Affiliate Marketing Business Model: The Definitive Guide

Affiliate marketing business model

Looking for a proven business model to make money online? You’ve come to the right place! The affiliate marketing business model is one of the best ways you can build a real online business.

According to Lexico, powered by Oxford, the definition of business model is:

A plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing.

In this article, we explore how affiliate marketing can be a great business, as long as you follow the right plan.

We’ll cover step-by-step how YOU can build a successful affiliate marketing business!

How Affiliate Marketing Works

The affiliate business marketing model is a great way to make money online

Affiliate marketers promote the products or services of a merchant. They refer people to the merchant through unique, traceable affiliate links. When someone clicks on their affiliate link and makes a purchase, they get paid a commission on the sale.

With some affiliate programs, the affiliate can earn a commission even if a visitor doesn’t buy anything. It’s referred to as a pay-per-lead payment model. The affiliate gets paid for sending leads, such as when a visitor opens an account with a merchant.

This is a win-win for the affiliate and the merchant! The merchant can focus on creating quality products or services, and save money on marketing expenses. The affiliate can focus on promoting the merchant without having to worry about payment processing and order fulfillment.

Here’s a graphic illustration of how the process works:

How affiliate marketing works

Source

NOTE: Many affiliate networks don’t use the term merchant. They use “advertiser” or “vendor” instead. Some also don’t use the term “affiliate” either. They use “publisher” instead. Just remember they mean the same thing.

For more information, refer to our article: How Does Affiliate Marketing Work?

The Pros of the Affiliate Marketing Business Model

The pros of the affiliate marketing business model

The main advantages of an affiliate marketing business model include the following:

Low barriers to entry – Anyone with a computer and access to the internet can start an affiliate marketing business. It’s true!

Low startup costs – A traditional brick-and-mortar store costs a lot of money to start. An affiliate marketing business on the other hand business has very low overheads.

Low risk – Unless you spend money on paid advertising, which we don’t recommend, you have little financial risk.

Don’t need your own product or products – Creating your own product or products can take a long time and can be very expensive. With affiliate marketing, you can promote brands that have great products and a good reputation. There’s no need to reinvent the wheel!

High income potential – There are many affiliate marketers that earn 6-figure incomes and higher from affiliate marketing. There are no income guarantees, though. Affiliate marketing is NOT a get-rich-quick scheme. Like any normal business, you get out what you put in.

Can be done part-time – Nearly all affiliate marketers start their business on the side. Many may choose to work on it full-time once it brings in enough that they’re able to leave their full-time job.

Work from anywhere in the world – One of the perks of affiliate marketing is that you can work from anywhere in the world. For example, there are people in the travel niche that travel the world and make money while doing so.

No commuting! – You’re able to work from home in your PJ’s should you choose to do so. Not only do you save money on gas but, more importantly, you have more time to spend with your loved ones.

Choose from millions of products to promote – There is no shortage of products to promote. You are really spoiled when it comes to choices!

Easy to scale – With affiliate marketing, the sky’s the limit. There are always new things you can do to grow your business. For example, you could post more content, get more active on social media, join new affiliate programs, send outreach emails…

Flexibility – Affiliate marketing offers you a lot of flexibility. For example, if you’re not happy with the results you’re getting from an affiliate program, simply change to another one. If your website looks dull and boring, you can change your color scheme or add some fresh images.

“Cookies” are a huge advantage – When someone clicks on your affiliate link but doesn’t make a purchase right away, a “cookie” is created. If that person makes a purchase the next day using the same device, you’ll earn a commission on the sale. Cookie lengths are often up to 30 days and even longer.

Affiliate marketing isn’t mutually exclusive – Affiliate marketing isn’t the ONLY way you can make money from your website. There are many other income models that are 100% compatible with affiliate marketing. Examples include sponsored ads, selling your own products, offering coaching or consulting services, etc.

Make money while you sleep – Once your affiliate marketing business is up and running, you can literally make money while you sleep. It’s a great way to earn passive income!

Make money while you sleep

With affiliate marketing, your business never sleeps. Even while you’re sleeping or away on holiday, nothing stops your website from making money.

The Cons of the Affiliate Marketing Business Model

There are honestly few disadvantages of the affiliate marketing business model, but nothing’s perfect. Here are some possible drawbacks to be aware of:

Takes time to start earning money – It’s possible that you’ll start earning regular and consistent commissions within the first couple of months, but not likely without a LOT of time and effort, or a healthy dose of luck. However, you’ll likely start earning consistent commissions from affiliate marketing after 6 months to 12 months.

For more information, read: How fast can you make money with affiliate marketing?

Inconsistent income – Your income can fluctuate a lot from month to month, especially in the beginning. As your business starts to grow, your income will still fluctuate, but will normally increase month after month. That’s if you continue working on your business.

Commission payments take time to be processed – There are affiliate programs that’ll pay you a commission as soon as somebody you referred makes a purchase. Most affiliate networks, though, will only pay you one or two months after the sale. They need time to verify the sale, cater for refunds, and process your payment.

Tracking down affiliate payments – If you’re not selective about the affiliate programs you join, you could end up being owed affiliate commissions by someone who doesn’t want to pay up. Like with any business, it’s important to work with people you can trust to avoid payment nightmares.

Affiliate marketing isn’t for everyone – Not everyone enjoys spending hours behind a computer. It can get lonely. And while the work can be exciting sometimes, it’s not always glamorous. Often, the most useful things you can do aren’t particularly engaging, such as optimizing internal links on your site, compressing images, or sending out outreach emails…

In a nutshell, affiliate marketing is a LOT of work! If you’re not willing to put long hours in while sitting in front of a computer screen, you may be better off doing something else.

Can be a steep learning curve – Building a website, doing keyword research, optimizing your site, and creating content for search engines can be daunting. If you don’t already know how to do all of these things, it requires a steep learning curve.

NOTE: At BrandBuilders, we can help you flatten the learning curve and provide you with a fully functional affiliate website in under 24 hours. You can also order premium quality SEO optimized content for your website from our team of expert content creators!

Affiliate Marketing is a BUSINESS

Working on online business

If you treat affiliate marketing as a part-time hobby or an afterthought, don’t expect great results.

You have to see yourself as the owner of a new startup. As with any startup, you need to do your research, have goals, and define your business plan.

As mentioned earlier in this article, the definition of a business model is:

A plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing.

Plan

Let’s take a look at what the plan for an affiliate marketing business model looks like.

How to Start an Affiliate Marketing Business

An affiliate business won’t give you good results if you don’t have a plan in place.

Step 1: Define Your SMART Goals

Having goals are great, but unless they’re SMART, chances are they’ll never come to fruition.

Hitting the mark with SMART goals

SMART goals are:

  • Specific – Your goals should be specific and not vague. For example, “I want to earn money online” is too vague. “I want to make $100 per day within 6 months as an affiliate marketer” is specific.
  • Measurable – Vague goals are not measurable. Choose a goal you can count AND measure. If your goal is to make $100 a day, you need to be able to measure your results through income statements and analytics reports.
  • Achievable – Achievable goals are goals that are possible within the timeframe you’ve set. For example, numerous affiliate marketers have proven that it’s possible to make $100 per day, so you can feel comfortable using this number as an achievable goal.
  • Realistic – Even if a goal is achievable, it doesn’t mean it’s realistic. For example, making $100 a day may be achievable, but it’s not realistic to expect it on day one. You may want to start with a smaller initial goal that’s realistic first.
  • Timely – Goals need to have a clear timeline. You need to have specific dates by when you wish to accomplish your goals. Without that, your goals may always remain pending.

Tip: Have sub-goals. Your goal may be to make $100 a day within 6 months, but you won’t go from $0 per day straight to $100! Once you’ve established your goal, work backwards to the present moment.

For example:

6 months = $100 per day

5 months = $50 per day

4 months = $20 per day

3 months = $10 per day

2 months = $5 per day

1 month = $0 per day

With these sub-goals defined, you have an easier time tracking your progress and making sure you’re on track to hit your SMART goal.

Step 2: Find the Right Niche and Audience

Find the right community for your online business

People search the internet because they want something. Some just want to be entertained. Others are looking for information. Others are ready to buy something.

With the affiliate marketing business model, you should be focusing on the people who are searching for a solution to a problem and are willing to pay for it. There will always be an affiliate program or affiliate network that caters to those people.

To get started, find a niche with a lot of hungry buyers. YOU should ideally be a part of your target audience or be willing to learn a lot more about the niche. It will be difficult to come across as an authority figure if you don’t have good knowledge of your niche.

Here are some tips to help you get started:

Avoid generic niches

A niche such as weight loss is a very lucrative niche but you have a lot of competitors. If your new website is all about weight loss in general you’ll quickly get lost in the crowd. It’s simply too broad.

In addition, you’ll be competing against massive authority sites such as healthline.com, medicalnewstoday.com and webmd.com.

In order to succeed you should drill down deeper. For example, weight loss for women who have recently given birth. It would obviously help if it describes you. This way it will be easier to establish a connection with your target audience.

Just make sure you don’t drill down too deep. You don’t want to have an audience you can fit into your car! A sub niche should be large enough so you can earn a decent income from it.

Focus on one niche at a time

Your business should be highly focused on your niche. Everything you publish should be 100% relevant to your target audience. For example, If you’re in the health niche, don’t post content about dog training.

You can have an affiliate marketing business in the health niche and one in the dog training niche. Just don’t post information about both niches on the same website. It’s very confusing for search engines such as Google and you’ll find it hard to rank well.

My advice is to focus on only one niche at a time. Many people suffer from the shiny object syndrome. Every time they see a new shiny object they drop what they’re busy with to chase after it. In the end they have nothing to show for all their hard work.

Become an authority figure

As an affiliate marketer you need people to trust you. If you have no or little credibility with your target audience they won’t care about your recommendations.

How do you become an authority figure? By posting high quality, helpful and comprehensive content! You need to show people you know your niche, and understand the challenges they face.

They have to believe you can help them or point them in the right direction. That’s what affiliate marketing is all about… getting people to click on your affiliate links and buy a product or service from the merchant you’re recommending.

For more information, refer to our article: How to Choose a Niche for Affiliate Marketing.

NOTE: If you have any problems finding a good niche, we’ve compiled a list of 1,452 niche ideas you can download for free.

Step 3: Conduct Keyword Research

Gone are the days when you could optimize a post around a single keyword by repeating that keyword over and over. Google has evolved way past that. Today, you need to focus more on the topic you’re writing about than a specific keyword.

Does this mean keyword research has become obsolete? Not at all! You just need to see it in a different light. See it in the context of the topic you’re writing about. Covering the topic well is critical but you need keywords in order to do so.

The following keyword research strategy is very powerful. If applied correctly, it can help you outrank high authority sites!

In order for this strategy to work, download MozBar. It’s a free SEO toolbar that’s compatible with the Chrome browser.

MozBar toolbar for Chrome

MOZ allocates a domain authority (DA) to all websites. It’s a good indication of how likely it is for a page on that website to rank well in Google. DA varies between 1 and 100. The higher the number, the more authority the website has.

It’s normally unlikely a new website will outrank a high authority website if they’re both targeting the same keyword. However, it’s possible and I’ll show you why in a minute.

For this keyword strategy, we’re going to deviate from the traditional way keyword research is done. We’re not going to start by entering a keyword into a keyword research tool and see what pops up. Instead, we’re first going to find competitors that are relatively new but are already ranking for several keywords.

1. Enter a keyword relevant to your niche in Google. Find the site with the lowest DA that’s ranking for that keyword on the first page.

Earlier in this article, we mentioned the weight loss niche. Let’s see what happens when we search for “weight loss friendly foods” as an example.

Moz domain authority

There are some high domain authority sites on the first page. What’s interesting is that the website healthkeepersclub.com with a low DA of 17 is on the first page. What’s even more interesting is that it’s able to outrank the authority site webmd.com that has a DA of 94!

In addition, the healthkeepersclub.com page only has 1 external link pointing to it. The webmd.com page has 152 external links pointing to it.

How’s that possible?

The reason is the healthkeepersclub.com page has been SEO optimized for the keyword “weight loss friendly foods.” For example, we can see the keyword in the title of the page.

The webmd.com page hasn’t been optimized for that keyword. It still appears on the first page though because it’s such a huge authority site. Even though it doesn’t target the specific keyword, it covers the topic. That’s enough for it to rank on the first page.

2. Find out what keywords your competitor is ranking for.

Find competitor's keywords using Ubersuggest

According to Ubersuggest, the keyword weight loss friendly foods is searched for about 3,600 times per month. That’s not bad at all. However, we want to see what keywords our competitor is ranking for.

Ubersuggest keyword tool

Ubersuggest shows the site healthkeepersclub.com ranks for 2,842 keywords. You’ll notice Ubersuggest gives it a domain score (their equivalent of MOZ’s domain authority) of 3.

Why are we targeting a low authority site instead of a high authority site? The reason is it’s easier for us to rank for keywords a low authority site is already ranking for.

Staying in Ubersuggest, click the “Keywords” tab.

Finding keywords using Ubersuggest

This will show us what keywords our competitor is ranking for.

Search difficulty in Ubersuggest

You’ll be able to see the keywords, monthly search volume, and their position in the search results. You’ll also see the SEO difficulty (SD) of that keyword.

Make a list of all keywords with a monthly search volume of 500+ and a SD below 25.

3. Find your competitor’s highest ranking pages.

Click the “Top Pages” tab in Ubersuggest.

Find competitor's top pages using Ubersuggest

This shows you your competitor’s top pages and how much traffic those pages generate.

Click “View All” to see the specific keywords a page is ranking for.

Keywords a competitor is ranking for

The first page gets an estimated 553 visits a month from Google. Our competitor’s website is in the #4 position for the keywords “keto custom plan review” and “custom keto diet reviews.”

Look for keywords with a monthly search volume of 500+ and a SD below 25.

Note: Use your own judgement. If a keyword has a higher SD and a high search volume you may wish to use it. Especially if your low domain authority competitor is ranking on the first page of Google for that keyword.

4. Get more keyword ideas.

Go to the “Keyword Ideas” tab in Ubersuggest and type in the keyword you’re thinking of using. This will give you some additional keyword ideas to work with.

Find more keyword ideas

Look for keywords with a monthly search volume of 200+ and a SD below 25.

These are typically secondary keywords you would include in your headings and content.

5. Get ideas of what people want to know from Google.

The last step is to go to Google to get more keyword ideas you can use in your content.

For example, for the keyword “weight loss friendly foods” Google will show you what questions people ask.

"People also ask" questions in Google

These questions are relevant to the topic. Where possible, try to include them in your content and provide helpful answers.

Google will also show you related searches.

Related searches in Google

Once again, these are searches Google considers to be relevant to your keyword and audience. It’s a good idea to include at least some of these keywords in your content.

By now you’ll have a huge list of relevant keywords you can include in your content.

It may seem like a lot of work, and it is. However, studies have shown the average #1 ranking page will also rank well for about 1,000 other relevant keywords.

The keyword research you’re doing may not only help you rank for your primary keyword but for many others as well!

NOTE: Keyword research and content creation can take a lot of time. As a business owner there are better ways to spend your time. At BrandBuilders we can provide you with high quality SEO optimized content. Contact us for more information.

Step 4: Pick the Right Affiliate Programs to Join

You’ve found a good niche, identified your target audience, and done your keyword research. Now it’s time for the next step, namely finding the right affiliate program.

Some merchants have their own in-house affiliate program while others make use of the services of an affiliate network.

Here are some options for you to consider:

Amazon Associates

Amazon Associates

Amazon is our #1 affiliate program.

With Amazon you can earn up to 10% commission per sale. There are programs that offer higher commissions but they just don’t have the credibility Amazon has. You can typically earn more per click from Amazon than other programs that pay a higher commission.

Amazon tends to convert better than most other programs. The reason is simple, everyone knows Amazon. Even if you’ve not yet established your credibility with your target audience, Amazon has.

People are more likely and comfortable buying from Amazon than from any other website.

Choose between millions of products to promote!

NOTE: Earlier in this article we mentioned we can provide you with a fully functional affiliate website in under 24 hours. These sites are already optimized for Amazon and are ready to make you money right away.

Commission Junction

Commission Junction

Commission Junction, rebranded CJ Affiliate, is the world’s largest and most established affiliate network. They host thousands of merchants (called advertisers) and are trusted by some of the world’s largest brands.

It’s a great platform to find the right product or service for your affiliate business.

Note that in order to be accepted as an affiliate (called publisher by Commission Junction) you need to have a website or blog.

FlexOffers

FlexOffers affiliate marketing network

FlexOffers hosts 12,000+ programs and is a very popular affiliate network.

As an affiliate marketer you can choose between thousands of products and services for your affiliate business.

FlexOffers categories

Product categories include home and garden, lifestyle and recreation, travel, digital products, insurance, online services, and health and wellness.

The most successful affiliate marketers promote many different affiliate products in their niche. There’s no reason to limit yourself to just one product – just make sure every product you choose to promote is a good fit for your audience.

For additional information, refer to our article 5 Best Affiliate Programs for Beginners.

Step 5: Build a Great-Looking Website

Build a great looking website

As discussed in our article how to make money with affiliate marketing without a website, having a website isn’t absolutely necessary. However, it’s highly recommended for the affiliate marketing business model. I can’t think of one successful affiliate marketer that doesn’t have a website.

Many affiliate marketing programs expect their affiliates to have a website and won’t approve their application without one.

With any website, first impressions count! Nobody likes an ugly affiliate site with thin content that’s difficult to navigate. You only have a couple of seconds at most to grab the attention of a visitor before they click away.

It’s beyond the scope of this article to provide you with detailed instructions on how to build a website or blog, but here are a couple of suggestions:

Domain Name

All affiliate websites need a domain name that’s relevant to the niche and the product or products being promoted. Always try to register a .com extension and keep the name as short as possible.

Namecheap is a good and trusted domain name registrar.

Namecheap domain name registrar

A .com domain will cost you less than $10 to register on Namecheap.

Website Hosting

Once you’ve registered your domain, the next thing you’ll need is website hosting.

Our recommended website hosting provider is SiteGround.

SiteGround web hosting platform

SiteGround is one of only a couple of hosting providers that are officially recommended by WordPress.org.

Talking about WordPress.org, there are free blogging platforms such as WordPress.com that will host your site on their platform. But trust me on this: you don’t want your content hosted on somebody else’s platform!

Instead, you want to have a self-hosted solution where you’re in complete control. That’s why we recommend you use WordPress.org as your content platform.

Don’t know how to link your domain name to your hosting provider or how to install WordPress.org? SiteGround will only be too happy to assist you if you get stuck, or you can connect with us at BrandBuilders for free coaching on your affiliate marketing journey.

Use a Responsive Theme

As mentioned earlier, first impressions count. Affiliate websites need to look great!

A responsive theme will adjust the layout of your website based on the device your site is being viewed on. This way, your site will display correctly on desktops, tablets, and mobile devices.

There are many free and paid responsive themes to choose from. Two of the most popular options are Neve and Astra.

Neve WordPress theme

Neve by ThemeIsle is a fast-loading responsive theme that can be downloaded for free.

Astra WordPress theme

Astra is one of the most popular WordPress themes, best known for being lightweight and working well with popular page builders like Elementor.

Step 6: Drive Traffic to Your Site

You’re not going to get paid by merchants and earn passive income if you can’t drive traffic to your site.

Affiliate websites need a lot of traffic to make decent money. On average, only one or two out of 100 people will click on your affiliate link and buy the product you’re recommending!

Many affiliates make the mistake of sitting back once their site is up and running, expecting Google to send them traffic. Unfortunately, it doesn’t work this way. It’ll take time before you start getting free organic traffic from Google.

Successful affiliates don’t just sit back and wait. They continue working on their business, actively and aggressively.

Here are some things you can do to drive traffic to your site:

Post more content on your website.

The more content you have out there, the more keywords you’ll have rank for. You should NEVER stop creating fresh content!

Of course, this doesn’t mean you should create it all yourself. Smart bloggers will outsource most or all of their content creation!

Take a blogger such as Jon Dykstra, for example. Based on his August 2020 income report, his revenue totaled $71,562 across 8 niche sites.

Income report

His “content investment” totaled $7,641. There’s no way Jon could have sat down and produced that much content on his own in a month – not with all of the other responsibilities involved in running content sites!

Content investment

Jon is not the exception. Most highly successful bloggers outsource much or all of their content creation. It’s the way a business owner thinks.

NOTE: In case you’ve missed it, at BrandBuilders, we specialize in supplying our clients with high quality SEO optimized content. Don’t hesitate to contact us for your content requirements!

Don’t only rely on search engines to send you traffic.

Google should not be your only source of traffic, especially not in the beginning when your website is not “trusted” by Google.

Social media sites like Facebook, Instagram, and Pinterest can drive a lot of traffic to your site and affiliate offers. Here are some recommended articles for succeeding on social:

Step 7: Scale Your Business

One of the reasons the affiliate marketing business model is so popular isn’t only because it can be very lucrative. It’s also because it’s highly scalable.

Once you understand how you can make money with affiliate products, you can take it to the next level!

There are mainly two ways you can accomplish this:

1. Become a serial entrepreneur.

Many successful affiliates have more than one website. Once your first website is doing well, nothing stops you from launching a second site… or a third, or a fourth…

Remember, as a business owner, your job is to manage your business. This doesn’t mean you have to do everything yourself. If you can get into the mindset of a business owner, the sky’s the limit on what you can achieve.

2. Incorporate additional business models in your business.

The affiliate marketing business model is only ONE of many models you can use in your business. Many affiliates add additional income streams to their business that are 100% compatible with affiliate marketing.

Examples include the following:

The ad revenue business model.

Monetizing your site with both ads, such as Google AdSense, and affiliate offers are totally doable. Many bloggers get a huge percentage of their income from ads.

Jon Dykstra – whose August 2020 income report we looked at previously – is one of those bloggers. He mainly relies on ad revenue, as opposed to affiliate commissions.

Google AdSense isn’t the only or necessarily the most profitable ad network. In a recent article, we looked at Mediavine vs AdSense. Once you have sufficient traffic, you can apply to Mediavine and other ad networks that pay MUCH better rates than Google does.

The online course business model.

A short while ago, I wrote an article titled 21 Ways to Make Money While You Sleep. Online courses or digital courses ranked in second position, only behind affiliate marketing. One of the best ways to make money online is with your own product, and courses offer great margins and great passive income potential.

As is the case with Google AdSense, online courses are completely compatible with the affiliate marketing business model. According to Teachable – one of the major players in the industry – their average instructor earns $5,426 with each online course.

Regardless of what business model works best for you, it’s always a good idea to have multiple income streams!

Conclusion

Affiliate marketing is a great business model if you treat it as a true business. It does require hard work and a commitment on your side. However, it’s well worth it! An affiliate marketing business can provide you with a great passive income for years to come.

By following the 7-step plan we’ve outlined in this article, there’s no reason why you can’t make a huge success of it!

At BrandBuilders, we would love to see you succeed with the affiliate marketing business model. We specialize in helping entrepreneurs like you build income streams that work 24 hours a day.

Book a FREE coaching call with one of our experts right now to find out how we can help you succeed!