A successful mobile user acquisition strategy includes multiple marketing channels in a coherent plan and affiliate marketing is amongst the activities that should be taken into account. Affiliate marketing has become increasingly popular as a tool for paid user acquisition, let’s see why.
What is Affiliate Marketing?
Affiliate marketing is an advertising activity aimed at the acquisition of traffic or users for companies’ products or services. In the context of app install campaigns, it refers to the acquisition of mobile users for a company’s app and it is one of the main channels in every paid user acquisition strategy.
In affiliate marketing, the advertiser, who owns an app and wants to grow its user base, gives the publisher a budget in order to acquire new users. The budget is usually based on a fixed payout model, which the advertiser and publisher negotiate together. The most common payout model is CPA, which stands for Cost-Per-Action, where advertisers pay their publishers whenever new users generate a specific action inside the app.
Affiliate marketing was initially carried out manually, placing the tracking links necessary to download the app within websites and apps. However, many affiliate marketers and networks have evolved using algorithms which manage the app install campaigns and buy traffic programmatically.
Affiliate marketing is often misused as a synonym for performance marketing, but the two activities are different. The former is the channel described above, the latter instead refers to a marketing activity which can include both affiliate marketing and programmatic advertising. The reason why affiliate marketing is often associated with performance marketing is because the two channels work both with a fixed payout model, which provides advertisers with full transparency in terms of pricing structure.
Why is it important?
Affiliate marketing is an effective channel for acquiring new users for mobile apps and helps advertisers save money in their app install campaigns. Indeed, with CPA model advertisers pay only for users who generate some post-install events which are often aligned with business KPIs. This means that advertisers pay only for users who generate in-app revenues.
In addition, affiliate marketing reduces the overall cost of advertising activities by allowing advertisers not to pay for all the new traffic generated. The users who do not carry out in-app events, and who are therefore acquired for free, can be engaged with subsequent marketing campaigns such as remarketing in order to be converted into high-LTV users.
However, affiliate marketing brings in some drawbacks too. Indeed, the level of transparency provided by affiliate networks to advertisers is lower than the one granted by programmatic partners for example. Thus, advertisers often do not know where their ads are shown and this can generate reputational risks.
Many companies do not want their brand associated with content such as gambling, porn, betting and other low quality publishers but they cannot know where affiliate networks are going to place their ad and this can affect the brand reputation.
Another risk is fraud, which can increase also because of the low level of transparency provided throughout the app install campaigns by affiliate networks.
What you need to know about Affiliate Marketing?
- Affiliate marketing is a powerful channels to include in a successful paid user acquisition strategy;
- Affiliate marketing allows advertisers to pay a fixed price for users who generate in-app events;
- There can be fraud and brand-related risks associated with affiliate marketing;
- Advertisers do not benefit from full transparency provided by affiliate networks;
- Affiliate marketing helps advertisers reduce the costs of their app install campaigns.