Affiliate marketing can be explained as a form of performance-based marketing where businesses pay commissions to their affiliates for every visitor or lead they bring them.
Affiliate marketing was born about 4 years after the birth of the World Wide Web in November 1994, and believe it or not, the “Cyber erotica” is credited for being the first or one of the first affiliate marketing innovators, which used a CPC (cost per click) program.
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Of course, in the early days of its birth, affiliate marketing wasn’t taken seriously. But, as time went on and investor and business owner discovered the huge potentials in affiliate marketing, it became another cyber space based phenomenal. How is $2.1 billion in affiliate marketing fees paid to blog and website owners in 2008 for a phenomenal!?
The thing that makes affiliate marketing very desirable is the low investment it requires and the huge profit potential it provides.
Affiliate marketing industry stands on four legs:
- The merchant
Can be any business that rewards affiliates for sending them visitors and customers. These days, most businesses do offer some kind of affiliate program.
- The publisher
Also known as the “Affiliate”, is anyone who owns a website or blog and uses it to promote products and services as an affiliate. It should be noted that you don’t necessarily need a website of your own. There are many ways you can make money affiliate marketing without a website. You can use web 2.0 sites to publish content promoting products.
- The customer
Is simply the buyer who is introduced to the product or service by the affiliate.
- The network
Is the link between affiliates and businesses. It makes it easy for affiliates to find all kinds of offers from different companies by simply registering with one site (the affiliate network) and not having to register with each and every business they want to promote.
The relationship between these 4 parties makes what is known as the affiliate marketing industry.
Although, affiliate networks came into play long after affiliate marketing was established. And to be honest, it is not a necessity for affiliate marketing, it just is a tool that makes it easy for both businesses and affiliates to find each other easier and faster.
How Does Affiliate Marketing Work?
So, how does affiliate marketing really work in the real world, not just on the paper?… Let’s assume I am a business owner with a product that I need to sell. In order to make more sales and get my product in front of as many potential customers as I possibly can, I offer commission to anyone how brings new visitors or customers to my site.
So, I go to any one of many affiliate networks and have them set up a campaign for me where they oversee finding affiliates, giving them appropriate tools for promoting my product, and paying them their commission, so I can concentrate on running my business without worrying about all of that stuff.
You on the other hand, are a publisher who wants to make money as an affiliate. You sign up with that same affiliate network, and through a search in their database, you find my product. Seeing that its a product that relates to the audience of your site, and seeing that it pays good commission, you decide to promote my product on your site.
So, the network gives you your special link that you can use to send people to my site. This is a unique link that makes it easy for the network to know who send a given visitor or customer to my site, thus enabling them to reward you appropriately.
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So, you put up a few banner ads, or maybe write a review of my product, or perhaps you send an email to your list suggesting my product, etc. Every time any one of your audience visits my site by clicking that special link and purchases my product, you earn commission. That is basically what affiliate marketing is.
There are different types of affiliate marketing and the way in which they pay commissions.
These days, almost 80% of affiliate networks use a method known as pay per sale (PPS). This compensation method relies on sales. Basically, for every sale resulting from your efforts you earn a predefined amount as commission.
About 19% of all affiliate programs use another compensation method known as cost per action (CPA). With CPA, your efforts (as an affiliate) doesn’t have to necessarily result in a sale. The business will ask that every customer you send to them take a specific action in order for you to be compensated. Sometimes that specific action can be as simple as signing up for their newsletter, trying a free trial, or other simple actions that do not necessarily require purchasing something. Other times, that specific action can indeed be buying the product. But in most cases, CPA affiliate programs require actions to be taken by the visitors that don’t involve spending money. And that is why CPA is one of the most popular forms of affiliate marketing for affiliates, as it is much easier to get people to do things that doesn’t involve them spending money rather than asking them to buy things.
- CPC and CPM
The other 1% of affiliate programs use a combination of other compensation methods such as cost per click (CPC) or cost per mille (CPM, cost per estimated 1000 views). With CPC, the affiliate earns commission for every click he gets on his or her special link. And with CPM, the affiliate earns a pre determined commission based on the number of views he or she generates.
There are many different ways to make money with affiliate marketing. Some people use niche websites and blogs to promote affiliate products, some use their personal blogs to push products, some folks make money by promoting products with review style sites, others publish content with their affiliate link embedded in them on web 2.0 properties, others use social media for promotion, and so on.
That said, generally, making money as an affiliate comes down to writing content centered around the product you want to promote, and getting that content in front of as many interested people as you can.
Here is a simple formula you can use to earn money as an affiliate marketer:
1. Get a blog or a website
Having a website or blog will allow you to place your affiliate links there and reach more potential customers, thus having a better chance of making more money as an affiliate marketer. Of course, having your own domain (you.com) will make you look more credible and gives you more control.
Web hosting companies like HostMonster or GoDaddy and many other offer affordable domain registering and hosting these days. If you prefer to start with no investment you can get a free website or blog using like blogger, TypePad, WordPress, and etc.
2. Choose a product or service to sell
With affiliate marketing you can sell virtually anything, from electronics and jewelry to tools, books, clothing and even food. So, to start making money with affiliate marketing, you have many option to choose from. But, it is suggested that you try to select something that you are passionate about, and have some knowledge about it.
Choosing a product you know about will help you make a better strategy based on what you think would be attractive about the product/service. To find a product to promote, register for free with affiliate marketing networks such as ClickBank, MaxBounty, Commission Junction and etc. These sites can make it easy for you to find an available product to promote and get paid for.
3. Write quality content related to your niche
Now you have your site and your product. But, You can’t have people coming to an empty page(your site), with one link on it, and expect them to buy or even come back or bring another potential buyer with them.
In order for people to visit your site and eventually click on your affiliate marketing link, you must have quality and useful content on your site. You can either research and write your own content, or pay someone to write them for you. You can also use PLR articles to create content for your site.
4. Drive quality traffic to your site
Here comes the most important part. You have everything ready, but nobody knows where you are, or how to find you! In order to make money with affiliate marketing, you need traffic, quality traffic to be exact.
How do you get good traffic? Well, there are different ways you can increase website traffic, like paid advertisement (Google AdWords, Yahoo,…), classified ads (Craigslist, Backpage,…), article marketing (ArticlesBase, AssociatedContent,…), email marketing and many more.
5. Watch, read, ask and learn
Famous Greek philosopher Socrates once said “When you decide you’re done learning and think you know everything is when you just realized you don’t know anything yet!” (Sorry, not the exact phrase, but you get the idea).
Take advantage of online forums focused on affiliate marketing to add to your knowledge, and learn how other more experienced affiliate marketers have made it. Forums like Warrior Forum and Digital Point are good places to learn.
This is the simple yet effective system that successful affiliate marketers use to make money affiliate marketing. Just don’t forget that it takes time and plenty of hard work to succeed in affiliate marketing.
It may be a while before you make any money, but if you combine your effort and hard work with patience, you will succeed and make money with affiliate marketing!