Affiliate Marketing VS. Paid Advertising | Which Is Better?

Paid online advertising has been used by brands and businesses for about thirty years; the first online advertisement was published on October 27, 1994. The headline of this straightforward banner ad said, "Have you ever clicked your mouse right here? You'll do it. 

But just one little banner ad would forever alter the way companies communicate with their customers. Instead of just putting their banner ads on every website in the hopes that their target audience would see them, advertisers wanted strategies to target certain audiences and consumer demographics as banner ads grew in popularity. 

In 1995, tailored ad placement made its debut due to this need, and it went on to become the standard for internet advertising. Paid web advertising with a targeted audience transformed marketing for businesses and brands all over the world. It would soon overtake all other marketing channels as the most widely used means of increasing consumer conversion and brand exposure.  

However, after being in use for close to 30 years, traditional internet paid advertising strategies are starting to yield lower returns for both businesses and brands. Today's customers have become so inundated with paid advertising on the internet that they have begun to completely ignore it. 

What was once an effective way for businesses to present solutions to consumers’ problems has turned into a seemingly gainless endeavor, converting fewer consumers with each passing day. 

Today’s consumers are increasingly more demanding and more challenging to convert, which paved the way for alternative advertising methods online. One such method that has quickly taken the throne of the most popular marketing channel online is affiliate marketing. 

Affiliate marketing involves hiring affiliates to promote your products and services and rewarding them with a commission percentage of every sale they contribute to. 

Below, we’ll cover the top 5 reasons affiliate marketing has become the go-to solution for businesses to reach new audiences, drive brand awareness, and convert consumers.

Reason #1: Affiliate Marketing Is More Organic Than Traditional Paid Advertising

In the early days of the internet and paid advertising, consumers quickly learned to ignore the overwhelming presence of pop-up ads. Similarly, today’s consumers are learning to ignore the overwhelming presence of traditional paid advertising displayed all around them online. The sheer quantity of paid advertising online has forced consumers to tune them out subconsciously. 

Additionally, many of today’s consumers employ adblockers to block out display ads online completely. Many of today’s online shoppers perceive traditional online ads by brands and companies as inorganic and inauthentic. 

Today’s consumers are experiencing social media ad fatigue from the seemingly endless number of ads present on Facebook, Instagram, and all other social media platforms by companies and brands alike. Social media ads displayed by companies and brands are becoming increasingly less effective in converting consumers. 

More and more consumers each day, such as the increasingly more dominant demographic of Gen Zers, demand organic means of advertising from brands and seek trusted resources before purchasing. One such trusted resource that is increasingly becoming more dominant is influencers. Influencer marketing was rated as the fastest-growing online customer acquisition channel by businesses. 

Affiliate marketing beat paid online display advertising, search advertising, and email marketing as the fastest-growing channel. Another recent survey by Thrive My Way discovered that 52% of Gen Zers go to social media to seek advice from social media influencers before purchasing a product. Additionally, 52% of Gen Zers also said they value authentic snaps over professionally-edited product photos. 

Reason #2: Affiliate Marketing Has No Defining Guidebook

Affiliate marketing takes full advantage of the seemingly endless number of niches and their respective online affiliates. Unlike traditional paid online advertising that often utilizes specific best practices, affiliates in every niche have their own unique approach to reaching audiences and their own tried and tested advertising methods that best resonate with their respective audience. Thus, different affiliates working in the same niche and industry can reach different groups of audiences. This is a significant advantage of affiliate marketing for businesses compared to traditional paid advertising. It allows brands and companies to reach new audiences and convert them more successfully. 

Reason #3: Low Costs to Getting Started

Brands and businesses looking to get started with affiliate marketing don’t need a dedicated advertising team or expertise to begin their affiliate marketing program. Aside from choosing an affiliate network and selecting and vetting affiliates, there’s not much effort required to get started with affiliate marketing. This, along with a commission structure that only pays affiliates once a confirmed conversion that resulted in a sale, is one reason why affiliate marketing has become an immensely popular marketing method for businesses. 

Traditional paid advertising methods commonly utilize a PPC, or Pay-Per-Click, payment structure that charges businesses a fixed amount for every click made on their ads. Because most of the marketing activities are done by affiliates, the costs to maintain an affiliate marketing program are significantly lower when compared to traditional means of paid advertising online. This makes it easier for brands and businesses to manage their marketing costs and doesn’t strain their cash flow. 

Reason #4: Low Risks

Since businesses are only charged once sales are made, the risks of running an affiliate marketing program are significantly lower than traditional paid advertising. In addition, since affiliate marketing is performance-based, affiliates are incentivized to do their best to make the most amount of conversions possible. Finally, affiliate marketing further alleviates risk because businesses can permanently terminate their affiliate relationships with poorly performing affiliates. 

Reason #5: More Flexibility

Affiliate marketing gives companies greater freedom to scale up or down their affiliate marketing programs for little to no expense in comparison to traditional paid advertising. Both large companies and small businesses use affiliate marketing because of its relative simplicity and adaptability in developing a program. Furthermore, affiliate marketing gives businesses greater creative freedom when it comes to the approaches they might use to reach their target customers.

For the majority of firms in the twenty-first century, online paid advertising has become the primary marketing strategy. However, as its returns on investment decline, affiliate marketing is becoming a more popular choice for firms looking to expand their reach and boost sales. 

Affiliate marketing provides organizations with a natural, incredibly efficient, affordable, and adaptable way to boost conversions and brand exposure. Refersion makes it simple to launch an affiliate marketing program.