Want to know about what is affiliate marketing?
Then you are in the right place.
Because, in this post I’m going to tell you every little thing in detail relating to it.
This is the most definitive and complete guide you could ever find on this topic.
So without any further ado, let’s dive right in.
What is Affiliate Marketing?
“Affiliate Marketing is the process of earning a commission when you promote other companies’ products to others. You find a product you like, you promote it to your audience and get paid commission for every sale you make through your affiliate link”.
In simple words, it means when you help a company generate sales, you get a piece of the profit.
And, the best part?
You can promote anything from a physical product like an armchair to a digital product like an e-book.
It just depends on what product you are familiar with, have knowledge about and would help your audience the most to make their life easier.
Now, let’s move onto the next part!
Who is involved in Affiliate Marketing?
Generally, you would find most of the people talking about 3 parties that are involved: the advertiser, the publisher and the consumer
Whereas, Wikipedia defines 4 parties: the merchant, the network, the publisher and the customer.
But according to me, there are only 3 parties that play a major role in this affiliate marketing industry.
That’s who I focus on and I’d suggest you, to do the same.
Those 3 parties are A] the merchant, B] the marketer and C] the customer
And the 4th party, the network I will explain it to you later in the post. But for now, let’s look at these 3 parties and understand who are these and what role do they play.
The First Party-
The merchant is also known as the product creator or seller. This party takes care of the creation, production and selling of the product.
Merchants offer commissions to affiliates for every sale acquired through their significant following.
The merchant can be a big company like Liberty who makes furniture.
Or, a solo-entrepreneur like Brain Dean aka Backlinko who sells courses to make money online.
Often people recognize merchants as an advertiser because sometimes a merchant does not create the product, only sells it. For example: Amazon.
In simple words, a merchant in the affiliate marketing industry is someone who has a product to sell.
Up next, The Second Party-
The marketer is also known as the publisher, but most often marketers are called affiliates. This party handles the promotion part of the affiliate marketing system.
Affiliates can also range from a single individual like you & me or a big company like Wirecutter.
A marketer promotes products to potential customers trying to convince them to buy the product through their links.
This can be achieved by writing reviews about merchants’ products. For example:
Or it could also be an entire site dedicated to a certain topic. For example: OutdoorGearLab comparing different outdoor gear products and promoting them.
In simple words, a marketer in the affiliate marketing industry is someone who promotes a product to generate sales.
And finally, The Third Party-
Ok, hands down! Any industry can’t survive without its customers. Because they are the one making transactions.
This party completes the affiliate marketing system. Without customers purchasing products, there would be no revenue generated and no commission paid out.
To get sales and for the promotion of the products; both, the merchant and the marketer need potential customers.
The affiliate would try to promote the product to customers on whatever channel they see perfect. Whether that’s a social network like using an Instagram page or a YouTube channel or on a search engine by starting a blog.
How Affiliate Marketing Works Step by Step?
Successful Affiliate Marketing is a simple 9 step procedure. Beginning from the joining program till the commission being paid out.
I will tell you each step in detail.
Or more so show you…
Step #1: Affiliate finds a product that he likes and joins the merchant’s affiliate program to promote it and generate sales for the merchant.
Step #2: Affiliate uses a unique link or a banner ad provided by the merchant to promote it on his blog or any social network he sees fit for his audience.
The link usually looks like this:
Step #3: Customer visits affiliates’ blogs or social network and learns about the features and benefits of the product.
Step #4: Cookie
When a potential customer clicks on the link to buy the product, a small file called cookie gets stored in their device.
This cookie helps in two things:
- It contains data related to affiliates to help merchant credit commission to the right affiliate.
- It (usually) has an expiration date of the click data so that even if the customer delays the purchase, the affiliate still gets paid for his hard work.
Let’s learn more about cookies through an example:
If suppose a customer reads your blog post about best running shoes and clicks on one of your affiliate links and visits Amazon to view their desired product.
However, they delay their purchase for some time due to an issue.
But, later in the night, they revisit Amazon to complete their purchase along with the other two products: a running tracksuit and water-bottle altogether.
And here’s the good news! You will receive a commission for every product purchased on Amazon by the customer even though you only promoted running shoes and not others.
This is because of two reasons:
- Earlier when the customer clicked on your link a cookie got stored in their device. And, Amazon has 24-hour cookie duration.
- Amazon has the policy to compensate affiliates for every product purchased through their link even though the product might not be the one they’re promoting.
Now back to the process of how affiliate marketing works.
Step #5: After visiting merchants’ websites, the customer buys their product.
Step #6: While the customer is buying the product the merchant records his transactional details.
Step #7: After the selling of the product, the merchant checks for an affiliate cookie to credit the qualified sale.
Step #8: The merchant finds a cookie that belongs to the affiliate and logs credit for sale commission.
Step #9: At the end of each payment period (usually monthly), the merchant pays out the commission to the affiliate for every sale referred.
Thus this is how affiliate marketing works step by step. The Complete Process.
Now, after knowing the process, it’s important to know, what benefits do you get by being an affiliate marketer.
Benefits of becoming an Affiliate Marketer
Why become an Affiliate Marketer?
After the release of New York Times Bestseller book The 4-hour Work Week.
Everyone wanted to escape 9-5 and achieve the dream of working just for a few hours a week and make money while living the new rich lifestyle.
At Least that’s how the majority of the people (including me) get started with affiliate marketing.
To live a life I truly deserve by travelling the most prestigious & luxurious places in the world.
And work only for few hours a week while everything being kept on automation.
If you too want to acheive this goal, then affiliate marketing is the best option.
Although, below are some points which might make you understand, what are the benefits of being an affiliate marketer.
1. Make Money Online
Didn’t I mention it to you? Starting an affiliate marketing business makes you a new-gen entrepreneur and not a regular entrepreneur.
If not? then read below and you will get to know, how?
When starting a new business, entrepreneurs have to worry about the product, its creation, development, inventory.
And heck! They also have to worry about the after-sales service like customer support.
But that’s not the case in this business model. You don’t have to have a headache of anything like that.
You only have to promote the product and send visitors to merchants’ sites.
The more people buy from your link the more commissions you get.
And that’s it. Your job is done.
Although there are many ways to make money online but affiliate marketing is simply the best.
2. Low-Cost Business Model
While setting up any new business, an initial capital infusion is required as well as consistent cash flow is a must to keep the business running.
Whereas, this is not the case with the affiliate marketing business model. It’s not only simple to set-up but also light on a budget so that you can start while working on your job and have a side hustle that could grow into big one day.
Wondering how? Say, no more!
An average american millennial spends $208 per day, and I bet if you save that money for a week or even for a month, you could not only start your own affiliate marketing business but be ahead of many others, just by having that much cash to spend on tools or leverage your work.
3. Passive Income
Affiliate Marketing is one of the best ways to make passive income with not much effort.
Being an affiliate marketer will allow you to promote products relating to your niche. But why stop there? Why not promote other products too related to your niche?
For example, If your niche is “running shoes” then why not promote several other products related to that, like jackets, watches, snacks, water bottles, belts, etc. the list continues.
Not only that, but why not sell your own digital products like an e-book with a perfect checklist for running gear?
That way you could not only be making more money but also discover different sources of income. And ultimately resulting in making passive income.
4. Work From Anywhere a.k.a Freedom
Let me guess, what your daily routine looks like.
You get out of your house early in the morning, catch a taxi, get stuck in traffic and finally make it to the office. Where you would have to agree to whatever your boss says and work like a machine.
Finally, come back in the evening fully exhausted, have dinner and go to sleep with utter disappointment to turn your life around but can’t. And repeat the schedule for the rest of your life.
It sucks right?
But don’t worry. Because that’s what affiliate marketing could make possible.
Affiliate Marketing gives you the freedom to work from anywhere. You could be enjoying a vacation in any part of the world. And only need your laptop and an internet connection to work.
And there are many people (including me) who start affiliate marketing to have freedom from the rat-race and make a living online.
5. Make Money While Sleeping
Making money while you sleep is one of the biggest desires people have in 21st Century. I bet you have this desire too.
May be I’m wrong but let me tell you that, being an affiliate marketer is one of best the ways you can make money while you sleep.
You just have to create great content that your audience would love and then place affiliate links strategically to guide them towards the CTA (call to action) and that’s it.
Your audience being anywhere in the world would consume your content, love your content and buy the products you recommend.
And when you wake up in the morning you’d get tons of notifications for recommending a sale.
Fulfilling your desire of making money while you sleep.
6. Continuous Cash Flow
Wouldn’t it be amazing to have a continuous cash flow so that you never have to worry about your money problems again?
Well, that’s something affiliate marketing can help you with.
Many of the affiliate marketing programs offer recurring commissions so that you have to refer the product to someone once and that will bring you money over the long term as long as they are paying for that product.
For example: Aweber an email service provider company offers 30% recurring commissions to affiliates.
Platforms available for Affiliate Marketing
You can start making money with affiliate marketing on any platform as you wish, but most of the affiliate marketers share common channels to keep their audience engaged and receptive(open to suggestions).
However, not all affiliates are the same. As they do not promote products in the same way as others. They may leverage other marketing platforms for their use.
1. A Blog
To be an affiliate marketer, you need to have influence. You can start a blog and that would be the best way to create influence.
You could focus on finance, personal health, business, tech or even dogs, a niche-specific blog would help you gain influence and build an audience over time.
Also with the ability to rank organically in search engines, bloggers excel to increase merchants sales through effective promotion techniques like writing in-depth & comparison reviews about the product.
So become a blogger and start making money blogging via affiliate marketing.
2. A YouTube Channel
The ever-rising demand for video tutorials has made YouTube the 2nd largest search platform in the world leaving behind Bing, Yahoo, and Ask.
And why would it not be? From cute dog videos to in-depth physics theories everything is available on YouTube and people can watch it.
And if people can watch that, they can surely watch your videos.
You can start a YouTube channel on a specific niche to create an influence and to build an audience.
And then promote products by creating video tutorials featuring how the product works, the benefits, the alternatives, etc. to help your audience with.
So become a Youtuber and start making money on Youtube via affiliate marketing.
3. Email Lists
I know what you’re thinking, isn’t email marketing dead?
But what if I tell you, despite the rise of social media marketing and SEO (search engine optimisation), email remains one of the most effective ways to reach your audience.
And also email delivers highest ROI over any other channels for marketers.
So focus on building your email list and send curated emails to nurture your subscribers. Further building your connection with them and increasing the chances of generating sales.
With the rising demand for this photo-sharing platform, it has reached 1 billion active monthly users.
Influencers benefit the most from this platform due to their influence over their audience, they have a large number of opportunities to promote products on Instagram with such an engaging audience.
They can easily direct users from their profile to sellers products through their interactions with followers such as posts.
You can become an influencer by creating a niche-specific profile on Instagram which would help you to build an audience and and by creating quality content you can have a great influence on them.
So become an influencer and start making money on Instagram via affiliate marketing.
Now, let’s talk about something that most people get confused between.
And that is affiliate programs and affiliate networks. Most people get confused and consider them as the same, but the truth is that they are not.
There is not much difference between programs and networks available for affiliate marketing.
They are quite inter-related to each other, but there’s a slight difference between the both and I’m gonna tell you that just now.
Affiliate Marketing Programs
What is an Affiliate Program?
Affiliate Program is an automated electronic program consisting of web advertisers (merchants) and recruited webmasters (affiliates).
Affiliate Programs are also called affiliate models or associate programs. It is a relationship between the sellers and affiliates, where sellers pay their affiliates for sending them traffic.
Affiliates have to apply and join the program to promote products. The ads and banners available in affiliate programs are linked to sellers’ websites and are referred to as affiliate links.
And when people buy through the affiliate links attached to a specific affiliate, that affiliate receives a commission.
Types of Affiliate Marketing Programs-
Depending upon the price of the product and the commission rate, affiliate programs can be classified into 3 types:
- High Paying, Low volume: These programs have high payouts but a limited number of buyers. For example: Any Niched Product
- Low Payouts, High Volume: These programs have low payouts but the number of buyers is high. For example: Amazon Associates Program
- High Payouts, High Volume: These programs have high payouts and also have a high number of buyers. For example: Credit Cards
Affiliate Marketing Networks
Remember the part? Where I talked about Wikipedia, which mentions four parties involved in affiliate marketing.
And I skipped the fourth party to explain it to you later?
Yep! This is the 4th party involved in the affiliate marketing industry.
Yet most people don’t consider them that, as they don’t play a major role in the industry.
But now, I will explain it to you, because as this is an ultimate guide.
And I would cover every little thing about affiliate marketing.
So, here you go…
What is an Affiliate Network?
An affiliate network is a platform that works as an intermediary between the merchants and affiliates. They bring them both together under one platform, relieving headaches for both.
Both the seller as well as the affiliates have to first register with the affiliate network before dealing with each other.
In simple words, an affiliate network works as a ‘middle-man’ connecting both the merchants and sellers.
Benefits of using Affiliate Networks-
- Relieves Stress: All tracking of links and accessing of payments is done by the network itself.
- Secure Payment: As the network is working as a middle-man, they pay affiliates for their efforts, even if the merchant has not paid them yet.
- Reward Programs and Incentives: When a publisher generates a high amount of sales for the merchant, the network provides various rewards and incentives to the affiliate.
Awin is the best example of an affiliate network. Their affiliates earned over $900 million in 2019.
How do Affiliate Marketers Make Money?
There are many ways an affiliate gets paid for his efforts after linking the customer to the seller. This is because the customer doesn’t always need to buy the product for the affiliate to get paid.
Even if the customer doesn’t buy the product straight-a-way or even after the cookie expires, you as an affiliate can get paid for your efforts.
This ideology increases the chances of you getting paid.
Types of Monetization:
1. Pay Per Sale (PPS)
The standard (traditional) affiliate marketing payment structure dominates the whole industry.
In this type of payment system program, the merchant pays an affiliate a piece of the sale price to compensate for every successful purchase of the product through his link.
The commissions paid out are of 2 forms either a specific percentage (%) or straight cash ($$) for every referral.
- Higher Earnings: The commissions paid out in this payment system are higher than any other, so even with low conversions you as an affiliate can make a good amount of money.
- Less traffic: Even with low traffic, affiliates can generate sales, so there is no compulsion on having a small amount of traffic, although having high traffic is a plus point.
- Challenging: This type of marketing is challenging because to earn a commission, an affiliate must convert the customer into a sale rather than a lead.
2. Pay Per Lead (PPL)
Pay Per Lead is a type of Cost Per Action (CPA) or Pay Per Action (PPA) payment system program which compensates affiliates on the acquisition of leads.
You as an affiliate must persuade customers to achieve a specific action on merchants’ websites to earn a commission.
That action might range from – filling out a form, requesting a quote, signing up for a free trial, opting into an email list, and more.
- Easy: This type of program is easy in nature. The customer can conveniently sign-up for something free or low-priced than to make them purchase something.
- Multiple Payouts: Most PPL programs have two tier commissions, which means you get paid twice, first when you generate a lead and the second time when that lead becomes a customer.
- Less Earning: The biggest drawback of this type of program is that you will get paid more often but the amount you receive would be less.
- Requires Traffic: In order to make a good amount of money, you will require high traffic to convert into leads.
3. Pay Per Click (PPC)
This type of payment system program focuses on providing affiliates incentives for sending traffic to merchants’ websites.
It is an advertising model where advertisers pay commission to the publishers whenever one of their ads gets clicked. (i.e bloggers, affiliate marketers who are showing their ads on their sites).
- Convenient: The PPC affiliate programs are very convenient to use. An affiliate has to only place ads on site provided by advertisers and can make money from clicks.
- Extra Income: An affiliate can use this method to boost his affiliate earnings, which is helpful in the early stages of affiliate marketing.
- Slow Down: The biggest drawback of PPC affiliate programs is that the excessive number of ads might slow down an affiliate’s site to load. Further hurting rankings in search engines.
- Requires Traffic: The only way to enjoy PPC programs is to have heavy traffic. Otherwise, the money earned is too low to qualify as income.
That’s all folks!
Okay so, I have covered almost everything relating to affiliate marketing except for one thing.
And that’s how to get started with it and make money, for that purpose, I’ve created an another in-depth and easy to follow guide on how to start affiliate marketing for beginners feel free to read it.
Now, it’s time for me to answer some of the basic questions that you might have.
Frequently Asked Questions (FAQ)
Can affiliate marketing make you rich?
Yes, it certainly can, but it’d be dumb of you to expect to make money within a few weeks of starting. Making money through it depends on your niche and how much effort you are willing to put into it to scale.
What are some of the most popular affiliate networks?
JVZoo, Clickbank, Awin, ShareASale, eBay partners network, Amazon Associates Program, CJ Affiliate, etc. are some of the popular networks.
How much money can I make as an affiliate marketer?
Affiliate income is not consistent. One month it can be higher and the other month it won’t be. So, you’ll have to look at it on an annual basis. A decent affiliate marketer can make $10,000 a year (side income) to upwards of $100,000 a year (primary income).
What type of products can I promote?
You can promote any product (may it be physical or digital product) you’re familiar with, have knowledge about, and is useful for your audience within your selected niche.
How to make fast money with affiliate marketing?
There is no fast or easy way to make money with affiliate marketing. You must have lots of patience and ability to focus on scaling over the long term rather than short term.
Too much information to digest?
Don’t worry I’ll give you a quick summary so that you can understand more but in fewer words.
First off, affiliate marketing is a commission-based business model, the more you generate sales for the company the more you get paid.
For affiliate marketing to work there needs to be involvement of three parties, namely the merchant, the marketer and the customer.
It is the best side hustle one could start to make money online and take control of their income while looking for performance-based revenue options.
Also, this business model has the ability to grow from just being a side hustle to a complete business in itself and make you a new-gen entrepreneur by escaping 9-5.
Not only it’s relatively easier to start, maintain, scale and monetize than other business models but it also has various benefits for affiliate marketers.
Affiliate Marketing Industry has different programs, different networks, and different payment structures so that one can make money at his/her own convenience.
But the only question is when are you going to start making money via affiliate marketing?