THE IMPACT OF AFFILIATE MARKETING ON THE PERFORMANCE OF ONLINE BUSINESSES IN NIGERIA

CHAPTER ONE

INTRODUCTION

Background of the Study

Since the advent of the internet, the growth rate of the retail industry in Nigeria has changed. The modern business environment is dynamic by nature, and it takes extra effort even more serious than it did in the past to survive in it. Online shopping sites with affiliate programs in Nigeria, like Konga, Jumia, Jiji, DealDey, Kaymu, etc., have embraced the idea of affiliate marketing and the services of affiliate marketers to promote their products and services in exchange for a commission on purchases. (Lestari & Maharani, 2023). Because the use of the internet is expanding so quickly, online marketing has become increasingly important as a way to directly engage with a worldwide audience (Turner, 2019). Among all the available internet advertising strategies, affiliate marketing has emerged as one of the most effective means of generating leads. This kind of marketing strategy is commonly known as associate marketing or affiliate marketing. Google AdSense is a popular option for publishers using affiliate marketing. Businesses wishing to promote online typically use Google AdWords, while publishers use Google AdSense to display these ads in an attractive manner within their web content (Abdelhady et al., 2020).  

Nonetheless, affiliate marketing has grown to be a significant industry and a significant source of revenue.  Furthermore, affiliate marketing is collaborating with other companies, websites, or groups to market their products and services and generate profits for both sides (Aldhama, 2022). Anshari & Mahani further characterize it as a cooperative endeavour, when companies, groups, or websites collaborate to market products and services with the goal of making money for both parties involved in a deal (Batu et al., 2020). In general, affiliate marketing is a technique whereby agents of other people's businesses promote their own products in return for a commission in the event that a sale happens as a result of their recommendations (Misra et al., 2021). The majority of organizations use contact count, campaign efficacy, and the percentage of contacted leads that convert to sales as their primary metrics for evaluating their success. 

Foss (2023) defined business performance as the result of an organization's or investment's actions over an extended period of time. Additionally, the more effort affiliate marketers put in, the more well-known the business gets, increasing revenue and sales volume. On the other hand, conventional marketing techniques are no longer sufficient in today's retail environment to build a strong and competitive service brand. According to Punjaisri et al., (2019) and Burmann and Zeplin (2018), online retailers are able to grow their service brands because they appeal to their target market. It also entails delegating the task of closing deals to a third party, particularly a client who is paid a commission for convincing other clients to purchase goods that a sponsor is offering (Grzegorz and Mchal, 2019),.  Therefore, a survey will be conducted in order to assess the impact of affiliate marketing on the performance of online businesses in Nigeria.

1.2 Statement of the Problem

In recent times, affiliate marketing has become quite popular all over the world. It is a performance-based marketing technique in which companies pay affiliates for bringing in customers or making sales through their marketing campaigns. For these companies, affiliate marketing offers a potentially affordable way to expand their customer base and boost revenue without having to shell out a lot of money up front. 

Apparently, many Nigerian online businesses struggle to maintain growth and profitability despite notable increases in internet penetration and mobile phone usage (Ndukwe, 2018). Although, Nigerian-specific cultural, technological, and economic elements have a distinct impact on affiliate marketing campaign success than in other locations. For instance, the results of affiliate marketing initiatives may be impacted by Nigerian customers' shopping patterns, their degree of confidence in online transactions, and their general level of digital literacy (Adewale, 2019). Further research is needed to determine the kinds of goods and services that appeal to Nigerian customers as well as the best affiliate marketing avenues to use there.

In addition, there are issues with affiliate marketing management and regulation in Nigeria. Problems like affiliate fraud, in which dishonest affiliates fabricate traffic or purchases, can destroy confidence between companies and their affiliates and reduce the efficacy of affiliate marketing programs (Kumar & Rao, 2019). Likewise, the integrity and viability of affiliate marketing techniques in Nigeria are seriously jeopardized by the absence of strong regulatory frameworks to monitor and curb these fraudulent operations. Hence, it is in the light of these that the study seeks to assess the impact of affiliate marketing on the performance of online businesses in Nigeria.

1.3 Objectives of the Study

The main purpose of this study is to assess the impact of affiliate marketing on the performance of online businesses in Nigeria. Specifically, the study will;

1.Evaluate the extent affiliate marketing contributes to the sales growth of online businesses in Nigeria.

2.Assess the effectiveness of affiliate marketing in customer acquisition and retention for online businesses.

3.Investigate the role of affiliate marketing in enhancing brand visibility and awareness for online businesses.

4.Investigate the challenges faced by online businesses in implementing affiliate marketing strategies

1.4 Research Questions

The following questions have been prepared for the study:

What is the extent to which affiliate marketing contributes to the sales growth of online businesses in Nigeria?

How effective is affiliate marketing in customer acquisition and retention for online businesses?

What role does affiliate marketing play in enhancing brand visibility and awareness for online businesses?

What challenges do online businesses face in implementing affiliate marketing strategies?

1.5  Research Hypotheses

H0: Affiliate marketing has no significant impact on the performance of online businesses in Nigeria.

Ha: Affiliate marketing has significant impacts on the performance of online businesses in Nigeria.

1.6  Significance of the Study

Marketers will acquire a better grasp of affiliate marketing's effectiveness as a promotional strategy from the study's findings. They will be able to create and execute affiliate marketing strategies that are more responsive to the needs and preferences of their target audience. Additionally, business owners will optimize their campaigns to increase sales, improve customer acquisition, and enhance overall profitability. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard the impact of affiliate marketing on the performance of online businesses in Nigeria.

1.7 Scope of the study

The scope of this study is boarded on the impact of affiliate marketing on the performance of online businesses in Nigeria. Geographically, the study will be delimited to residents of Lagos state.

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. 

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Affiliate marketing: A performance-based marketing strategy where businesses reward affiliates (partners) for driving traffic or sales to their products or services through the affiliate's marketing efforts.

Consumer: An individual that purchases goods or services for personal use.

Online Business: A commercial activity conducted over the internet, where businesses offer goods, services, or digital products to consumers.