Affiliate Marketing

What is Affiliate Marketing and How Does It Work?

The concept of affiliate marketing was born in 1989 when William Tobin developed the idea for his business, PC Flowers. Fast forward to 1991 and PC Flowers is raking in the cash on Prodigy Network. We’re talking in the neighborhood of $6 million. You’re likely thinking, “if Tobin made $6 million back in 1991, how much can I make today?” Well, the Global Affiliate Market is worth around $12 billion today and the United States leads the charge with 39% of the pie. I dunno about you, but that’s a solid chunk of change! You can carve out your personal share of this market if you’re willing to put in the time and effort. In this post, we’re going to explore what it takes to thrive in the world of affiliate marketing and how you can earn a reasonable income by selling on behalf of other parties.

What is Affiliate Marketing?

First and foremost, affiliate marketing can be a side hustle or a full-time job. It all depends on how much time you wish to invest in it.

Affiliate marketing is the process of earning a portion of each sale for promoting a product or service on behalf of another business. Think of yourself as a sales professional earning a commission for every sale you make. However, the difference here is that as a marketer, you don’t work directly for the company.

In the simplest sense, you make money via affiliate marketing by funneling your audience to the company via an affiliate link. When a customer follows through with the call-to-action due to your affiliate link, you get your commission. When you promote your affiliate products to your audience enough, you’ll likely develop a healthy revenue stream. Below is a step-by-step guide that will walk you through how to earn a respectable affiliate income.

How Does Affiliate Marketing Work?

How Affiliate Marketing Works

Here’s the most basic process outline for how affiliate marketing works:

  1. You share a link with your audience via your online platforms (social, email, paid ads, etc.) to a specific online store.
  2. A potential customer from your audience clicks on the link.
  3. The link takes the customer to the online store via a tracking link.
  4. The customer completes a purchase.
  5. The company records the sale and the transaction details.
  6. Each sale is confirmed as valid and is credited to you.
  7. You earn your commission.

There are three key participants in the world of affiliate marketing: the customer, the advertiser, and the marketer.

The Customer

The customer is part of your audience and they seek answers to satisfy a specific need. They trust that you’ll have the answers they’re looking for and they believe that you know what you’re talking about.

Your primary tool is your content – blog posts, videos, social, etc. You then use your content to funnel your audience to your advertiser’s website where the customer will hopefully find the answer to their query.

Once the customer reaches the advertiser’s website, they will need to purchase the advertiser’s product or service. If, and only if the customer purchases will you, the affiliate marketer, earn your commission.

The Advertiser

The advertiser is typically an online eCommerce store, a software developer, or a coach of some sort looking to sell their product or service.

Naturally, they want more sales without spending a king’s ransom on marketing campaigns. In lieu of the standard digital marketing campaign route, they want to pay you, the affiliate marketer, a commission for every customer you send their way.

The Affiliate

Affiliate Marketer Attracting Customers

Finally, we have you, the affiliate marketer. You’re the workhorse who drives customers and leads to the advertiser’s website.

Once you’ve been doing this for a certain period of time, you can easily identify the ideal customers for specific offers. You may even go so far as to develop fictional customer personas. Over time, you can start sending hundreds of customers to an affiliate website every day.

But wait, it gets better – the advertiser may increase your commission and even offer you exclusive discounts which you can then pass on to your audience. This typically results in higher conversion rates, which, in turn, means more cash in your pocket!

At this point, most of your time and effort goes towards maintaining your site and tweaking it to increase your ROI. Why? Well, your business likely runs like a well-oiled machine at this point!

This is when the snowball effect kicks in, which means that there is a massive opportunity to scale your affiliate operation.

Key Affiliate Marketing Terms

You now have a decent idea of the three core players involved in the process. Now it’s time to go over a few key terms.

Affiliate Network

Affiliate networks offer a wide range of offers all in one central location. Since affiliates only work with a single point of contact, they can easily select different offers.

On the other side of the equation, the advertiser only deals with a single network instead of hundreds of affiliates.

The real icing on the cake is that all you need to do is join an affiliate network and set up your affiliate link!

The Traffic Source

Your traffic sources are where you find potential customers. After all, you do need actually people with whom to share your affiliate link.

You can create SEO content or share your offers with an email list that you develop ethically.

You can also drive traffic from:

  • Organic content on social platforms like Facebook and Instagram
  • Paid ads (this can be risky if you have limited or no experience with paid ads)

The best way to build a steady flow of inbound traffic is to create superb SEO content. Once you have a steady flow of inbound traffic via your SEO content, you can then start to build your email list.

How Do You Become an Affiliate Marketer?

There are a few steps that you need to complete in order to become an affiliate marketer.

  1. Identify a company and product you want to promote.
  2. Join an affiliate program.
  3. Get your unique affiliate link and promote it via your website, social platforms, and email list!

The essential part of this process is the creation of high-quality content. You need to appeal to and attract a large audience. You also need to naturally embed your links into your content. The last thing you want to do is to make your content sound like a sales script.

If you already have a website, then the three steps mentioned above should be pretty simple.

However, if you’re starting on the ground floor and need to build a website, then you have some work ahead of you. We’ll discuss what you need to do if you’re starting a website from scratch later.

How Much Can You Earn as an Affiliate Marketer?

Earn Money as an Affiliate Marketer

According to PayScale, the average base salary for an affiliate marketer is in the neighborhood of $53,000. If you ask me, that’s not too shabby seeing how you don’t need a diploma or any formal education in order to succeed as an affiliate marketer.

The Benefits of Affiliate Marketing

In addition to the income, there are a number of additional benefits of affiliate marketing, such as:

Little Overhead Costs

Affiliate marketing doesn’t require you to pay for manufacturing, shipping, or customer service.

All you need to do is hop on your computer, subscribe to a reliable internet service provider (ISP), and invest a few dollars into the construction and maintenance of your website.

You can also build out your business with limited overhead costs. There’s no need for formal office space, nor do you need to hire a team to run an affiliate marketing program. The sky is literally the limit!

Low Barrier to Entry

Minimal costs mean you’ll have an easier time entering the market. It’s wicked easy to join an affiliate program, even if you’re just starting out and you have a small amount of inbound traffic. Since you don’t have to mess around with physical inventory or shipping, there are far fewer headaches.

Limited Risk

Seeing how you don’t own the product you’re marketing, you literally have nothing to lose if a customer doesn’t purchase.

As you grow you can diversify your income sources and traffic streams, which further reduces your risk. With different streams and sources, you won’t rely on a single affiliate program or traffic source for income. For example, if an affiliate program amends its commission rates or Google updates its algorithm, you’ll take less of a hit.

Potential Passive Income via Affiliate Marketing

Passive income has to be one of the best parts of the job.

Goodbye 9 to 5!

The lifestyle of an affiliate marketer involves earning money while you golf, lounge on the beach, and sleep!

If you develop the right type of content, you can generate revenue just as long as it ranks well in the SERPs.

How to Start Affiliate Marketing

Here’s a detailed guide to getting started as an affiliate marketer.

Affiliate Marketing Starting Line

1.) Select Your Niche

You’ll want to select a niche that you enjoy, especially if you’re new to this business model. However, choosing one that makes your life easier is even better.

Niche selection dictates how much money you can earn and how difficult it will be to rank for quality keywords.

When selecting your niche, you’ll want to consider the following:

  • Can you write content that will rank?
  • How much money can you earn?
  • Is the product/service a high-impact issue?

Furthermore, you’ll want to look out for and avoid the following:

  • High maintenance niches that require regular updates
  • Your Money or Your Life” (YMYL) niches
  • Niches with low-cost products
  • Niches that don’t interest you

You can identify your dream niche through:

  • Marketplaces like Flippa
  • Affiliate networks that help you identify high-value products. Once you identify a few products that pique your interest, look them up on Google and check out their reviews and enter the top search result into Ahrefs to check out the type of traffic it gets. If it earns a healthy stream of traffic and offers solid commissions, then you’re on the right track.

If you want to become a successful affiliate marketer and develop a hearty stream of revenue, then stick to your niche.

An affiliate product can be a(n):

  • Physical product (coffee beans, lacrosse equipment, tablets, etc.)
  • Informational product (online courses, ebooks, cheat sheets, etc.)
  • Services (SEO management, lawn care, essay writing, etc.)

Physical Products

When it comes to promoting physical products, the opportunities are literally endless. The most popular affiliate marketing program for physical products is the Amazon Associate’s Program. However, physical products typically yield a lower commission rate. This is usually to offset the cost of manufacturing, storing, and shipping the product. For instance, Amazon’s 10% commission rate can quickly drop down to 1% depending on the affiliates’ sales volume and the product category.

Informational Products

An informational product can be a guide, an ebook, an online course, or anything that is similar in nature. Commission rates for informational products tend to be higher than physical products and services. Some advertisers offer commissions as high as 75%, which is essentially unheard of when it comes to physical products.

Services

You can always promote services like logo design companies and web developers. You need to ensure that your readers are legitimately interested and will use the service. Furthermore, commission rates can be as high as 50% for services.

2.) Develop Your Strategy

Affiliate Marketing Business Strategy

Next, you need to develop a bulletproof strategy that keeps you from wasting time and resources while maximizing your passive income.

It all boils down to how much time you’re willing to invest. Is this your full-time job, or is it more of a side hustle?

Regardless of how it plays into your overall income, you can’t have one foot in and one foot out. You need to commit to learning as much as you can about your craft in order to produce high-quality content.

Next, you need to dive headfirst into keyword research and brainstorming content ideas. Jot down every idea that comes to mind, select the best ones, and add them to your calendar. When it comes to publishing content, you must adhere to a strict publishing schedule.

3.) Create Your Affiliate Marketing Website

Your website is the primary vehicle through which you earn the big bucks, so invest a decent amount of time and money in it. There are thousands of templates from which you can choose or you can use a website builder. There are a number of website builders out there that are beginner-friendly and do not require any coding experience or other such skills to build an effective affiliate marketing website.

4.) Research Your Products

You’ll want to ballpark the level of interest in your chosen list of products. You can do this by:

  • Looking up their relevant keywords via tools such as Ahrefs
  • Determining if the search volume warrants your time and effort via Google Trends

Google Trends is a great way to identify break-out products that Ahrefs won’t have picked up on yet.

This data helps you identify the degree of demand and figure out which product will increase in popularity with time. This could be the difference between low and wicked high affiliate sales for your business.

5.) Promote Your Affiliate Marketing Links

Guy Jumping with Megaphone

You need to get your affiliate link in front of people in order to earn your commission. So you’ll need to market your content and drive traffic to your site. Here are two methods that high-performing affiliate marketers use:

SEO

Search engine optimization (SEO) helps your website climb to the top of the SERPs. The higher you rank for your target keywords, the better the odds of users clicking through to your website.

Drafting effective SEO content takes a while to master, but once you refine your craft, you can reap some serious benefits – aka cash.

Email Marketing

Once you have phenomenal SEO content, you’ll want to start building your email list. You can then use your email list to promote your products to your audience.

Potential customers will naturally find your content appealing, which then allows you to build a community based on legitimate interest. This makes it easier to push a product to your audience and score a higher conversion rate.

Ready, Set, Go!

Can you see yourself quitting your 9 to 5 job because your affiliate marketing machine is raking in mad cash?

I sure hope so!

After all, that’s the point of this affiliate marketing guide – to show you that it is not only profitable but also attainable.

In order to succeed, you need to ensure that you follow all of the steps in this guide when you start to promote your products.

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