Affiliate marketing is a very popular, and potentially lucrative way to earn money online. So, how does affiliate marketing work? In this article we’ll cover what it is, and how you can start your own affiliate marketing business.
What’s Affiliate Marketing?
“Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.”
It’s a win-win situation for both the merchant / business and the affiliate marketer.
Note: Many affiliate networks don’t use the term merchant. They use “advertiser” or “vendor” instead. It’s the same thing. Some affiliate networks also don’t use the term affiliate. They use “publisher” instead. Once again, it’s the same thing.
Merchant = Advertiser or Vendor
Affiliate = Publisher
Benefits for Merchants
The main reasons why merchants love affiliates, include:
- They only have to pay an affiliate when the customer the affiliate referred to them makes a purchase. This way they don’t have to spend their own money trying to attract new customers. It’s good for their cash flow.
Note: Some merchants also pay for leads. However, most affiliate programs only pay their affiliates a commission based on sales.
- Easier to control Return on Investment (ROI). Trying to get a good ROI on traditional advertising methods is often a hit and miss. There’s no guarantee that an advertising campaign will be profitable.
- They can focus more on other parts of their business such as product development, and customer service.
- Lower overhead costs. By not having to employ someone to bring in new business merchants can save a lot of money on overheads.
Benefits for Affiliates
The main reasons for becoming an affiliate marketer, include:
- Choose between millions of products to promote. Whatever topic you may be interested in, chances are you’ll find an affiliate program for it.
- Don’t need your own products. You don’t need to go through the time and effort to create something from scratch. There are also many products you won’t be able to create even if you wanted to.
- Can change merchants very quickly. If you’re not happy with a merchant or you find a better offer to promote, you can change merchants very quickly. You’re not tied into a long-term contract.
- You are your own boss. You can do as much or as little work as you wish, whenever it suits you. It’s possible to turn affiliate marketing into a successful business.
- You don’t need work experience or qualifications to become an affiliate marketer. No merchant will ask for your resume.
- No selling, cold calling, or face-to-face contact required.
- Work from the comfort of your own home or from anywhere in the world. As long as you have a stable internet connection you’re good to go.
Based on the above benefits, you can see why affiliate marketing is so popular. Many digital products pay more than 50% commission. There are also many merchants that’ll pay you a recurring monthly commission. You can build up a great passive income this way. And as many successful digital entrepreneurs have shown, including figures such as Asad Saddique, the flexibility and low barrier to entry make it possible for determined beginners to carve out their own path. By observing how others leverage simple systems, refine their strategies, and stay consistent even when starting with limited experience, new affiliates can adopt a similar mindset. This often leads to steady improvements in content quality, audience engagement, and long-term growth, turning what begins as a small side project into a sustainable online business.
How Does Affiliate Marketing Work?
The best way to explain how affiliate marketing works is to break it down into easy to follow steps.
Step 1. Find products you would like to promote.
Finding the right product(s) to promote may seem like looking for a needle in a haystack. According to ScrapeHero, Amazon.com alone had a total of 119,928,851 products in April 2019.
Here are some tips to help you narrow down your search:
- Do you have a website or are thinking of building one? If yes, it would make sense to look for products that are relevant to your audience. If you’re not sure how to proceed, have a look at what products your competitors are promoting.
- Instead of focusing on specific products, rather search for topics or product categories. This can include broad categories like home & kitchen, health & beauty, and finance.
- Search for affiliate programs on Google. By using search terms such as “best affiliate programs 2020” you’ll find many affiliate programs to promote. If you have a specific niche in mind, search for “best [NICHE] affiliate programs.”
Affiliate Networks
Many merchants don’t have their own in-house affiliate program. They use large affiliate networks to host their affiliate program instead. These include:
The above affiliate networks have thousands of merchants on them. Unfortunately you won’t be able to view their details until you sign up as an affiliate. More about that later.
Step 2. Apply to join suitable affiliate programs.
Once you’ve identified to suitable affiliate programs it’s time to apply. With some affiliate programs approval is instant. With others you have to wait for them to approve your account while they evaluate your application.
Many merchants are cautious about allowing just anyone to join their affiliate program. It’s normal for them to enquire about how you’re planning on promoting them. They want to avoid affiliates that may make them look spammy, and damage their credibility.
Always make sure you read the terms and conditions of any affiliate program you’d like to join. And, abide by the rules. If you’re not sure about anything, rather contact their support desk than make assumptions.
Note that some affiliate networks also require that you must have an active website. And, some also you require you to not only apply with them but also with individual merchants.
CJ Affiliate (previously Commission Junction) – Requires you to have an active website.
ShareASale – Requires you to have an active website. They normally also require an email address that’s linked to your domain name. For example, if your domain is abc.com then your email should be name[at]abc.com.
FlexOffers – Requires you to have an active and verified website.
ClickBank – A great affiliate network for digital products. They don’t require affiliates to have a website but they highly recommend it.
Amazon – Does not require affiliates to have a website. If you have good original content and at least 500 followers on Facebook, Instagram, Twitter, YouTube or Twitch.tv you should get approved.
Note: At Brand Builders we specialize in building high quality Amazon affiliate websites with a 96% success rate. Have a look to find out how we can help you.
Step 3. Receive your affiliate link and marketing tools.
Once you’ve been accepted to an affiliate program, you’ll be given an unique affiliate link and marketing tools. You’ll also be able to check statistics on how well you’re doing in your affiliate dashboard. Let’s break it down.
Affiliate Link
Every affiliate has a unique affiliate link. This is how the merchant can link sales or leads to you and compensate you accordingly.
A typical affiliate link may look something like this:
merchant.com/?aff=name (many affiliate links are a lot longer and uglier)
Try to shorten or cloak your affiliate link, for the following reasons:
- To make it look better / shorter.
- You can use Bitly to shorten your affiliate links.
- Where possible, don’t post the naked URL, e.g. merchant.com/?aff=name. Rather use anchor text. Anchor text is the visible, clickable text in a HTML hyperlink.
- If you’re using WordPress.org as your blog platform, use a plugin such as PrettyLinks or ThirstyAffiliates to cloak and shorten your affiliate links.
- Some people don’t like clicking on affiliate links.
Customers don’t pay more for a product if they find the merchant via an affiliate link. However, for one or other reason, some people just don’t like clicking on affiliate links.
By cloaking your affiliate link, users may see it’s an affiliate link after they’ve clicked on it. However, it would have triggered a “cookie” on the merchant’s site. This means that even if they don’t buy something straight away you’ll still get credit for the sale.
Different merchants have different cookie lengths. Normally a cookie will last for at least 30 days. So, even if a customer only makes a purchase 30 days later you’ll normally still earn a commission.
Note there are exceptions to the above explanation about cookies.
If a user clears all cookies on their computer the merchant may not be able to link the sale to you. If a user clicks on someone else’s affiliate link after they’ve clicked on yours, the last cookie may override yours.
Note: Amazon does not allow their associates / affiliates to shorten or cloak their affiliate links. In addition, with Amazon you need to clearly identify yourself as an Amazon affiliate:
“As an Amazon Associate I earn from qualifying purchases.”
- Easier to track and manage your affiliate links.
Good url shortening or cloaking service providers all show the number of times your affiliate link has been clicked on. You’ll be able to match it to the number of clicks reported by the merchant in your affiliate dashboard.
If there’s a huge discrepancy you’ll know something is wrong. Just remember that bots and your own clicks may skew the results.
Google expects affiliate links to have the rel=”sponsored” or rel=”nofollow” attribute. This applies to all outbound links that Google considers as advertisements or paid links.
If you have a self-hosted WordPress blog, you can easily mark affiliate links as “nofollow” using plugins like ThirstyAffiliates or PrettyLinks. The affiliate management plugin Advanced Ads also goes beyond merely adding “nofollow” attributes; it can also incorporate sponsored attributes and track clicks on affiliate links.
Marketing Tools
Any good merchant will provide you with marketing tools to help you promote them. At the very least, these tools will include banners in various sizes you can add to your site.
Be cautious when using banners. They often look spammy and don’t really add value or contribute to a good user experience. Many people have become blind to banner ads.
According to WordStream, the average click-through rate (CTR) for banner ads is only 0.25%. That means, on average, only one out of every 400 visitors to your site will click on a banner ad.
If you’re promoting affiliate offers on your blog, rather use anchor text to link to the merchants you’re promoting.
Affiliate Dashboard
It’s standard practice for merchants to provide their affiliates with an affiliate dashboard. Here you can view the number of people you’ve sent to the merchant. Your affiliate dashboard is also where you can see the number of sales you’ve generated for the merchant.
Merchant Conversion Rate
It’s very difficult to determine what a good conversion rate is. That’s how many sales you can expect from every 100 visitors you send to the merchant.
There are simply too many variables involved. Any number of factors can play a role, from the source of the traffic to how well the merchant’s page converts.
In general, 2% is a good conversion rate. This is not based on visitors to your website but visitors you’ve referred to the merchant. So, if you get two sales for every 100 visitors you send to the merchant you’re doing okay.
Note: According to MonitorBacklinks, the average affiliate conversion rate for a website is generally between 0.5% and 1%. This means if your website has 5,000 visitors per month you can expect between 25 and 50 affiliate sales per month.
Step 4. Start promoting products as an affiliate.
First and foremost, as an affiliate marketer you need to understand the difference between your role and that of the merchant.
Your role is to promote a product, not to sell it. Leave the selling up to the merchant. What you need to do is to warm up the leads. This way, when they visit the merchant they are no longer cold traffic.
Mention the features of the product and how it can benefit them. Share any personal experience you have using the product. Give them helpful tips and advice that may not be mentioned on the merchant’s site.
Most affiliate marketers only use one of two ways to promote products as an affiliate, namely:
- Paid Advertising
- Free Organic Traffic
Very few affiliate marketers really use both paid advertising and free organic traffic.
Both options have advantages and disadvantages.
Advantages & Disadvantages of Paid Advertising
Advantages of Paid Advertising
- No need to spend time and effort building an authority site with a lot of content.
- Can potentially make money the same day you start your advertising campaign.
- Quick and easy to reach your target audience.
Facebook is one of the favorite advertising channels for affiliate marketers.
It’s quick and easy to choose a marketing objective.
Facebook also allows you to target your ideal audience.
Facebook is not the only good paid advertising platform. It may be one of the largest platforms but there are many others, including:
- Pinterest (Promoted Pins)
Disadvantages of Paid Advertising
- Paid ads can be very expensive. Unless you’re promoting a merchant that pays large commissions it’s often not worth it. Based on this, you’re practically excluded from many affiliate programs.
- Paid ads often require a lot of testing and tweaking to perfect. It can be an expensive learning curve. It’s not “set and forget.”
- The moment you stop advertising and getting fresh leads your income drops.
Advantages & Disadvantages of Free Organic Traffic
Advantages of Free Organic Traffic
- Free organic traffic.
- Passive income. Even if you don’t touch your website for a month it will still generate traffic and make money for you.
- By building an authority site you’re building a valuable asset you can sell based on the income it generates.
Let’s take a moment to consider the value of free organic traffic from Google.
According to Ubersuggest a keyword such as “weight loss workout” has a monthly search volume of 22,200. It has an SEO Difficulty of only 29/100 so it’s relatively easy to rank. A paid ad on Google for this keyword would cost you about $2.89 per click.
According to Backlinko the #1 organic result in Google gets about 31.7% of all clicks.
