Affiliate marketing vs display advertising: which works best for my business?

So you’re a business with a product or service to promote. You may well be umming and ahhing about the best way to advertise it. Should you opt for affiliate marketing? Or is display advertising the better route?

Affiliate marketing and display advertising are two very effective ways of promoting your brand or products, and both have been proven to work. In fact, although they’re two completely different methods, they can look very similar and share many overlaps. Here, we’ll help you to get your head around that all-important toss-up between affiliate marketing and display advertising.

What is affiliate marketing?

Affiliate marketing is one of the best-known kinds of partner marketing there is. It’s a $15 billion industry (according to CHEQ). It drives as many e-commerce orders as email in the US (according to Business Insider). And it has an ROI ratio of 1:16 in the UK (according to AWIN). 

So, there’s no doubt it can be insanely effective (read our affiliate marketing stats if you’re still not convinced). But what exactly is it?

Well, affiliate marketing is when a brand rewards another brand or individual for promoting its products on a performance basis. 

Normally, the party doing the promoting (known as the affiliate, affiliate marketer or publisher) gets a percentage commission on any sales they help generate. However, the affiliate can also be paid based on other consumer actions they encourage, such as clicks, email sign-ups, likes on social media and more.

Affiliate marketing as we now know it largely revolves around the sharing of affiliate links. The primary brand (the one that wants their product promoting) generates each of their affiliates with a unique tracking link. The affiliate then shares the link whenever they promote the brand’s products (whether that’s on a blog, website, social media account or even just a family WhatsApp group!). 

When a consumer clicks the link and then goes on to buy the brand’s product, the brand is able to see where the consumer has come from and reward the relevant affiliate accordingly.

The biggest benefit of affiliate marketing for the primary brand is that they only have to pay when an affiliate’s efforts are successful! This makes it a cost-effective and low-risk way of promoting your brand and products.

What is display advertising?

Display advertising is another extremely effective way for businesses to promote their products. In fact, it’s the fastest-growing type of digital advertising out there, with US companies spending around $79.75 billion on it in 2021, according to Small Business Trends.

Display advertising is when a brand places a visual advert for its products on a third-party website, app or social media platform. Normally, you’ll do this through a display advertising network – a service that places your ads on websites that have ad space available. One great example is the Google Display Network.

You’ve probably come across tons of display ads before – like banner ads. You know, those rectangular (or banner-shaped!) ads that you often see along the top or bottom of a web page, or vertically down the side?

Well, there are lots of different types of display ads, but they’ll normally combine text, images (or video) and a link to a website where a consumer can buy the product or learn more.

Like with affiliate marketing, the third-party website will normally be paid based on performance. They’ll usually get paid on a cost-per-click (CPC) basis, which means they’ll receive money each time the ad receives a certain number of clicks. However, it’s also common to get paid based on cost-per-thousand-impressions (CPM), which means they’ll receive a set payment each time a thousand people view the ad.

Where do affiliate marketing and display advertising overlap?

Affiliate marketing and display advertising can look very similar. They both involve getting your brand or products promoted on a third-party website or platform. And they both involve paying for those promotions on a performance basis.

In fact, sometimes affiliate marketing and display advertising can look pretty much identical. After all, while banner ads are frequently used in display advertising, some affiliates will use banner ads to promote products on an affiliate marketing basis too!

Let’s start at the beginning.

Imagine you’re a brand that wants to promote a product. One option is to find affiliate marketers to work with. In this case, you can create some guidelines for them and create assets that they can use. But it’s up to your affiliates to decide how exactly they want to promote your product.

If your affiliates run affiliate websites or blogs, they might well choose to use banners ads to promote you. But many affiliates will favour a softer, less obviously salesy approach, such as writing a product review or dropping a mention of your product into a relevant blog post.

Ultimately, the crux is in what kind of affiliates you choose to work with. This will affect how your brand is promoted, as well as who it’s promoted to – hence why it’s important to work with affiliates that fit your niche.

Another option is to use display advertising. In this case, you create your ads yourself. So, you have complete creative control over them. Depending on the display network you decide to use, you’ll probably end up creating a mix of banner, image and text ads.

You can then choose what websites you would like to run your display ads on, known as ‘site placement advertising.’ However, mostly, the display advertising network will place your ads on third-party websites (or apps or social media platforms) for you.

You can then manage your ads and make them highly targeted by selecting what demographics you want your ads to be displayed to, and even setting up remarketing display ads, which appear in front of users who have been on your website before but left without converting.

In this way, although they can look similar, display advertising is focused on helping you to place your ads in new places, while affiliate marketing is focused on giving another brand or individual the freedom to market your product to their following in their own way.

What are the benefits and disadvantages of affiliate marketing?

We’ve already banged on a bit about how great affiliate marketing is. But how does it compare to display advertising? Well, these benefits and disadvantages of affiliate marketing will help you to weigh that up.

Benefits

• Low risk. Brands that use affiliate marketing only have to pay when an affiliate’s efforts are successful. This means there’s very little risk involved. If an affiliate’s efforts to promote your product are unsuccessful, you don’t gain anything but you don’t lose anything either.
• Cost-effective. Brands often pay affiliates a percentage commission on sales. This means that brands aren’t having to fork out any money unless they’re being paid themselves, unlike with display advertising which is more commonly run on a cost-per-click basis.
• Reach niche audiences. By working with affiliates that have a small but engaged audience within your niche, you can ensure your promotions reach a highly-targeted audience.
• More personal. Affiliate marketing involves an affiliate promoting your product to their audience, who they already know and have built a relationship with. This means their promotions can often come across as personal recommendations, which can be highly effective (McKinsey found that word of mouth is behind 20-50% of all purchasing decisions).
• More relevant. Successful affiliate marketing will see your product or service being promoted in places where it feels relevant. For example, if you sell hairdryers, your product might be recommended in a blog about how to achieve a certain hairstyle. This is in contrast to display advertising, where the content of your ad may not be relevant to where it’s being advertised. 

Disadvantages

• Less control. Affiliate marketing gives you less control over the way your products or services are promoted. You have to place your trust in the affiliates you work with to promote your products sensitively and successfully.
• Competition for top affiliates. If you want to work with the most successful affiliates or those who have huge followings, you’ll find yourself competing with many other brands for their attention.
• Low-quality affiliates. Some affiliates use dishonest tactics to get consumers to click on their links, such as failing to disclose their affiliate links or giving out fake voucher codes to encourage clicks. However, this can be combated by setting up fair attribution models that don’t give all the credit to the affiliate who achieves the ‘last click.’ 
• Lack of relevancy on networks. Good affiliates will only promote products that are relevant to their audiences. However, others will promote anything and everything, which is often unsuccessful and can even be seen as spammy. Be careful if you’re using affiliate networks to find affiliates, as there’s likely to be a lack of relevant affiliates to choose from.

What are the benefits and disadvantages of display advertising?

Now let’s compare that with display advertising. Like affiliate marketing, display advertising has a whole host of benefits, but it has its downsides too. 

Benefits

• Low risk. Like affiliate marketing, display advertising is a relatively low-risk way to promote your products, as you pay based on performance (although payment tends to be made based on metrics that are near the top of the funnel).
• Advertise anywhere. The consumers who might be interested in your product could be anywhere and may not necessarily be scrolling through websites that are relevant to your product. Display advertising allows you to advertise to them on websites that may not have anything to do with your niche or industry.
• Eye-catching. Display advertising tends to be less subtle than many methods that affiliate marketers will typically use. Display ads are normally centred around visuals, such as images or video, so they’re likely to catch a consumer’s eye and demand their attention.
• Highly targeted. You can use your display advertising network to decide what audiences and demographics you would like to target with your ads. This allows you to show your ads to those consumers most likely to convert.
• Ability to run remarketing campaigns. Remarketing display ads allow you to target consumers who have already visited your website but not yet converted – these consumers have already shown interest in your brand so are likely to need less effort to convert.

Disadvantages

• Less relevant. Display ads can sometimes be shown on pages that aren’t the most relevant to what you’re selling. While this has its benefits, it does mean that display ads can feel a little out of context.
• Banner blindness. Banner blindness refers to the fact that consumers see so many ads every day that they can begin to mentally filter them out. This is where some of the softer tactics used by affiliate marketers, like integrating promotions within valuable content, have an advantage.
• Ad blockers. A major disadvantage of display advertising is that consumers can choose to block your ads using ad blocking software. According to Statista, roughly 25.8% of internet users in the US block advertising on their connected devices, and this number is only expected to keep growing.
• Can be seen as salesy. There’s no hiding from the fact that display ads are there to sell to consumers. On the other hand, if you’re working with affiliates who have a loyal following, they’re often able to recommend products in a more authentic way. After all, 49% of consumers depend on influencer recommendations according to the Influencer Orchestration Network.
• Pay based on front-of-funnel metrics. As we’ve mentioned already, display advertising is a relatively low-risk form of advertising as you only have to pay when your ads perform. However, you’ll usually pay per click or per thousand impressions and, of course, clicks and impressions don’t always translate to sales. With affiliate marketing, you’ll often be able to pay only when a sale is made, which lowers the risk still more.

Which is right for my business?

There’s no denying that both affiliate marketing and display advertising can bring countless benefits to your business. But which is right for you?

Well, that depends on your preference. 

If you know exactly which demographics you want to target, and you have a way of advertising to them that’s proven to work, display advertising is a no-brainer. It will allow you to get your ads in front of the right people so that you can drive traffic to your site and (hopefully!) reap those conversions. It will also allow you to experiment with different messaging and with who exactly you target, to further hone your strategy.

On the other hand, if (like us!) you’re a believer in the saying ‘two heads are better than one,’ you’ll love affiliate marketing. You’ll get to hand over responsibility to a handpicked selection of partners who’ll bring their own expertise and creativity to market your products to their audiences, capitalising on an existing relationship that they’ve built with their following.

Having said all that, here’s something important you should know: there’s no need to pick just one or the other. In fact, it’s often a good idea to use both affiliate marketing and display advertising, in order to get the best of both worlds.

Affiliate marketing vs display advertising: final thoughts

Both affiliate marketing and display advertising can be effective ways to reach new audiences, boost brand awareness and increase sales. And there’s no reason why you can’t benefit from them both! 

However, affiliate marketing allows you to capitalise on the relationship that an affiliate has carefully curated with their following, allowing your products to be authentically recommended as opposed to blatantly plugged (when done well, of course!). And we all know how valuable word of mouth is when it comes to influencing consumer purchasing decisions. So, in the battle between the two, we’d probably say that affiliate marketing wins –– but we are biased of course, and ultimately, only you can decide!

If you’re ready to find partners to promote your products on an affiliate basis, just book a demo for Breezy. Our partner search engine can help you find affiliates way more quickly, so you can save time hunting for partners and instead focus on making those partnerships a success!