Interested in becoming an affiliate marketer? Perhaps you have plans of working with affiliate marketers and are curious about how affiliate marketing works?
If you are that person right now with limited knowledge about how affiliate marketing works then don’t worry, the concept isn’t hard to grasp and in a few minutes time, you’ll have a thorough understanding.
What Is Affiliate Marketing?
Affiliate marketing is an internet marketing channel where companies (sometimes referred to as advertisers or merchants) pay other people or companies based on their performance promoting an offering. Publishers can be individuals or companies that get paid for the providing leads or sales of products for the company.
In a nutshell, if you are an affiliate (sometimes referred to as the publisher), you use your skills as a marketer to refer others to a desirable product. When that person decides to buy the product based on your recommendation, you can then get a commission or kickback.
Who Are The Affiliates?
An affiliate can be an individual or a company but generally, these are bloggers or other content makers that may be in a similar to the industry to the company they are promoting.
They are people who help promote the product or service by writing posts, making videos and other marketing. When one of their visitors makes a purchase or submits a lead form on the company’s website, the affiliate gets paid. How much and for what they get paid depends on the affiliate program terms.
They also promote the company by putting up ads via banner ads, search box and text links. Whenever a lead is generated, the publisher gets paid a commission which is often a percentage of the amount sold or it could also be an amount agreed upon by the advertiser and publisher.
Who Are The Companies?
A company (also known as the Merchant, Advertiser, Retailer or Brand) that sells products and services can be any company that is willing to offer commissions to people who have the marketing skills to promote their products.
They partner with affiliates so they can generate more leads and sales.
These companies then pay their affiliates for helping them gain whatever it is they’re after. This can be done in a Pay Per Click, Leads or Pay Per Lead and Pay Per Sale. This can sometimes be more commonly known as “Performance Marketing”.
This is much more advantageous to the company compared to traditional Pay Per Click advertising where a ton of money can be spent without producing any actual leads or sales.
How Affiliate Marketing Works
As an affiliate, you are paid for performance.
Here’s are the different types of performance-based models common to affiliate marketing:
- Pay Per Click or PPC – where an affiliate gets paid for all the valid clicks generated regardless if it made sales or leads.
- Pay Per Lead or PPL – where companies pay a fixed commission for every qualified action that it generated. This action could be Installation, Online Form Submission, Free Trial, Short Survey and many others.
- Pay Per Sale or PPS – where companies pay a percentage of all sales that are qualified. These could be a percentage which was agreed by the company and it’s affiliate. Among the most common PPS program is the Amazon Associates where a publisher can earn up to 15% depending on the products that were sold. Here’s a list of places where you can find products to promote.
What Are Affiliate Networks?
Affiliate Networks add another layer between the companies and their affiliates in exchange for managing the relationship and providing third-party checks and balances.
Some popular networks include ClickBank, Commission Junction and ShareASale.
They track, report and manage payments to the affiliates. Companies have the liberty to choose the affiliate network they want to work with and affiliates may choose to worth with multiple companies within the Affiliate Network.
Recap Of How It Works
Here’s a quick recap of how affiliate marketing works:
First, you need to sign up for an affiliate program. After signing up you will get an affiliate link or a special URL that contains the Username or ID of the affiliate. You can then use this link whenever you mention the advertiser in your website.
Whenever a visitor clicks on an affiliate link a cookie is dropped into their browser to track them. If they become a customer, ordering something from the company’s website, then the company is notified that they received that customer from the respective affiliate and gives them credit for making the sale.
Commission payouts by the company are usually given on a monthly basis, but this varies depending on the affiliate program terms. It could be a weekly payout or a monthly payment for all the leads or sales that you have made.
Does It Cost To Join An Affiliate Program?
There are no charges for joining an affiliate program but the cost will depend on the promotion technique you will be using. For example, your blog is free, but the PPC marketing, email campaigns, etc, all have a price.
Do You Need Qualifications To Be An Affiliate Marketer?
Truth is anyone can join and there no qualifications needed.
However, knowing how to write is a big plus because it means you don’t have to pay for content in the beginning.
If you already have knowledge about marketing then this could also be an advantage on your part.
Start Earning Today
There is no limit to what you can earn with affiliate marketing. It’s up to you to see how far you can scale this incredible business model.
The amount you earn will depend on a number of factors:
- The program you are promoting
- The conversion rate
- How many visitors you are sending through those links
- The buyer’s motivation
But when you hit that sweet spot and all of those things align, it’s a great feeling.
Now that you know how affiliate marketing works, why not test the waters? This could be your golden goose but of course, will never know unless you try, right?