Ask a taxi driver in Sydney for a restaurant tip or a hotel receptionist in Melbourne for a tour recommendation and you shouldn’t be surprised if they send you to a venue that rewards their referral with a commission. That’s affiliate marketing in action and it’s one of the oldest, perfectly legitimate techniques for generating sales. In the digital era, however, affiliate marketing has reached new heights, with Australian businesses now ready to reap the rewards.
Research by the Interactive Advertising Bureau (IAB) Australia found that a third of brands in Australia are currently spending $50,000 or more a month on affiliate marketing, with 19% spending $100,000 or more. And it’s working. Applying the principles of affiliate marketing to digital channels consistently outperforms other marketing activities when it comes to customer acquisition and return on investment.
Find out what is involved in affiliate marketing and how to start an affiliate marketing program in Australia.
When a third-party publisher or agent promotes a business’s product or service in return for a fee or commission on sales, that relationship is defined as affiliate marketing. For businesses, it saves the cost and time of sales outreach. Instead, the task can be handed to content publishers, bloggers, YouTubers or agencies who can recommend the service or product to their network, adding a veneer of authenticity and social proof in the process.
Without affiliate marketing, some of the biggest marketplaces of the digital era would struggle. It’s the guiding marketing strategy for Amazon, eBay, Etsy and more. In fact, affiliate marketing is now worth US$12 billion worldwide and accounts for 10% of global e-commerce sales and 15% of all digital media revenue.
The mechanics of affiliate marketing are simple, making it relatively easy to get started. At entry-level, a solitary content creator can generate passive income as a side-hustle by incorporating affiliate links into their blog or YouTube videos. To take a home-grown example, when Scotty’s Gone Walkabouts lists out the gear taken on a hike in the Blue Mountains to his over 87,000 subscribers, each time a follower clicks on a link and purchases, the YouTuber receives a commission. For the brands featured, there is a direct route to an engaged, primed audience.
At a corporate level, big brands will commission a network of agencies and publishers to disseminate their products, spending five- or six-figure sums a month to create a buzz and make their brand unmissable across digital platforms. Usually, this will be in tandem with traditional TV, radio, online and out-of-home advertising activity.
The missing link in the chain between brand and publisher is the affiliate marketing network. These are the platforms where brands list their products or services and publishers sign up to source items, generate affiliate links, and process commission payments. Typically, it is free for a publisher to join an affiliate network, but there may be a vetting process to complete. The bigger your brand, the greater your access to authoritative publishers with a strong reputation in their niche and a solid network. And make no mistake, most of the world’s best-known brands are fully active on affiliate marketing platforms.
There’s an important distinction to be made between affiliate marketing, in which commission is earned on sales, and multi-level marketing, in which most revenue is earned by signing up members. The former is respected and legitimate. The latter, when it becomes a pyramid scheme, is illegal.
Otherwise, the key legal requirement in Australia (as elsewhere) is that publishers should clearly state that their content includes affiliate links and that they receive a commission on sales. Specifically, under Section 18 of Australian Consumer Law, publishers should identify affiliate content as a sponsored post or paid promotion. Section 2.7 of the ANAA Code of Ethics requires disclosures to be prominent and visible, so they can’t be hidden away in the footer, for example.
A further challenge for all those working in affiliate marketing, both brands and publishers, is that from 2023 on the third-party cookies that are essential for tracking affiliate sales will be banned by Google, whose Chrome has 64% market share for online browsing. Third-party cookies are already blocked on Safari and Fox.
The most popular sectors that use affiliate marketing are fashion, outdoor recreation and health and wellness. Typically, these generate around 5 to 10% commission on sales for the publisher, although the larger the following and the bigger the personal ‘brand’ of the blogger or influencer, the bigger the commission that is typically paid. Celebrated marketer Ryan Robinson regularly earns over US$17,000 a month, for example, considerably more than the AU$52,130 average annual salary for an affiliate marketer.
The big commissions are in high-ticket affiliate marketing. Brands within the following categories frequently offers commission of US$1,000 per sale to secure the most influential publishers:
Gold and jewellery.
High-end electronics.
Luxury goods.
Web hosting.
Education and courses.
For publishers, it’s not as simple as dropping a few links into a blog, however. These high-ticket offers are often supported with a considerable deal of free content, such as e-books, reports or email newsletters, and buyers will assume a certain level of expertise or authority on the part of the viewer.
Increasingly, the serious affiliate marketing action is to be found on price comparison websites, or those that offer cashback or coupons. Useful content alone is not necessarily enough and marketers will need to be more ambitious than the standard blog post.
Businesses, brands and publishers in Australia can choose from a wide variety of networks to get started.
Some are well-known global networks:
Amazon Associates - the global leader with just under 20% overall market share.
Shopify Affiliate Program - courtesy of one of the most successful eCommerce platforms on the market.
ClickBank - has paid out more than US$5 billion in the last 20 years, with a presence in 190+ countries.
But others have a closer connection to Australia:
Commission Factory - catering specifically to the Australian market, generating up to AU$25m in monthly sales.
AvantLink - operates networks in the USA (HQ), Canada and Australia, with a portfolio of 800+ premium brands.
Awin - another global giant (21,000+ advertisers) with a dedicated Australian operation.
CrazyDomains - offers up to 10% commission with a generous attribution window of 90 days.
Catch - huge online shopping inventory of over 1.2 million items across fashion, beauty, pets and electronics.
Experience Oz - targeting tours, hotels and events in Australia and New Zealand.
Up to now, affiliate marketing has been dominated by the United States, which accounts for almost two-thirds of target traffic, the United Kingdom, and the European Union. But that northern hemisphere monopoly is starting to teeter and businesses in Australia can choose from a wide variety of networks and opportunities to grow their customers and client base.
If you’re growing internationally and paying publishers abroad, there’s a good chance you will have to handle overseas payments. Whether you are paying overseas suppliers, contractors or staff in their local currency or receiving payments for goods or services sold overseas, our comprehensive guide will help you make informed business decisions as you navigate the world of foreign exchange and international payments.