What Is Affiliate Marketing And How Does It Work?

You may have seen ads online promoting affiliate marketing as a way to make lots of money online. It often sounds easy: recommend products or services and watch the affiliate income roll in. But a successful affiliate marketing business takes a lot more than that. Here’s what affiliate marketing is and how it works.

What is Affiliate Marketing?

At the most basic level, affiliate marketing is an arrangement where you agree to promote a company’s products or services. If your audience buys a product or takes a specific action using your referral link or code, you get a commission. 

How Does Affiliate Marketing Work?

While affiliate marketing is promoted as a way to make passive income without creating your own products or services, the reality is that it takes work. Each program may be somewhat different but here are the basic steps: 

Step 1: Find products you want to promote

You’ll first need to identify the products or services you think your audience will be interested in. (Note that this step assumes you’ve already built a website, social media following or email list and have an audience that trusts you. If not, you’ll need to focus on building that first.)

You can look at other websites in your space to see what they promote, or search for affiliate programs in your area of interest. Many beginners start with the eBay or Amazon affiliate marketing programs because they offer such a wide range of products, but as you become more involved in affiliate marketing you’ll likely want to find more niche products that pay higher affiliate commissions. 

Step 2: Sign up for affiliate programs

You’ll submit an application to become an affiliate. This may mean going directly to a company that has an affiliate program (for example, the Amazon Associates or eBay Partner Network) or signing up for an affiliate network such as Clickbank, Commission Junction, or Shareasale, which manages many different affiliate programs. Once you’ve been accepted into a network, you need to find specific affiliate products you want to offer and apply for each individual program. 

You will typically have to complete and submit an application that includes your marketing channel information so they can get an idea of where and how you’ll promote their products, and you’ll need to meet the program’s requirements. 

Step 3: Get ad creatives 

Once you’re accepted you’ll get access to custom links to track the referrals you send to the company. You may also get access to ads that include your unique tracker link to promote the product or service. You may be given unique coupon codes to track purchases by your audience. 

Step 4: Promote products

Next you’ll need to give your audience a reason to click on your links. This may involve writing product reviews or articles that include affiliate links. Alternatively you may use paid advertising to send traffic if the affiliate program allows it. 

Step 5: Get paid

Get your payout. As people use your links to go to the affiliate website to make purchases you will get a commission. 

Types of Affiliate Marketing

There are several types of affiliate marketing. There isn’t a lot of consistency in how these different activities are named or categorized, so don’t worry too much about all these distinctions. They are included here because they may give you ideas for ways you can increase your affiliate sales. 

Content Marketing

Here, you’ll want to work your links into high-quality, search engine optimized content in a natural manner. An example of this type of site would be Wirecutter, a product review site of the New York Times, that recommends and reviews products, and includes affiliate links.

There are many possibilities here. Think review sites, roundup articles, or step-by-step product tutorials. Bloggers often will write in depth about products or services and include their links. Some may hold webinars, especially for higher ticket sales. Others may do unboxing videos. 

Content marketing is one of the most popular methods used in successful affiliate marketing. But it also takes time to build a site that will be found in search engines and to then get readers to trust you. Don’t expect overnight results.

PPC Affiliate Marketing

Pay-per-click or ppc advertising is a type of marketing where you get paid when someone clicks on an ad. As a publisher, for example, you might allow Google Ads on your site, and if someone clicks on one of those ads, you get a share of the revenue Google makes from the advertiser.

It’s debatable whether PPC ads are really affiliate marketing or whether they are just a form of advertising. Most affiliate programs pay on a CPA (cost per action) not PPC basis. But you may be able to find affiliate partners who are willing to pay you to bring traffic to their site or a specific landing page. 

The advantage of this approach is that you don’t have to have a large following to make this work, provided you have strong digital marketing skills. Find a formula that works and you can repeat it as long as you’re getting results. However, advertising costs money and if your efforts aren’t successful you’ll lose money. 

Social Media Affiliate Marketing

If you are a content creator with a solid presence on social media platforms such as Instagram, Facebook, Youtube or Tiktok, you may be able to refer people to your affiliate links and get paid. You don’t have to be a well-known influencer to make this work. As long as your audience sees you as a trustworthy resource they may follow your recommendations. 

It can also supplement other advertising income. For example, you may get paid by Youtube for the ads shown on your Youtube videos, but then also be able to earn income from your affiliate recommendations. 

This can be a fairly low-cost way to get involved in affiliate marketing, but it will likely be time-consuming to build a large enough audience to get good results. 

How to be Successful in Affiliate Marketing

Building an online business, whether it’s an ecommerce store or a successful affiliate marketing business, takes time and effort. It will take a while to figure out what works for you and your business, but keep these tips in mind. 

Quality Content

Whether you have a Youtube channel, a podcast, a startup hair salon, are a blogger, a social media influencer, or something else entirely, quality content is a must have. On visual platforms like Instagram that means high quality photos. On a website, it means well-written interesting content that answers readers’ questions.

Quality content brings your target audience to you and brings them back again. As you build trust with your audience they will turn to you for recommendations. A spammy affiliate site is easy to spot and few last very long. 

Marketing Skills

You’ll need to develop marketing chops to become a successful affiliate marketer. The good news is you can often start small by simply integrating affiliate marketing into your current marketing efforts. 

Eventually though you’re going to need to be able to develop marketing campaigns and test marketing strategies like sales funnels, email marketing or A/B testing to learn how to drive your audience to action. You’ll need to understand what types of copy or creatives are getting the best conversion rates so you can create more like it. And you may need to negotiate better payouts from your affiliate partners. 

Good Products

Affiliate marketing is all about the products you are selling, why you are selling them, and to whom. You always want to keep your target audience in mind when you are selecting products to promote. Whether it is a digital product or physical product it should be relevant and useful to your audience. 

While you may not always be able to test every product you sell, think about why you are recommending each one and make sure you feel confident in your recommendations. You also don’t want to oversaturate your target audience with sales pitches. 

And don’t forget to take time to find new products so you can keep your site fresh and diversify your affiliate income. If you rely primarily on one affiliate partner for most of your income and it lowers commissions or stops paying affiliates, your business can dry up overnight. Don’t let that happen to you. 

Compliance

Almost every affiliate program has a list of terms and conditions you must follow. There may be restrictions on how you can promote the affiliate program, for example. Some affiliate programs, including credit cards and other financial products, are very strict. Follow the rules or you may get kicked out and even forfeit income you’ve earned. 

As your business grows, you may need to hire an affiliate manager to make sure your marketing efforts follow all guidelines, including updates to program details, new links or other rules. 

Affiliate Marketing: The Bottom Line

Affiliate marketing can be a lucrative way for newer entrepreneurs and established businesses to monetize their marketing platforms. It can complement the businesses’ own products or services, or be the main source of revenue for others. 

Keep in mind that if you decide to build a business based on affiliate marketing you’ll need to be flexible and adaptable. Programs change, and what works in online marketing today may not work tomorrow. But stick with it and the rewards can be tremendous.


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