What is Affiliate Marketing and How does it work?
Believe it or not, one of the questions I get (via comments on my blog) the MOST is this:
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What is Affiliate Marketing?
So, I figured I’d share a blog post on this topic with the world! 🙂
Before we get started, let’s examine the dictionary definition of the word ‘affiliate’
- Verb – To officially attach a person or group to an organization.
- Noun – A person or an entity that is officially attached to a larger organization.
In marketing terms, an affiliate is simply a person who helps a business to drive sales in exchange for a commission.
Here’s an Example:
John is a very good doctor, and he’s discovered an easy way to prevent and cure acne.
Dr. John has written a book about it and aspires to sell it online.
He can definitely publish it offline too but that would involve approaching several publishing houses and trying to work out a deal with them.
Publishers can be picky and even if Dr. John can get a renowned publishing company to print, market and distribute his book, he will have to share a very significant percentage of the profits.
Moreover, people all around the world are gravitating towards e-books. Paper books are getting rarer by the day. Publishing an ebook on the web is ridiculously easy – it takes just a few minutes to set everything up. By choosing to publish online, Dr John can LITERALLY reach billions of people from all corners of the globe.
However, John has a problem. He spends most of his time attending to patients, giving lectures in universities, coaching interns, conducting research and so on. He has neither the expertise nor the time to market his book on the internet.
Dr. John has an idea!
He contacts two of his friends, Sandra and David.
David has a popular blog about home remedies and Sandra has a Youtube channel about beauty, makeup tips and so on.
John works out a deal with Sandra and David – they will recommend his book to their followers in exchange for a fixed commission (let’s say 50%). In short, Dr John now has two ‘affiliate’ partners who help him to drive a ton of QUALITY sales to his product!
By doing this John can focus on his patients, research and finances while his two affiliate marketers handle the sales. He just has to create an affiliate link for both of them and set up payment methods.
This is a bit technical but can be handled easily and quickly:
- The affiliate link helps to track sales – it is an important aspect of this business model.
- The affiliate is paid a commission only when people buy using their affiliate link.
There are various conditions that are agreed upon by both parties. In some cases, commissions are paid out only when people buy on the same or next day after clicking the affiliate link. This is getting more rare though, and more than often, the time window is quite big and may extend up to a month or even lifetime!
Now, let’s add another character to our story – Katie, a college student. Kate had an acne problem and Dr John’s book helped her to get rid of it easily and safely. She now has smooth, glowing skin and her confidence is sky high!
Like most students, Katie is short on cash most of the time.
She can take up odd jobs here and there but the pay is minimum wage and the work is hard. It distracts her from studies.
Katie needs a good source of income that is easy to manage and will not take up lots of time.
So why not recommend Dr John’s book to others and make some quick and legitimate cash in the process?
By recommending a genuinely good product, Katie can build up a reputation as a reviewer.
Katie quickly sets up a simple website and contacts Dr John. He is glad that his methods have worked for her and agrees to make her his affiliate partner. Katie gets her affiliate link and runs a couple of campaigns on Instagram and Facebook featuring her before-after photos and Dr John’s book.
Her posts attract a lot of attention as many people suffer from acne and are amazed by her results. They get excited by seeing her results and buy the book.
Dr. John makes money, Katie makes money, people get rid of the acne and everybody is happy!
Overtime, Dr John gains many affiliate partners in several countries. He creates many more books on various medical topics. His books get translated to several languages and generate wealth for all his affiliates.
It is not uncommon for affiliate marketers to earn hundreds of thousands of dollars in passive income.
Ebooks, video courses and other digital products are relatively less expensive to create and can be ‘shipped’ to any part of the world within seconds. There is no need for a physical warehouse as there basically is no inventory. Hence, the margins on these products are high – often up to 50, 60 or even 70%!
However, affiliate marketing is not limited to digital products only. It can be a lucrative stream of income even for conventional products and services.
If you’re interested in a particular niche but don’t have the in-depth knowledge or resources that are required to create a brand new product from scratch, then affiliate marketing is perhaps your only real option for making money online.
Many marketers (such as myself) make full time incomes through affiliate marketing – just by working for a few hours per week!
You can try the product out for yourself and test the claims they make. You only recommend them if you feel that they are truly good. If you manage to build a decent fan following, companies will approach you themselves to review their products. Many famous reviewers also charge a one time ‘review’ or ‘production’ fee.
If you already have many followers on Instagram, Youtube or other social media channels, you can make an absolute killing with affiliate marketing. Many bloggers and internet marketers with a long list of subscribers earn six (even seven) figures through affiliate marketing alone.
IMPORTANT: Commissions are based on a pay-per-performance basis (not pay-per-click).
- For example: In Adsense, the publisher gets paid even if people simply click the link.
- In affiliate marketing, the affiliate gets a commission only if the person performs a desired action after clicking the link.
- The desired action can be buying the product, filling up a contact form (lead generation), taking a survey etc.
(Watch this video from Joel Comm for a quick VIDEO overview of Affiliate Marketing!)
5 things to consider before you start:
1) Niche: You have to pick a niche that is popular/cool. Also, you have to be at least moderately interested in the niche. The higher your interest level, the more chances of success you have. You can never blog/vlog with authority on subjects that you don’t like or know nothing about.
True Story: I did a blog once on Chicken Farming, believe it or not this is a huge niche WITH popular affiliate products that pay nicely. I could not succeed with it for the LIFE of me, because frankyl – it bored the hell out of me and I got bored and hungry for KFC every time I tried to work on it! LOL
Sure, you can find other people to create the content for you. But, some niches require at least some degree of involvement.
For example: Say your niche is Game Of Thrones merchandise (mugs, t-shirts etc). You cannot really dominate your niche if you know nothing about GOT.
Don’t be intimidated by highly competitive niches. They offer more potential for earning. Some of my BIGGEST paydays have come in the most popular & populared niches believe it or not!
2) Create information that people like or are searching for: Content will always remain king. The way how it is delivered might change and you have to evolve to stay relevant. If you can create unique, high quality content that people like, 90% of the battle is done.
3) Select good products to promote: Your reputation depends on the products/services that you recommend.
4) Clickbank, Commission Junction and Amazon are some of the most prolific affiliate marketplaces. These are good for affiliate marketers as well as product creators. You can learn all about how to sell on Amazon with Amazing.com’s training. Also, check out Clickbank University 2.0 for CB training
5) Get the technical parts right. Most established business make it very easy for you to generate your affiliate link and set up payment procedures. However, oftenyou may find yourself working with offline businesses or companies who have not explored this model of marketing before. In such cases, both parties must invest in hiring a professional coder.
Affiliate marketing works very well with Google Adsense (it does not violate Google’s terms of service). Hence you can integrate it into your business even if you have other modes of revenue.
You don’t need to have a website to be an affiliate marketer – you can use any platform to reach out to people – be it Youtube, Facebook, Instagram and so on.
Whether you’re a business, product creator or internet marketer, affiliate marketing can be a potent weapon in your arsenal.
So What Next?
You see this blog here? (The one you’re reading this article on)? I run it, and make money with it daily as an AFFILIATE for many programs that teach people, like you, how to REALLY make money online.
I try to be 100% upfront and honest about everything I do on it.
Feel free to google me, Jeff Lenney, you’ll find tons of good things about me, and the success people have had following what I teach!
Anyways, There’s an amazing program I know of, it’s 100% legit and you can use it to jump start your career as an Affiliate Marketer.
This is high quality training to help you create your own online business. It’s helped thousands of people to create their own REAL home-based income, and I fully endorse it.
I’ve known John Crestani (the man behind it) for a couple of years now, I’ve taken the training myself. I’ve seen people BRAND NEW to the internet make money with it. Are you next?