If you want to generate income online but do not have a product to sell, then affiliate marketing may be a great option for you.
With this marketing tactic, you are able to promote other people’s products in exchange for a commission.
In this affiliate marketing for beginners guide, I will walk you through everything you need to know about affiliate marketing and how it works.
What Is Affiliate Marketing?
Affiliate marketing is a type of marketing in which an individual or business markets another company’s products or services. In exchange, affiliates earn commissions for their work, bringing visitors and sales to the business.
It is similar to the commission a salesperson earns. However, affiliates do not work for the company whose products they are promoting.
Affiliates typically promote products through their website, blog, social media accounts, podcasts, or other online platforms. The company will track all the sales from the affiliate to credit them with the commission.
How Does Affiliate Marketing Work?
Affiliate marketing starts when an affiliate joins a program and receives a unique link to promote. When a customer clicks this link and makes a purchase, the affiliate system records it, and the affiliate earns a commission.
The diagram below shows how affiliate marketing works in detail.
Here are the steps:
- Add Affiliate Links To Your Online Platforms
- Customer Clicks On Your Affiliate Link
- Customer Visits The Merchant Site
- The Customer Purchases From The Merchant
- The Affiliate Tracking System Records The Purchase
- The Company Confirms Purchase As a Valid Sale
- You Are Credited The Transaction
- You Receive a Commission
1. Add Affiliate Links To Your Online Platforms
Upon joining your program as an affiliate, the merchant’s software will generate a unique affiliate link for you to use.
Once you have this link, you can begin adding it to the places where you want to promote your content.
The most common places to promote affiliate products are websites, blogs, and social media profiles.
If you have a blog, you can place your links throughout your content. Or if you promote through social media you can create a sponsored post that includes the link.
2. Customer Clicks On Your Affiliate Link
As you start to bring visitors to your content, some of the users will click your affiliate links.
When they do, your affiliate links will create tracking cookies in the user’s browser. These are what allow the merchant to tell which (if any) affiliate helps bring in the customer.
The cookies are stored on the browser for a specified amount of time. For you to receive credit for the sale, the customer will need to complete their purchase before this time period expires.
Cookie windows can be as short as 24 hours or as long as 60 days.
For example, Amazon’s affiliate program uses a 24-hour cookie window, meaning you want to find visitors who are ready to buy.
3. Customer Visits The Merchant Site
After the customer clicks your link, they will be taken to the merchant’s website.
The type of page that they land on will depend on the business’ particular offering.
It may also be determined by your choice as some programs give affiliates multiple landing pages to choose from.
While on the page the customer will review the product to learn more about it.
4. The Customer Purchases From The Merchant
Once they have time to weigh their decision, some of the people who land on the merchant’s website will choose to complete their purchase.
There may be others who do not buy right away but eventually come back to complete their purchase.
5. The Affiliate Tracking System Records The Purchase
When the customer places their order, the affiliate tracking system will record all the details for the purchase.
It will also look to see which affiliate should be credited with the sale.
In a situation where the customer only clicked one affiliate link, this is easy to determine.
Things get more tricky if the customer clicked multiple links before buying. Affiliate programs use different attribution models to decide who gets the sale. A common attribution model is a last-click model.
With this model, whoever’s link was clicked most recently gets the sale. It is also common for programs to use a first-click model where the first affiliate that gets the person to the merchant site is credited.
6. The Company Confirms Purchase As a Valid Sale
Affiliate programs also review transactions to ensure that they are legitimate.
They need to take this step to make sure that you are not buying your own products or doing anything else dishonest.
For example, breaking the terms of the program by bidding on branded keywords in paid ad campaigns.
Typically, there is a set amount of time it will take the affiliate company to officially recognize the sale.
7. You Are Credited The Transaction
The transaction will be credited to your affiliate account after the merchant verifies the qualifying sale is legitimate.
The amount you earn will be based on the terms of your affiliate agreement. For example, if your terms state that you receive 10% of every sale and a customer buys a $100 item, you will receive $10.
You will likely have to wait until the scheduled commission payout to receive your funds. This will vary based on the program and can be anywhere from instant to 30 or 60 days.
8. You Receive a Commission
You will receive your commission payout once the affiliate merchant officially credits you with the sale.
Again, when the commission is paid out, it will depend on the particular affiliate program.
In addition to following a payment schedule, many programs have payment thresholds. If a program has a payment threshold, your commission balance must be equal or greater for you to receive payment. These thresholds usually aren’t too high. Amazon, for instance, has a $10 threshold.
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Benefits of Affiliate Marketing
Here are some of the benefits of using affiliate marketing:
Easy to Start And Scale
Affiliate marketing is an attractive option for many as it is easy to start.
You do not have to go through the lengthy process of creating a product yourself. As such, you can find success with affiliate marketing without being an expert in a particular niche.
With the ability to generate passive income over time, affiliate marketing is also highly scalable.
You do not need to worry about creating new products as your business grows. Nor do you need to handle post-sale customer service concerns. Once you grow your audience base, you can also find new products and services to promote to increase the lifetime value of your customers.
Passive Income
Affiliate marketing can provide a steady stream of passive income. By this, I mean you can set up your traffic sources once and continue to generate new sales as more users come through.
One of the most common ways to promote affiliate products is through a website with content such as blog posts.
These could be reviews in which you go through the pros and cons of an item for potential customers. Or it could be a how-to guide in which you add an affiliate link to a tool that would help the reader.
Once you create the content, you can employ search engine optimization (SEO) tactics to get the site to rank in Google’s search results.
When your pages get high enough in the rankings, you will get visits to your site and make affiliate sales.
Additionally, you can earn even more passive income from affiliate marketing if you get recurring commissions. Learn more using these resources:
Low Initial Costs
Affiliate marketing is a low-risk way to generate income online. The initial costs to set up your website and traffic sources are minimal compared to launching a product.
If certain products are not working with your audience, you can quickly pivot to begin promoting new items.
Easy For Everyone To Do
Like other ways of making money with digital marketing, affiliate marketing affords great flexibility. You can use affiliate marketing anywhere so long as you can access the internet.
Plus, you get the ability to work and promote your products independently.
Your affiliate program will undoubtedly have guidelines that you need to follow, but it is ultimately up to you how you choose to engage with your audience.
Win-Win For Affiliates And Companies
Affiliate marketing is equally beneficial to the companies creating the affiliate program.
One of the biggest advantages of running an affiliate program is the ability of the company to extend its reach. With it, businesses can access customers that they would have otherwise missed out on.
Plus, it takes time to build an audience of your own. Affiliates have their own platforms and active audiences. If their business is aligned with the merchant's, they quickly become a valuable traffic source.
Since affiliates are only paid for the value they bring (typically sales), there is no cost to this added marketing once the program is up and running.
How Much Money Can You Make With Affiliate Marketing?
How much money can you actually earn with affiliate marketing?
If we look at the commission rates for some popular programs, we can get a sense of how much you can make if you were to achieve a certain number of sales.
How to make $ 1,000 in affiliate marketing earnings
For example, as an Amazon Associate, you typically earn between 4% to 8.5% commission per sale. This can vary based on the category of the item you are promoting.
If you were to take an average order value of $100 with a 5% commission, you would make $5 per sale.
To see how many sales you can get, you would need to project how much traffic comes through your site.
You must estimate a conversion rate (how many visitors lead to sales).
For instance, if you convert 1% of your visitors into sales, you will receive one sale for every 100 visitors. With our $5 commission per sale, you would need to get 20,000 visitors to make $1,000.
In this example, the commission rates are lower, so you need to get more sales to earn a good profit.
But, these types of items often convert better, meaning more people who click your link become customers.
Another Example
Let’s look at another example, specifically software as a service (SaaS) products such as web hosting, online course platforms, eCommerce platforms, or digital marketing tools.
These affiliate products will often pay more for sale. Some pay a lump sum upfront, while others offer recurring commissions.
For example, with the Bluehost affiliate program, you can earn $70 for each web hosting plan you sell, or the Constant Contact affiliate program that pays $105 per sale.
You can also review the earnings of some of the top affiliates to get a sense of how much you can make with affiliate marketing.
For instance, Pat Flynn, one of the most popular affiliate marketers, grew his affiliate marketing income to over $100,000 monthly in a few short years.
How To Succeed With Affiliate Marketing?
So, while we can see that there is a lot of potential with affiliate marketing, there are still steps you will need to take to be successful.
Here are some tips to help you be a good affiliate marketer:
Focus on targeted traffic
To get sales, you need web traffic. Not just any traffic but targeted traffic. You need your products in front of people interested in buying them.
Before you select products to promote, you should make sure there is an active market for them.
You’ll then need to plan how to reach the ideal audience.
The best way to bring traffic to your products will depend on what you’re trying to sell. For some types of products, in-depth content will be most effective. For others, you may be able to use your social profiles to bring highly qualified visitors to your products.
Choose high-selling products
Many new affiliate marketers make the mistake of trying to sell anything when they start.
Instead, you want to choose items that are related to your niche but also that sell.
If the items you promote do not sell well, you will need to bring more traffic to your content to make money. You should carefully review the best solutions in your industry to ensure you present the best products to your customers.
Look for products with high commissions
Naturally, you want to sell products that reward you well for your efforts.
With high-commission products, you can earn a solid payout for each of your sales or leads.
The most profitable commissions are recurring commissions. These not only give you a source of passive income, but the sums of money they accumulate can add up rapidly.
Affiliate Marketing FAQ
Here are answers to the most common questions beginners have about affiliate marketing.
What Are The Types of Affiliate Marketing?
There are two types of affiliate marketing.
With the first type, you promote other people’s products and earn a commission for each sale you refer.
The second type of affiliate marketing is when you create your own products and set up an affiliate marketing program where other people can earn a commission by selling your products.
When you see a description of affiliate marketing meaning, most times, it is about the first type of affiliate marketing.
What Is An Affiliate Marketer?
An affiliate marketer is a person who promotes someone else’s products in exchange for a commission.
They are often a content producer that has an audience that they can use to share the company’s products.
What Is An Affiliate Merchant?
An affiliate merchant engages in the second type of affiliate marketing. They create an affiliate program along with their own products to be marketed in the program.
They then find affiliates to join the program and begin promoting their items.
When setting up an affiliate program, the merchant needs to implement a sales tracking system and a way to monitor affiliate results and commission payouts.
What Are Affiliate Marketing Programs?
Affiliate marketing programs are the in-house systems used by merchants to run and manage their affiliate marketing strategy.
The foundation of any affiliate marketing program is the arrangement between the merchant and its affiliate.
In the arrangement, affiliate merchants and marketers come to terms with the specific details of their working relationship.
This includes what qualifies for commissions, how commissions are paid, how the affiliate is allowed to promote the products, and more.
The agreement's specifics are often determined by how many new customers the affiliate can bring to the business.
If the affiliate has a larger audience and can consistently drive more sales, the affiliate merchant may offer higher commissions.
Affiliate Program Examples
Amazon Associates is one of the most popular affiliate programs. As an Amazon affiliate, you get to promote the massive amount of products available in the Amazon catalog.
To enroll in the program, you need to have a qualifying website or mobile app.
Affiliates often use their websites to write dedicated product reviews or comparison roundups in which they break down multiple affiliate products.
Affiliate Marketing Commissions
Affiliate commissions are a key component of any affiliate program. They are the amount of money that you earn from marketing the merchant’s products.
Your exact commissions vary depending on the specific products that you promote.
The lower end for commission rates is around 5% of the sales price. These low percentages are often part of programs focused on physical products where purchases are much more frequent.
Some affiliate marketing programs pay a flat dollar amount instead of a percentage.
There are several types of commission models used by affiliate programs. These determine what actions earn a commission.
Per sale: With the Cost-per-sale (CPS) commission model, you receive a commission for each sale that comes from your affiliate link. This is the most common type of affiliate commission model.
When you promote this type of affiliate program, it is important to select products that convert well. Otherwise, you could generate consistent traffic but not have any revenue to show for it.
Per lead: Cost-per-lead (CPL) is a commission model in which you receive payment for every lead you bring to the business.
These leads could be someone who subscribes to an email newsletter or enrolls in a free trial for a product.
Your commission rates in a CPL program will typically be lower than those in a CPS program. But, it can be a good way to start making income as you will attract leads before sales.
CPS and CPL affiliate models usually follow a once-off payment model. This means you receive a single commission for the sale and do not earn any residual revenue.
Per click: Some affiliate programs use a cost-per-click (CPC) commission model. With this type of commission, you are paid each time someone clicks on one of your links to go to the merchant’s site.
Because clicks are far more common than leads or sales, the average payout is much lower.
This can still be an effective model for making money with affiliate marketing. You won’t need to worry as much about closing the deal, simply getting enough interest in the items to get a solid amount of clicks.
Recurring commissions: Recurring commissions pay affiliate ongoing commissions over time. They are often part of subscription products where the customer is repeatedly billed.
For example, a software product with a monthly membership fee. With this model, the affiliate continues earning income over time as long as the customer keeps their subscription active.
What Are Affiliate Networks?
Affiliate networks serve as intermediaries between affiliate merchants and affiliates.
Networks will consolidate and manage multiple affiliate programs to benefit both affiliates and merchants.
When a merchant joins an affiliate network, they will provide the details for the program, and the network will use their system and tools to get the program set up.
The affiliate program is then available to affiliates that sign up for the network. Affiliate programs within a network can require approval. Or they can grant open access to anyone that is part of the network.
Networks can be an effective tool for affiliates looking to partner with several different merchants. With a network, you get a single place to track and monitor your campaigns without having to switch back and forth between different accounts.
Some of the largest affiliate networks include Shareasale, CJ, Rakuten, and Impact. These have hundreds of thousands of merchants and an extensive selection of affiliate products to promote.
While these networks offer tons of products, keep in mind that not all products will be worth promoting.
You’ll want to narrow your focus to a specific niche. And then the best products within that niche.
Conclusion
Affiliate marketing is an effective way to start making money online.
It won’t make you rich overnight. But if you find the right programs to join and take time to grow your audience, you can eventually build a consistent income stream.
