the Internet by many decades. Brands have for long used celebrity endorsements from movie stars and famous athletes to promote their products and services to the public.
However, with the rise in popularity of social media platforms, particularly YouTube and Instagram in recent years, influencer marketing as a digital marketing strategy took off in a big way.
How Does Influencer Marketing Work?
Influencer marketing works by leveraging the relationship of authenticity and trust influencers have with their followers to promote a brand and its products or services.
Influencer marketing campaigns involve a direct, one-on-one relationship between a brand and an influencer. The nature of the relationship can vary widely depending on the brand objectives and marketing priorities.
While some influencers work closely with a single brand, the vast majority are open to multiple brand partners.
An influencer campaign could work in the following ways::
- Shoutouts: The influencer promotes a product in a single post or series of posts.
- Giveaways: The brand gives the influencer free products that they give to their followers via a contest or lucky draw.
- Platform takeovers: The influencer gains exclusive access to the brand's social media channel to boost traffic.
- Sponsored content: The brand works closely with the influencer to create sponsored content such as videos.
- Affiliate marketing: The influencer can also publish affiliate links and exclusive codes to earn commission on sales.
- Brand ambassador: A long-term arrangement where a celebrity influencer works to promote a brand across multiple channels.
Advantages of Influencer Marketing
Brands worldwide are funnelling more cash from their ad budgets into influencer marketing every year. In the US, total influencer marketing spend increased from $2.42 billion in 2019 to $5 billion in 2022 (PDF download).8 More than 75% of companies with more than 100 employees are currently working with influencers.
The following advantages are driving the surge in interest in influencer marketing:
1. Influencer Recommendations Matter
In the past, consumer decisions were often based on word-of-mouth recommendations from friends, colleagues, and family. However, according to recent consumer shopping trends, 30% of consumers consider influencer opinion a decisive factor.9 It is slightly ahead of friends/family recommendations, which ranked second at 27%.
2. Influencer Marketing Has a High ROI
In 2023, 25% of all marketers are expected to use influencer marketing, with 89% of them planning to increase or maintain their spending levels in the coming years.10 The consistently high ROI it delivers is an important factor here. One survey conducted among marketers in the US, UK, and Germany in 2020 revealed that more than 60% of marketers believed influencer marketing to have a higher ROI than traditional marketing.11
3. Influencers Build Trust and Authenticity
The most popular influencers tend to be capable entertainers or domain experts in sports, fitness, fashion, nutrition, and technology.
They have a dedicated fan following due to their talents and domain expertise. The aura of authenticity they generate is valuable for any brand looking to build credibility and trust among its target audience. In other words, they provide a very important component of all marketing efforts these days - social proof.
4. Influencer Marketing Is Highly Focused
Nearly 39% of all brands prefer to work with nano or micro influencers, or those with 10,000-100,000 followers.6
Such nano and micro influencers are usually focused on specific niches, and have highly engaged followers, resulting in better conversion rates. Thus, despite lacking in numbers, they have the potential to deliver better business outcomes for brands due to deeper social media engagement, and at a relatively lower cost.
What’s the Difference Between Affiliate and Influencer Marketing?
Despite the seemingly significant overlap between the two, they are not identical. There are major differences between affiliate marketing and influencer marketing, and we can broadly classify them under the following headers:
Affiliate partners can be both individuals or business organisations. As long as they have an online presence through blogs, websites, apps, or social media posts, any entity can become an affiliate partner. Brands typically engage and interact with multiple partners on a common online platform.
Influencers, on the other hand, are almost always individuals (or couples, bands etc) with a significant audience on a popular social media platform like Instagram, TikTok, or YouTube. Brands don’t typically engage with influencers en-masse - they enter into direct one-on-one negotiations.
While influencers can earn commissions through affiliate links on their channels, that is not their primary source of income. Social media personalities can charge brands for each post, or enter a long-term partnership with multiple benefits including cash payments, performance-based bonuses, and freebies.
By contrast, commissions on sales are the only form of compensation in affiliate marketing. Partners have to complete a sale to earn a percentage as a commission.
Affiliate marketing has a sharp focus on sales/conversions. While some affiliate networks can offer rewards on other outcomes like cold lead generation and web traffic, they are the exception, not the norm.
Influencer marketing doesn’t have a singular focus. Instead, these campaigns can focus on brand exposure, increasing brand awareness and credibility, generating more web traffic, greater engagement levels with target demographics, and more conversions in the long term.
Key Performance Indicators (KPIs)
It is much easier to track and measure the ROI in affiliate marketing owing to its narrow focus on sales. The main affiliate marketing metrics that matter are click-through rates (CTR), conversion rates, average order values, revenues, and customer lifetime value (CLV).12
Since it has a broader focus on improving brand awareness and authenticity, measuring ROI on influencer marketing campaigns is difficult and requires more sophisticated KPIs. This can include user engagement levels, click-through rates (CTRs), website traffic, conversions, audience growth, reach and awareness, and more.
Short-term or long term
Improve brand awareness, increase user engagement, generate leads and traffic
Generate more sales
Fees per campaign, free products, other forms
Commission per sale
Deals with individual influencers
Networks involving multiple affiliate partners
Campaign reach, web traffic, audience growth, engagement levels
Number of sales, CTR, CLV, average order value
Affiliate Marketing or Influencer Program: Which One to Choose?
There is no direct competition between affiliate and influencer marketing in the digital marketing space. Both are highly valued tools in the modern brand marketer’s arsenal. In fact, with the current pace of growth in online commerce, a more pertinent comparison for marketers would be eCommerce vs affiliate marketing.13
For content creators, the choice ultimately boils down to their personal preferences and capabilities. The life of an influencer is drastically different from that of an affiliate marketer. The latter are not normally in the limelight the way influencers need to be.
Influencers have to constantly interact with their audience and handle the pressure of the spotlight day in and day out. While some people thrive in this highly competitive environment, it is not the ideal career choice for many others.
For brands, the choice boils down to the product or service they want to advertise, the audience they are targeting, and their end goals. As already discussed, affiliate marketing is a great strategy if a business is focused on conversions, whereas influencer marketing casts a wider net.
Affiliate and influencer marketing, however, don’t have to be mutually exclusive. Both businesses and content creators can deploy each strategy simultaneously to realise their goals.
Commission Factory is the largest affiliate platform in the thriving Asia-Pacific region, connecting more than 800 of the world's leading brands with the best content creators and social media influencers in their target niches.
Connect with the Commission Factory team to learn more about how we help brands and publishers build and grow their affiliate marketing strategies.
Frequently Asked Questions
Is Affiliate Marketing the Same as Influencer Marketing?
No, affiliate marketing is not the same as influencer marketing. While they are both marketing strategies where brands collaborate with external partners, the goals and methods used are quite different.
Affiliate marketing strategy uses affiliate partners to promote products or services. This method involves using performance-based commissions to incentivise affiliate partners to boost sales. The ultimate goal is usually an increase in sales.
An influencer marketing campaign uses media engagement to promote a brand. The method here involves leveraging the influencer's credibility and trust among their audience. The end goals in influencer marketing can vary from increasing brand awareness, to improving customer engagement, to driving more conversions.
Can Influencers Use Affiliate Marketing Strategies?
No rule prevents influencers from trying their hands at affiliate marketing. In fact, several influencers often derive income through both affiliate and influencer marketing.
For instance, TikTok influencers often earn by partnering with brands for influencer marketing campaigns, while also earning through affiliate links placed in their content. For more on how to leverage the power of TikTok, refer to this detailed guide on Tiktok affiliate marketing.14
Which Is Better, Affiliate Marketing or Influencer Marketing?
Both are lucrative fields with great growth potential and one isn’t inherently better than the other. Businesses and content creators may choose one or the other depending on their strategies and capabilities. Sometimes, they may even engage in both simultaneously. The popularity of Instagram affiliate marketing is testament to this, as it's used by both affiliates and influencers.15
- Print Ad Revenue Halves in Six Years as Three Tech Giants Make $400bn Annually | Press Gazette
- Affiliate vs Referral Programs: What's the Difference? | Commission Factory
- The Top Affiliate Marketing Trends That Will Shape The Sector in 2022 | Commission Factory
- What Is affiliate marketing? | Commission Factory
- Frequently Asked Questions | Commission Factory
- The State of Affiliate Marketing: Benchmark Report (2023) | Influencer Marketing Hub
- 2022 Performance Marketing Industry Study | Performance Marketing Association
- eMarketer Influencer Marketing Report 2022 (PDF) | Insider Intelligence
- Top Shopping Trends of 2023 & How They've Changed | Hubspot
- The HubSpot Blog's 2023 Marketing Strategy & Trends Report | HubSpot
- Share of Marketers Who Thought That Influencer Marketing Had a Greater ROI Than Traditional Advertising | Statista
- Measuring Up : Affiliate Marketing Metrics | Commission Factory
- Ecommerce vs Affiliate Marketing | Commission Factory
- TikTok Affiliate Marketing in 2023: How to Become a TikTok Affiliate | Commission Factory
- Affiliate Marketing on Instagram - 13 Effective Strategies | Commission Factory