Affiliate marketing can be a great way to earn a decent income. But not all affiliates make money. Some even lose money!
If you want to learn how to become an affiliate marketer, you’ve come to the right place. In this article we’ll look at the best way to get started.
What Is Affiliate Marketing?
You’ve do doubt seen the text links at the bottom of many websites that say “Affiliate” or “Make Money.” Perhaps you’ve even clicked on these links a couple of times and noticed they pay commissions to their affiliates.
According to Mediakix:
- 16% of all online orders in the U.S. are generated through affiliate marketing.
- In 2020 U.S. retailers are expected to spend $6.8 billion on affiliate marketing.
The easiest way to explain how affiliate marketing works, is as follows:
As an affiliate marketer, your job is to promote the products of a merchant by sending visitors to their website.
These are visitors that have clicked on your affiliate link, often after reading your product reviews.
Pay-Per-Sale
This is the classic, most commonly found payment model. If a visitor that you’ve referred to a merchant’s website buys a product, you’ll be paid a commission on the sale of that product.
This model pays you a percentage of the sales price. Think of it as revenue sharing.
You can often make the most money from this payment model. However, it’s also the one with the lowest conversion rates, as you only make money when someone spends money.
It’s not uncommon to only earn a commission on one or two out of every 100 visitors you send to a merchant’s website.
This model has two subcategories: one-off payment or recurring payments.
One-off Payment
A one-off payment means you get paid once for every sale.
Recurring Payments
Some merchants work on subscriptions, such as membership sites or service providers. Many of these merchants will pay you recurring commissions for as long as they continue to get paid. This can result in a very nice passive income stream for you.
Pay-Per-Lead
Some merchants will pay you a fee for visitors, called leads, that don’t buy anything but perform another action. Such actions can include joining their mailing list, signing up for a free trial, downloading an app, or opening up an account.
This model pays you a flat fee per lead. The rate is normally not very high, but these offers tend to convert better than pay-per-sale programs.
Note: Many merchants will also pay you an additional commission for orders placed.
Affiliate Program Structure
Your typical affiliate marketing program has at least three parties:
- Affiliate
- Merchant
- Customer / Audience
And if you join an affiliate network like Amazon or other affiliate networks that have many merchants, there’s a fourth party called the “Network.”
Note: Some affiliate networks call affiliates “publishers” and merchants “advertisers.”
The reason for this is that they see merchants as companies that wish to advertise their products on the network. They see affiliates as people that want to publish these offers on their website or other media.
Some affiliate marketing programs offer a two-tier payment structure. This is where you also qualify for commission payments on the sales of other affiliates you directly or indirectly referred to the program.
Example: You earn 25% commission on sales generated by you, and 10% commission on sales generated by affiliates you referred.
Two-tier affiliate programs can be lucrative but are often frowned upon as it resembles a MLM structure. If you join such a program, make sure the payment processor isn’t PayPal.
According to PayPal, they normally don’t allow programs that offer payments to both the seller and the individual who recruited the seller.
If the merchant is using PayPal, ask them if they have obtained permission from PayPal to operate a two-tier affiliate program. Don’t risk losing your hard-earned commissions!
Advantages of Being an Affiliate Marketer
The main benefits for a new affiliate to become an affiliate marketer are:
- Being in charge of your own business – You decide when to work and what affiliate marketing programs to promote to your target audience. The more effort you put in, the more money you can earn.
- Working from home – You have the freedom to work from home. You can actually work from anywhere in the world as long as you have a stable internet connection.
- Working full-time or part-time – If you’re a new affiliate, it’s normal to start your affiliate marketing business on a part-time basis. A good way to start is to do product reviews in a blog post.
- Making money while you sleep – It might be a cliche but you can make money while you sleep. Few things are as nice as waking up in the morning and checking the affiliate sales you made while you were sleeping.
- Not needing your own product – Building your own products or services, such as your own hosting company, can take a lot of time and money. As an affiliate marketer you don’t need your own products or services.
- Minimizing risk – Imagine working months on developing your own product just to discover it’s a dud. When you become an affiliate marketer you can change from one product to another product in a short period of time.
- Choosing from millions of products – There are millions of products and services you can choose from to promote to your audience. These include physical products as well as digital products.
- Avoiding customer service requests – You don’t have to worry about products getting lost in the mail, corrupt download files, and unreasonable customer requests.
- Adding extra income streams – You don’t have to only focus on affiliate marketing. Perhaps you have your own product or products, or get money from paid ads on your site. It doesn’t matter. Affiliate marketing can still be a welcome additional income stream for your business.
- Not requiring any formal qualifications – Even if you haven’t completed high school, you can become an affiliate marketer. We’ve never seen any program that first needs to see your resume before they will accept you.
- Doesn’t take long to get started – Depending on the affiliate products or services you want to promote or the network you want to join, there’s no lengthy waiting period.
- Free to join – Affiliate marketing programs are not known to charge their affiliates a joining fee. There are some programs though that expect you to first buy a product and try it out before you can become an affiliate.
Keep in mind, affiliate marketing is a business and not a get-rich-quick scheme. As with any normal business, it takes work to grow your business.
Disadvantages of Affiliate Marketing?
Now that we’ve looked at some of the main advantages of affiliate marketing, you’re probably wondering if there are disadvantages, right?
The short answer is, not really. The main complaints raised by affiliate marketers are not against affiliate marketing. It’s rather against specific affiliate programs or merchants.
Most of the complaints are unjustified. It often has to do with affiliates marketing a program in an unethical way to their audience.
Always read the terms and conditions of every program you’d like to join, and abide by those rules. Some programs don’t allow certain methods of promotion and if you don’t follow their rules they will cancel your account.
Here are some of the disadvantages, depending on your perspective, of affiliate marketing.
- Different programs have different rules – It can be confusing keeping up with the rules of various programs, especially if you’re promoting many different products.
- You cannot do as you please – If you can’t accept and respect the terms and conditions of a program, you shouldn’t become an affiliate for it.
- You only get a portion of the profits – If you want 100% of the profits, you’re better off developing your own digital or physical products. To get your own marketing business off the ground you’ll need time to work on your business. And, you may have to pump money into your business as well.
- You don’t get paid immediately – Most affiliate marketing programs will only pay commissions weekly, twice a month, or once a month. In addition, many will only pay out once your commission exceeds a certain amount. If you need cash by tomorrow, then affiliate marketing may not be right for you.
In the beginning of this article, we mentioned that some affiliates lose money with affiliate marketing. It normally has nothing to do with the products they are promoting, but with the way they are promoting those products.
Paid Advertising vs Free Organic Traffic
When you consider how to become an affiliate marketer, one of the key questions you need to ask yourself is, how are you planning on promoting products to your target audience? Are you going to use paid advertising, or are you going to rely on free organic traffic?
We know this is a difficult question to answer right now. You’ve not even had a look at the various affiliate products you can choose from in an affiliate market. But, as you’ll see, your answer will determine what programs you’ll need to join.
Paid Advertising
There are many different advertising platforms you can choose from. These include:
- Google Ads
- YouTube
- Bing Ads
- Yahoo Gemini
- Taboola
There are also many private websites that cater to your target audience you can use to advertise an affiliate product on. Affiliate marketing works well when you put the right product in front of the right audience.
It falls outside the scope of this article to evaluate all of the above advertising platforms.
Instead, we’ll look at two of the most popular advertising platforms: Google Ads and Facebook Ads. According to AdEspresso, these two giants dominate the industry.
Google Ads
There was a time when paid advertising was the best option to market affiliate offers. You could make good money in a short period of time from advertising a product you found on an affiliate network.
It was easy. All you had to do was put up a simple landing page for your product and advertise it on Google. You would send traffic to your landing page, also called a squeeze page, where you would collect email addresses. After they opted in, they would automatically be redirected to the merchant’s website.
You would then send regular emails to people who opted in to your email list. You would try to persuade them to buy the product from the merchant / affiliate network if they had not already done so.
Setting up the landing page was quick and easy, and it used to be very cheap to advertise on Google. If you were lazy, you didn’t even need to set up your own landing page. You could just send them directly to the merchant’s website using your affiliate link.
But now, times have changed. These days, you can’t get away with a cheap, ugly looking, single page landing page. It also costs a lot more to advertise on Google.
Have a look at some of the answers posted on a typical Google Ads thread.
One person commented that it’s nearly impossible to run a successful affiliate campaign using Google Ads. The same person also mentioned that he used to do it in the past and had 10 people working for him.
Is it really that difficult? Let’s have a look.
According to Ubersuggest, the average cost per click in the U.S. if you wanted to advertise on Google for the keyword “affiliate marketing” is $6.03 per click.
Let’s assume the merchant you’re promoting has an exceptional landing page that converts at 5%. It means that, on average, the merchant will get one sale from every 20 visitors you send them. That sale will cost you $120.60 in advertising fees.
Note: Keep in mind many programs don’t allow you to link directly to them using Google Ads. If they do allow it, remember you have no control over their landing page. If their landing page does not comply with Google’s requirements, you can get banned.
If you send traffic to your own website first, not all of these visitors will click through to the merchant. This means that even if the merchant’s website has a 5% conversion rate, you’ll need more than 20 clicks for every sale.
Unless you earn a very high commission on every product sale you refer, you’re dead in the water.
Affiliate marketing isn’t even a very competitive keyword to bid for. It’s not a buyer keyword and it only has a paid difficulty score of 53/100.
Let’s take a look at what it would cost you to bid on highly competitive buyer keywords.
According to Ubersuggest, the average cost per click in the U.S. if you wanted to advertise on Google for the keyword “insurance quotes for cars” is $115.17 per click!
If you’re an insurance company or a large brokerage firm with big pockets, you may be able to spend an average of $115.17 per click. They have huge marketing budgets. However, if you’re an affiliate marketer, you should probably walk away.
Some large companies don’t really care about return on their advertising spend. They do it for brand awareness purposes. They feel they have to be all over social media pages or their clients will not think they’re a serious player. For such companies, Google Ads are perfect.
Google Ads may also be perfect for a small business or entrepreneur that targets very low competition keywords.
What does Google want?
If you want to advertise a product on Google, you have to comply with their ad policies. You also have to understand their landing page requirements.
Google Ads Policies
Google’s advertising policies cover four broad areas:
- Prohibited content.
- Prohibited practices.
- Restricted content and features.
- Editorial and technical.
Make sure you comply with all of the above. In the highly unlikely event that Google doesn’t pick up a violation, anybody can report a violation to them.
Landing page requirements
Google uses Ad Rank to determine where your ad will rank, and how much it will cost you per click. The quality of your landing page is a key factor.
According to Google, you can improve your landing page experience by taking the following steps:
- Offer relevant, useful, and original content.
- Promote transparency and foster trustworthiness on your site.
- Make mobile and computer navigation easy.
- Decrease your landing page loading time.
- Make your site fast.
Facebook Ads
As Google Ads have become more expensive, and landing page requirements more strict, many affiliate marketers abandoned Google Ads. Many of them moved over to social media platforms such as Facebook.
Facebook has a great advertising platform. The fundamental problem with Facebook, being a social media platform, is that most people don’t go there to buy things. They visit it mainly to interact with friends and family. This means you’re mostly dealing with impulse buyers.
When was the last time you bought a product after clicking on an ad in your Facebook news feed? You probably click on ads, even accidently, while scrolling. But how many of those ads make you take out your wallet to buy something?
Regardless of whether Facebook is the best social media advertising platform or not, they are a popular advertising platform, and with popularity comes demand. The higher the demand, the more you’ll have to pay for ads.
As pointed out by LiveIntent, many marketers are getting anxious about skyrocketing ad costs on Facebook.
According to WordStream:
- The average click-through rate (CTR) across all industries is 0.90%.
- The average cost per click (CPC) across all industries is $1.72.
At a conversion rate of 5%, this means it will take, on average, 20 clicks for a merchant to make one sale. Based on a CPC of $1.72, you’d spend $34.40 on advertising for every sale you referred. If your affiliate commission is less than $34.40 you would lose money.
Note: Based on Wordstream, the average conversion rate is 2.35%, and ¼ of all accounts have less than 1% conversation rates.
At 2.35%, your break-even point is $73.19. From a budgeting perspective, it’s safer to budget on a 2.35% conversation rate rather than a 5%.
What does Facebook want?
Facebook, like Google, has strict advertising policies and landing page requirements.
Facebook Advertising Policies
For details on their ad review process, prohibited and restricted content, click here.
Landing Page Requirements
Facebook is clear they don’t want to see ads that direct to landing pages that have:
- Minimal original content.
- Low-quality content.
- Content that’s difficult to access.
Pros and Cons of Paid Advertising
Earlier in this article, we asked how you’re planning on promoting the affiliate programs you join. Paid advertising, or free organic traffic? By now, you’ll understand why it’s important for you to first answer this question before looking at any affiliate programs.
You don’t want to waste time and money on an affiliate marketing that won’t give you a good return. It takes time to find a good program, work on your ad copy, and landing page. Paying for ads can be expensive. You don’t only then want to find out you’ve made a mistake.
In the above section, it was mentioned the average CPC for a Facebook ad is $1.72.
Your break-even point, depending on your conversion rate, will be:
- 1% conversion = $172.00
- 2% conversion = $86.00
- 3% conversion = $57.33
- 4% conversion = $43.00
- 5% conversion = $34.40
2.35% conversion (average) = $73.19
This means you’re highly unlikely to make money advertising on Facebook if your affiliate commission is less than $30 per sale. It can be worth it though, if you get monthly recurring commissions.
Here are the main pros and cons of advertising products on giant advertising platforms like Google Ads and Facebook.
Pros
- Promote products and services in any niche to your target audience – Choose from a wide range of products and services across different industries. You don’t