Amazon Sets Standard for Affiliate Marketing

When it comes to creating online affiliate programs, few companies can match the success of Amazon (AMZN). Once again, the company has proved itself a valuable resource and promotional expert of online goods and services. According to a recent survey conducted by EPiServer, 47% of marketing and industry leaders polled voted Amazon as the best in promoting mobile commerce affiliate programs. Other companies like eBay (EBAY) received 20% and smaller companies including Shopkick received 5%.

Those who work in affiliate marketing earn a commission for all goods and services they sell online. Amazon has done a great job in helping affiliates market goods and services using the latest technology such as QR codes, product links, banners, apps and much more. The company also provides marketing advice, webinars, guides and other materials to ensure success.

In mobile marketing, those funny squiggly boxes found on product packages, in magazine ads and on websites are known as QR codes. To activate one of these codes, consumers take picture of the code with their smartphone. These codes include encrypted web addresses that smartphones decipher and then download. It’s an easy way for companies to drive traffic to product and service websites.

If you’ve only started noticing QR codes, you’re not alone. This form of mobile marketing is still relatively new – in fact, mobile marketing in general is still in its infancy. Marketing to consumers via smartphones and other portable devices allows companies to make an instant connection to inform, sell, and entertain. Instead of sending an email or piece of direct mail like a brochure or postcard and then waiting patiently for a response, companies now use mobile marketing to announce new products and services via text message and incorporate QR codes promoting discounts or special offers to increase web traffic.

The Importance of Affiliate Programs

Affiliate programs help companies complete more sales and increase revenue while boosting a company’s reputation and popularity. When utilized correctly, these programs become a second set of employees – without the additional costs of insurance, office space, time, and other expenses. It is worth it for large companies like Amazon to invest in its affiliate program as the return is huge in terms of money and branding.

Affiliates can sell products on any platform – social media, blogs, online forums, websites, email and mobile marketing. As long as affiliates adhere to Amazon’s rules concerning sales conduct, honesty, and fairness, those participating in the program can do so indefinitely.

From an investment standpoint, I think this is a very important part of the Amazon business model that many overlook. When Amazon first started, it didn’t spend much on online advertising – in fact, it still doesn’t. Early on, the company formed one of the first affiliate programs to let other people do the marketing and advertising work for the company. In return, affiliates earned commissions and bonuses for their efforts. This is just smart business as it helps keep marketing and advertising costs low.

According to its 2016 income statement, Amazon made $48.08 billion in sales/revenue and spent $8.77 billion in SG&A expenses. This number represents salaries, administrative costs, research and development, marketing and sales promotions, which makes it impossible to determine the exact amount spent on marketing. But in relation to sales/revenues, this figure is low. This leads me to believe that this one of the reasons the company has been able to expand into many other markets over the years. Instead of spending millions or billions on advertising and marketing, Amazon has instead focused on developing new products and services.

It’s All About Quality

At the end of the day, investors need to consider the overall quality of the companies they invest in. Keeping employees and affiliates happy by paying competitive salaries, providing ample goods and services to promote, and maintaining a knowledge database people can use to improve their online sales and promotional skills all help to create a workforce that’s happy, educated, and willing to put in the work necessary to build a solid brand. This is not something all companies are able or willing to do.

I think Amazon has taken steps over the years to make its affiliate program stand out. I think this investment will pay off in the long-run, especially as the company enters new markets. By keeping marketing and advertising budgets low and using the latest in mobile marketing technology, the company, currently trading for $233 per share, will continue to be a wise choice for investors.

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