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How Affiliate Marketing Works

March 1, 2021
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How Affiliate Marketing Works

Wake up to hit the snooze button, followed by a long drive to the office with jammed pack streets. Spend endless hours looking through email after mind-numbing email until the sweet release at five o’clock. Sounds terrible, right?

How about, instead of dealing with mind-numbing days of working the 9-5, you could make money at any time, from anywhere. That’s the concept behind affiliate marketing. 

Affiliate marketing is a successful tactic to drive sales and generate significant online income. It is incredibly beneficial to both brands and affiliate marketers, the recent push towards less traditional marketing tactics has paid off. In fact:

  • 81% of brands and 84% of content creators leverage the affiliate capability, a statistic that will continue to increase as affiliate marketing spending rises every year in the United States.
  • There is a 10.1% increase in affiliate marketing spending in the United States each year, meaning that by 2021, that number will reach near $ 8 billion.

Affiliate marketing defined by  Pat Flynn’s Smart Passive Income:

“Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make.”

 

What Is Affiliate Marketing?

Affiliate marketing is quite honestly one of the most powerful ways to generate an income online. Affiliate marketing is how an affiliate receives a commission for marketing another person’s or company’s products or services. The affiliate promotes that product that they enjoy and gets a piece of the profit from each sale they make. An affiliate has a specific tracker unique to them, which allows them to receive a commission for marketing the product. Despite your niche, the upside with affiliate marketing is nearly unlimited if you go about it the right way! 

The best part of affiliate marketing is you don’t have to invest time in creating the commodities that will be serving your viewers. Why? It’s because those products likely already exist. Because of that, affiliate marketing is an opening anyone can take advantage of, and it’s easy to get started!

As a hasty refresher, affiliate marketing is the method of earning a commission by promoting another person’s (or company’s) products or services. 

You discover a product you like, promote it to your audience, and earn a percentage of the profit for each sale that you make. It’s similar to a salesman earning a commission, but you don’t work for the company. Instead, it’s like receiving a reward for sending a new customer to the company.

Am I a Good Fit for Affiliate Marketing?

Affiliate marketing is an attractive choice for online entrepreneurs, bloggers, and honestly anyone who has a website and is willing to build a following they can serve authentically.

Affiliate marketing can be a perfect option if you’re not equipped to create your product or service yet, but you want to help your audience by promoting products that may help them.

Affiliate marketing can also be an excellent fit for a wide range of people because you can apply multiple marketing methods to promote affiliate products and services. These combine the same marketing methods you may already be using—things like paid search engine marketing (SEM), search engine optimization (SEO), content marketing, and email marketing. There are many nifty ways to market products, like product reviews and unboxings of products. 

Finally, it’s essential to remember that affiliate marketing works best when you’re sincere and confident about the product you’re promoting. If you start affiliate marketing with a get-rich-quick mentality, you’re not going to be impressed with your results. You should only promote a product that you have used or use because you honestly feel it will help the end-user. 

 

affiliate marketing

How Affiliate Marketing Works

For affiliate marketing to work, you need three parties involved.

  1. The product creator/ seller
  2. The affiliate or advertiser.
  3. The Consumer.

Below we will breakdown this complex relationship between these three parties.

 1. The Product Creator/Seller

Whether a solo entrepreneur or large enterprise, the seller is a product creator, merchant, vendor, or retailer with a product to market, the product can be a physical object, like home goods, or a service, like a streaming music service.

2. The Affiliate or Publisher.

The affiliate or publisher can be either a company or a sole individual that markets the seller’s product appealing to possible consumers. In other terms, the affiliate promotes the product to convince consumers that it is worthy or helpful to them and persuade them to obtain the product. If the consumer does complete the product’s sale, the affiliate receives a share of its revenue.

Affiliates often have a unique audience to whom they market, usually adhering to that audience’s interests. This particular interest is also known as a niche market

3. The Consumer.

Whether the consumer recognizes it or not, they (and their purchases) are the affiliate marketing drivers. Affiliates share these products with the consumer on blogs, social media, and websites.

When consumers purchase the products, the seller and the affiliate share the proceeds. Some affiliates prefer to be upfront with the consumer by revealing that they are earning commission for the sales they make. On other occasions, the consumer may be unaware of the affiliate marketing infrastructure behind their purchase.

Consumers rarely pay any more for the product or service purchased through affiliate marketing. The affiliate’s share of the profit is included in the seller’s price to the consumer. The consumer will perform the purchase process, receive the goods as usual, and not know if it was part of the affiliate marketing system.

How Do Affiliate Marketers Get Paid?

A quick and reasonable means of making money without the nuisance of actually selling a product, affiliate marketing has a sure draw for those looking to supplement their income online. But how does an affiliate get paid after linking the merchant to the consumer?

The consumer doesn’t always need to purchase the product for the affiliate to get a payment. Depending on the program, the affiliate’s augmentation to the seller’s sales will be scaled differently.

The affiliate may get paid in various ways as outlined below. 

1. Pay per sale.

This is the normal affiliate marketing structure. In this structure, the merchant pays the affiliate a percentage of the product’s sale price after the consumer purchases the product due to the affiliate’s marketing strategies. The affiliate must get the consumer to purchase the product before they are compensated.

2. Pay per lead.

A more complex system, pay-per-lead affiliate programs, repays the affiliate based on the conversion of leads. The affiliate must convince the consumer to visit the merchant’s website and perform the desired action These actions could be filling out a contact form, subscribing to a newsletter, or signing up for a trial of a product

3. Pay per click.

This program incentivizes the affiliate to redirect consumers from their shopping platform to the merchant’s website. This implies that the affiliate must engage the consumer enough that they will leave from the affiliate’s site to visit the merchant’s website. The affiliate is paid based on the increase in web traffic to the merchant’s website.

 

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