February 3, 2016

The Pros and Cons of Affiliate Marketing vs. Advocate Marketing

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Are you comparing affiliate marketing vs. advocate marketing? Trying to find the best way to build a steady stream of business referrals? Both strategies can work well, but each requires a different approach and set of tools.

Before pursuing any new marketing strategy, it’s important to understand what it is, how it works, and when it should be used . . . or not used.

What is Affiliate Marketing?

A marketing affiliate is a third party who helps sell your products or services in exchange for financial compensation. Many software-as-a-service (SaaS) companies, for example,  offer their affiliates the first month’s subscription fee when a referred prospect becomes a customer. Others offer ongoing payments for customer retention, similar to insurance residuals. This sort of affiliate model is usually priced and paid on a per-sale basis called cost per acquisition (CPA), which should be familiar to anyone who’s ever sold on commission.

Other affiliate marketing payment models include:

  • Cost per lead (CPL): Referrers are paid for passing along contact information of qualified, interested buyers.
  • Cost per click (CPC): Referrers are paid when a user clicks on a link.
  • Cost per impression (CPM): Otherwise known as cost-per-thousand (M is the Roman numeral for 1,000). Referrers are paid based on the number of times an ad is seen.

As you can imagine, tracking affiliate marketing results is essential. Lest you fall victim to an affiliate marketing scam, it would behoove you to sign up for one of the many affiliate marketing networks — ShareASale, AvantLink, Rakuten LinkShare, etc. — that offer a platform for tracking clicks, impressions, and sales. It’s possible to track results on your own, but doing so can increase risk and reduce visibility. You need to know which affiliates and channels are promoting your product or service most effectively, or you might as well be shredding your own money.

shredding-money

To avoid misunderstandings — and wasted affiliate dollars — it’s important to clearly define the rules of your campaign.

  • How will you pay your affiliates? CPA? CPL? CPM?
  • How will you identify users and properly assign credit to each affiliate partner? Tracking links? Cookies?
  • Does the affiliate get credit when the user leaves your site to visit theirs, before ultimately returning to make a purchase? If so, what percentage?

A well-executed affiliate marketing strategy can help businesses generate a large amount of interest for a relatively small investment. A poorly-executed strategy, on the contrary,  will become an untenable cost sink.

Affiliate Marketing Pros:

  • Affiliate networks make it easy to set-up a campaign
  • Low barrier to entry
  • Pay for performance
  • Can grow reach and frequency exponentially

Affiliate Marketing Cons:

  • Risk of nefarious tactics from affiliates trying to game the system
  • Potential to cannibalize your own traffic
  • Relatively low conversion rate
  • Oversight required to keep messages consistent.

ALSO READ: The Pros and Cons of Affiliate Marketing

Affiliate vs. Advocate Marketing

Like affiliate marketing, advocate marketing is referral-based. Unlike affiliate marketing, you don’t usually reward your advocates with financial incentives. Instead, advocates are more often inspired by the desire to help a brand they love, or to help connect their colleagues with a product they find useful.

Advocates also differ from affiliates because they’re more likely to have a personal connection with the referral, which engenders trust. And “trusted referrals,” as we all know, convert at a higher rate.

That said, advocate marketing isn’t perfect.

For one thing, it’s difficult to track. You won’t always know who’s advocating for you, much less who they’ve influenced.

For another, there’s no real opportunity to vet an advocate or to control their messaging (unlike an affiliate). In the event an advocate becomes a detractor, this can become a serious issue. — as powerful a positive force advocates can be, they can just as powerfully damage your brand, especially if you make them angry.

Advocate Marketing Pros  

  • Authenticity/trusted referrals
  • Sustainability
  • Exponential growth potential
  • Earned, not paid

Advocate Marketing Cons

  • Can be difficult to track referrals
  • Little to no control of messaging
  • Disenchanted advocates make bad enemies
  • Slower to scale than an affiliate program

ALSO READ: Why Your Business Can’t Ignore Advocate Marketing

Can Advocates and Affiliates Co-exist?

Comparing affiliate marketing vs. advocate marketing reveals more than a few commonalities: both rely on third-parties; both can produce exponential growth in marketing reach and frequency; and both are relatively low-cost. In theory, you could choose to run advocate and affiliate marketing campaigns at the same time. Just be careful, and be discreet. If your advocates discover how much your affiliates get paid, you can expect to have a few “interesting” conversations.

Are you pursuing an advocate or affiliate marketing strategy? We’d love to hear about your experience. Let us know in the comments.

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Image 1: “Wasting Money,” a creative commons licensed Flickr photo by TaxCredits.net