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
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:
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 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!
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
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.”
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.
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
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 pro