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Affiliate Marketing in China 2019

Affiliate marketing can be a great way to drive sales with a high ROI

by Ker Zheng

In China, there are many affiliate content websites that provide information and discount deals on cross-border e-commerce products. These include SMZDM (what's worth buying), 55haitao, and Dealmoon. 

These websites have niche content that consists of both professionally-generated content and user-generated content. These may include entertaining product reviews or information on third-party promotions.

Those with the most likes and comments gradually rise to the top, and the site recommends content based on personal preferences.

The allure is that the content is less “commercial” than information and reviews on e-commerce platforms, which many consider to be fake.

Because of the targeted focus of these sites and their users, there is a great deal of customer loyalty and the conversion rates are quite high. 

SMZDM, which went public in July 2019, generated over 500 million RMB in 2018 revenues and boasts ~10% per-click conversion rates. 

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A promotion on SMZDM's front page offers up to 80% off for popular shoewear. Source: SMZDM Official Website

Cost-Per-Sales Model Drives High ROI

As an advertiser, you can post information about promotions on these affiliate sites. Each post has a link that can redirect to your cross-border e-commerce business, which could be a standalone brand website or a shop on Tmall/JD.com. 

If the link drives sales, then the advertiser rewards the site with a commission for every transaction. The commission range is wide, varying from 5% to 40% depending on the product category. 

But the cost-per-sale commission model provides for high ROI because it’s directly linked to sales.

For smaller companies with limited budgets, affiliate marketing might make more sense.

However, note that many affiliates only sell well-known brands, because they know that the brands are quality and can drive sales. 

While some may consider accepting new brands, the commissions may be high and could eat significantly into your margins.

55haitao.JPG

55haitao offers customers cash-back offers of up to 40% for different merchants on its platform. Source: 55haitao official website

Affiliate Networks

Affiliate networks such as Yiqifa (亿起发)and Duomai (多麦) aggregate ad placement across thousands of affiliates and affiliate platforms in China. These networks also work with KOLs. 

In general, these networks help you expand your research across a wider variety of different advertising channels. However, they may charge an annual fee of 20,000-30,000 RMB for access to the affiliates on their network.

Affiliates generally prefer to work with established brands and retailers because the likelihood of success is higher.

Working on a CPS model may provide high ROI, but if your affiliate partner can't sell anything, then they don't get paid.

Affiliate marketing campaigns are also complex and difficult to manage for newcomers to the market, so it's best to work with local partners or hire an experienced Chinese team.

Lastly, the costs of using affiliates are not cheap. As mentioned, affiliate networks can charge 20,000-30,000 RMB a year for access, and the commissions can run high, depending on the type of product you're selling.

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Key Takeaways

 - Affiliate sites aggregate entertaining content and information on third-party promotions to generate large numbers of user traffic. They make money by directing that traffic to e-commerce sites where purchases are made, in exchange for a commission

 - Affiliate marketing is a high ROI marketing tool, but affiliate sites won’t work with just anyone. They prefer to work with well-known products with existing demand because they can sell quickly

 - Affiliate sites will continue to play an important role as 1. more brands build their own e-commerce websites and 2. advertising costs on marketplace platforms go up. This means that brands will look towards third-party content sites to help find customers.


marketing