What if you could make money at any time, from anywhere — even while you sleep?
This is the concept behind affiliate marketing.
Affiliate marketing is the process by which an affiliate earns a commission for marketing another person’s or company’s products. The affiliate simply searches for a product they enjoy, then promotes that product and earns a piece of the profit from each sale they make. The sales are tracked via affiliate links from one website to another.
Affiliate marketing is a great way to drive sales and generate significant online revenue. Extremely beneficial to both brands and affiliate marketers, the new push toward less traditional marketing tactics has certainly paid off.
In fact, affiliate marketing spend in the United States increased from $5.4 billion in 2017 to $8.2 billion in 2022 — which means there’s plenty of room for those looking to get a piece of the pie.
This step-by-step beginner’s guide will walk you through how to launch your affiliating marketing business and what benefits you can expect.
How Does Affiliate Marketing Work?
Because affiliate marketing works by spreading the responsibilities of product marketing and creation across parties, it leverages the abilities of a variety of individuals for a more effective marketing strategy while providing contributors with a share of the profit. To make this work, three different parties must be involved:
- Seller and product creators.
- The affiliate or advertiser.
- The consumer.
Let’s delve into the complex relationship these three parties share to ensure affiliate marketing is a success:
Seller and product creators.
The seller, whether a solo entrepreneur or large enterprise, is a vendor, merchant, product creator or retailer with a product to market. The product can be a physical object, like household goods, or a service, like makeup tutorials.
Also known as the brand, the seller does not need to be actively involved in the marketing, but they may also be the advertiser and profit from the revenue sharing associated with affiliate marketing.
For example, the seller could be an ecommerce merchant that started a dropshipping business and wants to reach a new audience by paying affiliate sites to promote their products. Or the seller could be a SaaS company that leverages affiliates to help sell their marketing software.
The affiliate or publisher.
Also known as a publisher, the affiliate can be either an individual or a company that markets the seller’s product in an appealing way to potential consumers. In other words, the affiliate promotes the product to persuade consumers that it is valuable or beneficial to them and convince them to purchase the product. If the consumer does end up buying the product, the affiliate receives a portion of the revenue made.
Affiliates often have a very specific audience to whom they market, generally adhering to that audience’s interests. This creates a defined niche or personal brand that helps the affiliate attract consumers who will be most likely to act on the promotion.
The consumer.
Of course, for the affiliate system to work, there needs to be sales — and the consumer or customer is the one who makes them happen.
The affiliate will market the product/service to consumers through the necessary channel(s), whether it be social media, a blog or a YouTube video, and if the consumer deems the product as valuable or beneficial to them, then they can follow the affiliate link and checkout on the merchant’s website. If the customer does purchase the item, then the affiliate receives a portion of the revenue made.
However, keep in mind that the customer must be aware that you, the affiliate, are receiving a commission off the product.
According to the Federal Trade Commission, an affiliate marketer must clearly and conspicuously disclose their relationship to the retailer, thus allowing the consumer to decide how much weight to give your endorsement.
A disclaimer such as “The products I’m going to use in this video were given to me by Company X” gives your viewers the information they need and allows them to make an informed decision about whether or not to buy the affiliate product.
Types of Affiliate Marketing
It’s often unclear whether an affiliate marketer has actually used the product they’re promoting or if they’re simply in it for the money — sometimes it may not matter to the customer one way or the other.
But other times, such as with diet services or skincare products, the customer may not trust an affiliate unless they know that he/she has tested and approved the product themselves.
In 2009, renowned affiliate marketer Pat Flynn categorized affiliate marketing into three types — unattached, related and involved — to help differentiate between affiliate marketers who are closely tied to a product versus those who are not.
Here we’ll break down each category to help you decide which route to take.
Unattached.
In the unattached business model, the affiliate marketer has no connection to the product or service they are promoting. They have no expertise or authority in the niche of the product, nor can they make claims about its use.
Typically, an unattached affiliate will run PPC (pay-per-click) marketing campaigns, using an affiliate link in hopes that shoppers will click it and make a purchase on their own.
While unattached affiliate marketing may be attractive due to its lack of commitment, it’s generally for those who simply want to generate an income without investing in the product or customer relationship.
Related.
A happy medium between unattached and involved, related affiliate marketing is for those who don’t necessarily use the product or service, but who are somehow related to the niche audience. These affiliates often have some sort of influence in the niche and an established following, and can therefore offer some authority.
For example, perhaps you’re promoting a clothing brand you’ve never used before, but you have an audience through a fashion blog or YouTube channel. In this case, you would be considered a related affiliate marketer.
The advantage of this type of affiliate marketing is that the affiliate has the expertise to generate traffic, however they may risk recommending a bad product or service if they’ve never actually used it before, potentially costing them the trust of their audience.
Involved.
As the name suggests, involved affiliate marketing describes those who are closely tied to the product or service they’re promoting. The affiliate has tried the product themselves, trusts that it will provide a good experience and has the authority to make claims about its use.
Rather than relying on pays per click, involved affiliate marketers use their personal experiences with the product in their marketing efforts, and customers can trust them as reliable sources of information.
Of course, this type of affiliate marketing requires more legwork and time to build credibility, but it will likely result in greater payoffs down the road.
How Do Affiliate Marketers Get Paid?
A quick and inexpensive method of making money without the hassle of actually selling a product, affiliate marketing has an undeniable draw for those looking to increase their income online. But how does an affiliate get paid after linking the seller to the consumer?
The answer can get complicated.
The consumer doesn’t always need to buy the product for the affiliate to get a kickback. Depending on the program, the affiliate’s contribution to the seller’s sales will be measured differently.
The affiliate may get paid in various ways:
Pay per sale.
This is the standard affiliate marketing structure. In this program, the merchant pays the affiliate a percentage of the sale price of the product after the consumer purchases the product as a result of affiliate marketing strategies. In other words, the affiliate must actually get the investor to invest in the affiliate product before they are compensated.
Pay per lead.
A more complex system, pay per lead affiliate marketing programs compensates the affiliate based on the conversion of leads. The affiliate must persuade the consumer to visit the merchant’s website and complete the desired action — whether it’s filling out a contact form, signing up for a trial of a product, subscribing to a newsletter or downloading software or files.
Pay per click.
Affiliate marketing is largely about generating traffic to websites and trying to get customers to click and take action. So, the myth that affiliate marketing is all about SEO (search engine optimization) is no surprise.
However, while organic traffic is free, SEO simply can’t sustain affiliate marketers in such a saturated market — which is why some affiliate marketers utilize PPC.
PPC (pay per click) programs focus on incentivizing the affiliate to redirect consumers from their marketing platform to the merchant’s website. This means the affiliate must engage the consumer to the extent that they will move from the affiliate’s site to the merchant’s site. The affiliate is paid based on the increase in web traffic.
There are two common concepts in PPC:
- CPA (cost-per-acquisition): With this model, the affiliate gets paid each time the seller or retailer acquires a lead, which is when an affiliate link takes the customer to the merchant’s online store and they take an action, such as subscribing to an email list or filling out a “Contact Us” form.
- EPC (earnings-per-click): This is the measure for the average earnings per 100 clicks for all affiliates in a retailer’s affiliate program.
Pay per install.
In this payout system, the affiliate gets paid each time they direct a user to the merchant’s website and installs a product, generally a mobile app or software.
So, if a retailer budgets for a $0.10 bid for each install generated via an affiliate program, and the campaign results in 1,000 installs, then the retailer will pay ($0.10 x 1,000) = $100.
Why Be an Affiliate Marketer?
Passive income.
While any “regular” job requires you to be at work to make money, affiliate marketing offers you the ability to make money while you sleep. By investing an initial amount of time into a campaign, you will see continuous returns on that time as consumers purchase the product over the following days and weeks. You receive money for your work long after you’ve finished it. Even when you’re not in front of your computer, your marketing skills will be earning you a steady flow of income.
No customer support.
Individual sellers and companies offering products or services have to deal with their consumers and ensure they are satisfied with what they have purchased.
Thanks to the affiliate marketing structure, you’ll never have to be concerned with customer support or customer satisfaction. The entire job of the affiliate marketer is to link the seller with the consumer. The seller deals with any consumer complaints after you receive your commission from the sale.
Work from home.
If you’re someone who hates going to the office, affiliate marketing is the perfect solution. You’ll be able to launch campaigns and receive revenue from the products that sellers create while working from the comfort of your own home. This is a job you can do without ever getting out of your pajamas.
