Affiliate marketing is a flexible and rewarding method of making money online, offering numerous opportunities compared to other options. When executed correctly, it allows individuals to generate income by creating valuable and innovative content.
In simple terms, affiliate marketing allows you to earn money from your content by endorsing products from other companies through affiliate links. Whenever someone makes a purchase using your referral, you receive a small commission.
An Introduction to Affiliate Marketing
Affiliate marketing refers to the act of advertising and endorsing products owned by external vendors on one’s own website. Although there may be slight differences in definitions, typically, there are three to four entities engaged in an affiliate arrangement. As terminologies in this field can often be perplexing, it is necessary to briefly clarify the identities of the parties involved in affiliate marketing.
- The affiliate. Also known as ‘the marketer,’ this is the person running a site that contains affiliate links. The affiliate receives a commission on each purchase made by visitors who found a product by clicking on one of their links.
- The consumer. This is a visitor on the affiliate site who clicks on an affiliate link and completes a purchase (whether that’s the original item being promoted or something else from the same company).
- The network. This refers to the internal or third-party platform that the affiliate program operates on. This means they’re the ones providing the links that the affiliates use and paying the affiliate their commissions.
- The merchant. This is a company that sells products being marketed by the affiliate. In many cases, the merchant and the network are the same, as some companies run their own affiliate programs. For simplicity, we’ll be combining these last two entities throughout the rest of our discussion here.
Now, let’s discuss how these elements combine to assist you in earning money – these are the fundamental components of every affiliate marketing agreement.
Who Are the Players?
In affiliate marketing, there are typically around three to four main individuals who play crucial roles.
- Affiliates: the people who promote the product
- Sellers: the people who created or are selling the product
- Networks: networks managing the affiliates (optional)
- Consumers: end-users of the product
We should take a closer look at each of these players.
Affiliates
Affiliates, also known as publishers, can be either individuals or businesses. Typically, affiliates are content creators within the same industry as the product they are endorsing. They utilize various forms of content, such as social media posts, blogs, videos, and more, to promote products and services. While affiliates may opt for paid advertisements to generate traffic, there are usually guidelines regarding the keywords they can use for the products they endorse, prohibiting the usage of brand names or trade names.
Sellers
The creators of the products or services that affiliates promote are known as sellers. They are responsible for paying affiliate commissions for sales. Sellers can include individuals or companies who are willing to attract affiliate marketers and compensate them for affiliate sales. Alternatively, they may choose to engage a specialized affiliate marketing agency to handle these operations. In certain cases, such as with the Amazon Associates Program, the seller might not necessarily be the originator of the product or service.
Networks (optional)
A lot of sellers choose to partner with an affiliate network for the management of their affiliate marketing programs. The network takes care of third-party audits and oversees the connections between sellers and affiliates. ShareASale, ClickBank, and Rakuten are among the leading networks in affiliate marketing.
Consumers
Consumers are the individuals who make purchases of products and services via affiliate links.
Examples (And Types) of Affiliate Marketing In Action
Web Hosting Affiliate Marketing Offers (Pay-Per-Sale)
Like many other web hosts, DreamHost also provides an affiliate marketing program, which you may have observed.
When applying for the program, website owners gain access to a personalized dashboard where they can monitor referral activity and earnings, as is the case with most programs.
We say if they get approved because most serious affiliate programs filter people who can access them. That way, the program owner or the “network” can protect its brand by deciding who can promote it.
After joining a network, you will receive a referral link, which directs visitors from your website to the network. This link includes a distinct identifier (a cookie) that informs the network about the source of the visitor. If the visitor makes a purchase through the referral link, you will receive a referral bonus.
E-Commerce Affiliate Programs (Pay-Per-Sale)
Amazon Associates is regarded as one of the most exceptional e-commerce affiliate programs. With a striking 36.9% share of total US e-commerce sales in 2020, Amazon’s immense size and operations are highlighted.
Amazon’s affiliate program is a component that contributes to its market share. The program operates by allowing you to earn commissions of up to 10% when users make purchases through your affiliate links.
Amazon Associates welcomes a variety of website types, with a particular emphasis on those equipped with blogs. Additionally, individuals with mobile applications or YouTube channels are eligible to apply for the program. Furthermore, a distinct category is available for social media influencers.
To become an Amazon Associates member, it is necessary to have a highly established blog. Applicants with less than ten blog posts on their sites are generally screened by Amazon. Nevertheless, in order to earn a significant income from the program, a website that receives substantial traffic is essential.
Acorns Affiliate Program (Pay-Per-Lead)
Following two instances of pay-per-sale affiliate programs, we will now delve into an alternative model of business. Pay-per-lead programs deviate from compensating affiliates based on successful sales, opting instead to provide a fixed payment for particular lead categories.
Acorns, for example, is a micro-investing platform that allows ordinary users to invest small amounts of money without the need for broker interactions or involvement with conventional banking platforms.
Most pay-per-lead programs typically offer lower commissions compared to pay-per-sale programs, but the advantage is that it is usually easier to convert users into leads rather than customers.
Skyscanner Affiliate Program (Pay-Per-Click)
Most companies tend to favor paying for leads or sales, resulting in pay-per-click programs being relatively uncommon. However, Skyscanner differentiates itself by providing multiple affiliate programs, accommodating sales as well as clicks.
In this scenario, the program compensates you for each accomplished search made using the exclusive widget on your website. It is to be anticipated that pay-per-click affiliation programs generally offer lower commission rates compared to sale or lead-based programs.
This type of program offers the benefit of being highly focused, making it relatively simple to persuade users to click on links. A great example is its suitability for travel blogs.
Benefits of Affiliate Marketing
After gaining more knowledge about affiliate marketing, you might have realized that it is not a simple switch-on-and-it-works kind of method. It requires dedication to initiate affiliate marketing. You will invest your time in generating content, drawing traffic to your landing pages or microsites, and advertising products on social media. Fortunately, affiliate marketing provides numerous advantages.
(Nearly) Passive Income
Aside from creating and promoting content, affiliate marketing has the potential to generate income round the clock, offering an almost passive earning opportunity. It is not necessary to actively engage in the transaction to achieve this. By establishing a system that maintains operations, you can expect substantial returns with minimal ongoing involvement.
Flexibility
With affiliate marketing, you have the freedom to pursue your own desires while generating income for your business. There is no need for product creation, production, storage, shipping, or customer support; your only focus is selling. This eliminates the requirement of specific work hours dedicated to product creation or promotion. Instead, you have the freedom to select products of your choice that resonate with your audience, create content to endorse those products, and engage in promotional activities.
Cost-Effective
If you’ve ever desired to establish your own business, particularly one that deals with tangible goods, you are aware of the initial expenses involved. Occasionally, these expenses can be quite substantial. However, affiliate marketing provides an affordable opportunity to launch your own venture. As an affiliate marketer, your main investment will be the time required to generate content and promote your products.
Low Risk
Following the previous advantage of affiliate marketing, it is worth noting that affiliate marketing poses minimal risk. As an affiliate, there is no need to invest money in product creation or storage. Your sole responsibility is to market and endorse the products to your audience and, if you prefer, to paid traffic. Even when promoting affiliate products through blogging, you are not risking a large sum of money that would be lost in case of failure. Numerous affiliate products and services are available for promotion, thus if one proves unsuccessful, you can easily move on to the next one.
No Customer Support
Affiliate marketers are fortunate to not have the responsibility of handling customer support for the products and services they promote. This is a significant advantage for those who desire the autonomy to establish their own business without concerns about managing real customers. However, it is crucial to emphasize that the items recommended to your followers should be high-quality products or services that you genuinely endorse. If you promote subpar items solely for immediate financial gains, your audience’s trust will diminish. Hence, it is essential to be discerning when selecting the affiliate products and services you endorse.
