Affiliate Marketing Definition & How To Get Started
Many budding entrepreneurs are constantly looking for ways to make a passive income to supplement their main form of income. There are a number of ways that someone might look to do this, but many of the more traditional options take a sizable initial investment. Not everyone can afford to use the traditional method of making a passive income.
That’s where affiliate marketing comes into play.
But what exactly is affiliate marketing? And how can you use it to your advantage? Read on as we take a closer look at everything to do with affiliate marketing in our handy guide.
Table of Contents
- Affiliate marketing is a process where a company compensates a third-party publisher to generate traffic. This is done via advertising.
- The main aim is to create leads for the company’s affiliate product or service.
- Companies tend to pay affiliates on a per-sale basis.
- There are three main types of affiliate marketing. They are unattached, involved, and related.
What is Affiliate Marketing?
Affiliate marketing is a process where a company compensates a third-party publisher to generate traffic. This is done via advertising. The main aim is to create leads for the company’s products or services. These products can be of any type. Whether they are physical products or digital products.
Large companies such as Amazon make use of affiliate programs that allow people to promote products. This is known as the Amazon affiliates program. It lets affiliates promote any item that is sold on their platform.
How Does Affiliate Marketing Work?
The goal of affiliate marketing is to diversify the marketing of an affiliate product.
This is done by allowing a wide variety of people to market products in a way that is unique to them and agreed on by the business. Companies can benefit from this greatly, as can the affiliates promoting the products.
Affiliates can either choose products that they themselves have a history of using or something they are unattached to. They can then market them. They tend to get paid when somebody purchases the product that they’re promoting through what’s called an affiliate link.
The History of Affiliate Marketing
Businesses are constantly battling in a crowded marketplace to get their product or service seen. But in a world where people are sick of advertisements, companies have to be inventive in how they market their products.
The rise of the internet gave a new pathway for companies to reach consumers. In the current day, more and more advertisements are being published online. Consumers can access these marketing ploys through a number of different avenues. Whether this is their smartphones, their social media, or via a mobile app.
But even with all of this access to the public for marketers, there is a general rule of thumb that is to be kept in mind. This rule is that consumers don’t like being advertised to.
That’s one of the main reasons that affiliate marketing has become popular.
Most consumers have influencers in their social media feeds, or on their media apps. Many people religiously follow the posts of popular accounts. They’ll absorb everything coming from these people, and therefore companies took notice.
Companies work with affiliates on a commission basis. The affiliate talks about the product and that their audience purchases it. They will then provide a link for the consumer to follow. The consumer uses this link to purchase the recommended product. The brand successfully makes a sale and the affiliate will receive a pre-decided cut of this sale.
The Three Types of Affiliate Marketing
In 2009, a well known affiliate marketer, Pat Flynn, put affiliate marketing into three different sections:
- Unattached affiliate marketing
- Related affiliate marketing
- Involved affiliate marketing
Let’s take a closer look at each of these types.
Unattached Affiliate Marketing
This type of affiliate marketing is an advertising model. It is where the affiliate has no connection to the service or the product that they are promoting. They don’t have a particular set of related skills or expertise and aren’t considered an authority on its use. This type is generally considered the most uninvolved form. This way the affiliate isn’t held to account for the quality of what they’re promoting.
Related Affiliate Marketing
This type of marketing is the promotion of the product or service by an affiliate. It is someone who has some form of relationship with whatever they’re promoting. Whether that’s an ex-footballer promoting boots, or a chef promoting a certain brand of knives. This affiliate has enough influence within the related market to generate traffic. And they would be considered a trusted source. Though this type of marketing will also not hold the affiliate to account for the quality of the product or service.
Involved Affiliate Marketing
The final main type of affiliate marketing is involved affiliate marketing. As the name implies, this type involved a bigger connection between the product being promoted and the affiliate. The affiliate will either use or have used the product and can lend a first-hand account of the product or service. They are considered the most trustworthy source of information. However, if there is an issue with the offering, then the affiliate’s reputation can become compromised.
The Three Parties Involved In Affiliate Marketing
In most instances, there are three distinct parties directly involved in the process.
Sellers and Product Creators
These are the parties that are looking for a new, less involved way to market their product or service. You don’t have to run a major corporation to have a program, but larger programs do tend to be more notable within the market. To start an affiliate program, you can be:
- A solo entrepreneur
- A major corporation
- A vender
- A reseller
- A product’s creator
- A mid-level retailer
Affiliate programs can be helpful for businesses of any size. And they can involve any product or service.
A straightforward way to look at sellers and product creators is by considering any company running a program as a “brand.” This brand will want to market its products through affiliates, but they don’t actually have to be involved in the marketing itself.
They instead put their efforts elsewhere. Such as maintaining the relationship between themselves and the affiliate. The affiliate takes care of their marketing efforts. This helps to reduce the direct marketing costs.
The second party involved with affiliate marketing is the affiliate themselves. Affiliates tend to be individuals who market products to their own audiences on behalf of the brand. However, in some cases, affiliates may also be affiliate marketing businesses. Whole companies can be set up with the aim of getting into the affiliate marketing industry.
The straightforward definition of the affiliate’s job is to market the brand’s product in a way that creates affiliate sales. They need to make their content interesting enough that it can sell what the company has hired them to promote. If the affiliate can accomplish this and a customer buys a product, then the affiliate receives a portion of the sale. This is what is known as a commission.
An affiliate partner normally has an existing audience. This is because of their online presence and ability to create articulate content. Because of this, they would most likely have a preexisting relationship with potential customers. They use their content, and their customer relationship, to market products to people that trust their opinions.
This is perhaps the most important party related to affiliate marketing. Essentially the entire reason that affiliate marketing exists is because of consumers.
The consumer is the keystone to this entire structure. Everything that affiliate marketers do is with the consumer in mind, as they are who the business most wants to catch the attention of.
How Do Affiliate Marketers Get Paid?
Becoming an affiliate can be very lucrative. Depending on the size of the audience you’re promoting to, you can stand to make a lot of money through people purchasing the product being promoted.
In terms of payment, there is no one size fits all way for businesses to pay their affiliates. And different programs may adopt different ways to pay their affiliates.
Let’s take a look at all of the common payment possibilities for affiliate marketers.
Per Sale Payments
The most common form of paying affiliates is via a ‘per-sale agreement’. This is a payment scheme based on the number of sales that an affiliate can influence.
A business will approach an affiliate to sell its product. The affiliate will then reach out to their audience and pitch the product to them. If the pitch is convincing enough, the affiliate’s audience will purchase the item using the affiliate’s link. Whenever a sale is made, the affiliate receives a pre-agreed portion of the sale.
This method of payment is reliant on just how persuasive an affiliate can be. They have to make the case that the product is worth purchasing. If they have a good relationship with their audience, it’s likely that they’ll trust the affiliate. This makes both the brand and the affiliate money.
Per Lead Payments
In the business world, leads can be just as valuable as a sale. Because of this, one of the more complex affiliate payment systems is paying per lead. Now, this isn’t nearly as straightforward as being paid per sale. Instead of convincing a consumer to purchase a product, they have to convince them to complete a different action. This could be either:
- Filling out a contact form
- Signing up to try a product sample
- Subscribing to a newsletter or an email list
- Downloading proprietary software or digital files
Again, this has to be done using trackable means. This can be using an affiliate link or using a specific code. This lets the brand track the progress of the affiliate’s marketing campaign.
This may seem like a relatively simple endeavor. But in reality, it’s actually an incredibly difficult thing to do. Affiliates have to convince consumers to provide their personal information and/or details to a brand. If the brand is smaller and relatively unknown, consumers are going to be less likely to do this as there isn’t a proven track record of trust.
This difficulty in forging trust with potential consumers is why smaller businesses focus on using affiliate marketers. They can use the level of trust that the affiliate has built with their audience for their own benefit. Therefore bypassing the unknown status of the brand.
Per Click Payments
In the modern world, businesses want to get as much exposure to their target audience as possible. This is because as a company’s exposure increases, so does its reputation. And the higher the reputation, the better the income.
Companies that have a good reputation within their target audience are given higher results in search engines. This can help to build their presence. Therefore increasing their exposure even further. The higher a company ranks on search engines, the more their company will show up to people online.
This payment tactic is probably the easiest of all three. Affiliates have to convince their consumers that the brand’s website has something of value to them. Thankfully, this isn’t as difficult as asking their followers to purchase a product. And it is certainly easier than asking them to give out their information.
People are likely to visit a website that’s recommended to them. This in turn increases the amount of exposure that a business has and can even lead to sales. But while it can happen, people tend to be less inclined to spend their money or give out their information just because they’ve visited a website.
Common Affiliate Marketing Channels
Any business that is running an affiliate program would get a high level of interest. But in order to make the right choice of who to promote your products, it’s vital to understand all of the possible channels. Let’s take a look at the various different avenues that affiliate marketing can go down.
Social Media Influencers
When it comes to an affiliate marketing strategy, social media influencers are the most popular channel to focus on. Good social media influencers have built up their online presence and tend to have a large following. They carry this influence thanks to the large number of people following them, hence the name.
Social media influencers benefit from affiliate marketing just as much as brands do. They have a large number of followers. And some even tend to be considered a brand themselves.
When a company and an influencer have overlapping brand identities, they can work together seamlessly. Influencers can easily market products directly to consumers via posts.
One of the most popular social media platforms for influencers and affiliates is Instagram. Because it is purely visual, influencers can post photos of products that will be seen by a large number of people. Furthermore, a series of photos and videos can be posted that serve as a product review or promotions. Instagram is a very popular option for influencers and brands alike.
Blogs have been a large part of media consumption on the internet for decades. Many of them are well-written, and they rank organically in search engine results via search engine optimization (SEO) tactics. This makes them a great candidate for affiliate marketing. Rather than being presented as an advertisement, they appear as a source of information. They may appear on review sites, or as an answer to a question. Either way, if your affiliated products appear in the blog, you can expect an increase in sales.
Bloggers focus on selling a brand’s products in a compelling way. This includes writing about them honestly and comparing them to other available products. When this is done well, the blogger is rewarded for the increase in sales or website traffic. Brands should aim to work with well-known blogs as often as possible.
An Email List
Email marketing is often considered an outdated form of marketing. But when it comes to affiliate marketing, it can actually still work very well.
Many influential websites and individuals have large email subscriber lists. When a brand pairs with these parties, they gain access to direct email marketing. This can be done without having an email address list of your own.
An email referral link works well because they feel personal. This is because any information that comes directly to a consumer’s inbox with a personalized greeting feels more personal.
They are more likely to listen to this “exclusive” information that comes from a person they respect. Using email newsletters is a highly successful way to conduct affiliate marketing that many businesses overlook.
The Advantages of Affiliate Marketing for Businesses
There are a number of reasons that brands should be using affiliate marketing in today’s market. It’s almost entirely advantageous, with very few drawbacks. Below you’ll find some of the compelling reasons that your brand should be utilizing affiliate marketing programs.
Affiliate marketing costs almost nothing to a business. This is especially true when compared to traditional marketing which can rack up quite a price.
When a company starts an affiliate marketing program, they’re allowing someone else to do the work for them. Affiliates are incentivized to create a stellar piece of content to sell the product or service for the company. If their pitch goes well with their audience, then they’ll make money. If it doesn’t, then the company has invested nothing into the marketing. This means they suffer no losses. Successful affiliate marketing means spending next to nothing on a product’s marketing campaign.
Reaching a New Audience
The entire point of affiliate marketing is to reach out to new audiences that have a high chance of buying your product. By using affiliate marketing, you’re enlisting the help of individuals who can connect you with that audience.
Most affiliate marketers are going to select to promote products that their followers will relate to. This means that they’re going to be more likely to use the product themselves.
Affiliate Marketing Works with All Types of Products
Developing a marketing campaign can be tricky. Not all forms of marketing work for all products. This, for the most part, is true. However, affiliate marketing is the exception.
An affiliate partnership works regardless of what your business sells. It puts the product into the hands of influential figures within the niche community. This allows it to reach the right audience, where other forms of marketing may not. If you’re a business, you want to work with the people who are influencing your ideal customers. Affiliate marketing lets you do that by creating affiliate partners.
The Disadvantages of Affiliate Marketing for Businesses
While there are very few drawbacks to affiliate marketing for business, it’s still important to understand them. And to perhaps even avoid some of them.
Efforts May Be Wasted
Not all affiliate marketing programs are successful.
This means that the effort you put into a program may not end up paying off. This can mean a waste of both time and effort that could have been put into other tactics. Marketing is crucial for a business, so having an unsuccessful program can make or break your income.
If you’re starting an affiliate program, you have to use other marketing tactics, too. This allows you to continue to bring in revenue, even if your affiliates aren’t finding the success that you may have hoped for.
Affiliate Marketing Can Damage Your Reputation
An affiliate marketing campaign relies on working with people in the community. Working with online influencers can even bring a global set of eyes to your product or service.
However, not all content creators are well-received. While these people can bring a large number of people to your business, they can also deter others. Some affiliates may end up being polarizing.
For example, if there is a social network influencer with a large number of followers that holds a certain controversial worldview, this could clash with a large number of people. So even though you’re reaching a large audience, you may well be cutting off an equally large, if not larger section of people.
Affiliates can Take Advantage of the Program
Management of an affiliate program is a must. You have to carefully monitor all of the transactions, conversions, and leads that come in. If you aren’t doing that, you may be taken advantage of.
Depending on the type of program you’re running, that can drive your affiliate commission through the roof. You have to watch things closely to make sure that your affiliates are acting in an honest manner.
The Advantages of Affiliate Marketing for Affiliates
There are a number of advantages to becoming an affiliate. Let’s take a closer look at some of the most common advantages of affiliate marketing.
If you’re part of an affiliate network, you’re going to be able to bring in some affiliate marketing income. This is especially true if you’re successful in your marketing endeavors. Unlike taking on sponsorship from a company and receiving a single payment, affiliate marketing continues to pay you. This is because you’ve entered into an agreement based on commission and quota.
Though it’s not an easy job. You still have to put in a significant amount of work to earn this passive income.
Content that you create has to be convincing, and it has to stand the test of time. If it can do both of these things, then you’ll be able to bring in money passively as long as people use your links.
You Aren’t Responsible for the Product
When you’re representing a company for affiliate marketing purposes, you aren’t responsible for the product. The company is responsible for working with the customers of their products. It’s your responsibility to turn a potential customer into an active customer. That being said, it’s important to be transparent, and only promote an affiliate product you can support.
Low Startup Costs
Affiliate marketing can become a full-time gig. The best part is that it costs very little to become a “professional” affiliate marketer. For the most part, you just need time and good content. Though you may be doing something like making video content. If this is the case, you may want to invest in recording equipment that will create high-quality videos.
You Get Out What You Put In
This is perhaps the biggest draw to becoming an affiliate marketer. If you put in quality work, you’re likely going to have a good conversion rate. This means you’re likely to get great compensation. Other jobs that are hourly aren’t going to pay you more based on the quality of work. This can be a real downer for perfectionists. Affiliate marketing is going to produce results based on quality. The more effort you put into your marketing and your content, the more you’ll end up making.
Flexible and Convenient
Many businesses that are looking for affiliate marketing don’t have a minimum requirement for affiliates. There may be quotas that they want you to fill, but most will just need you to actively promote their products. This means that you make your own schedule and that you choose what you work on.
The Disadvantages of Affiliate Marketing for Affiliates
With all good must come some bad. Becoming an affiliate marketer isn’t for everyone. There are some drawbacks to joining an affiliate platform. Let’s take a look at some of these disadvantages.
Affiliate Income Isn’t Guaranteed
Becoming an affiliate doesn’t mean that you’re definitely going to make a passive income. If your audience isn’t willing to invest in what you’re promoting, it can be hard to make money. This requires thinking about your audience. Are they willing to buy products that you promote? Is your niche something that you can market for another company successfully? You can’t sign up expecting to make money. Affiliate marketing is not an hourly job.
You Have to Have Patience
If you’re someone who lacks patience, then affiliate marketing isn’t for you. When you’re first starting out, affiliate income is going to be limited. You might not make a large amount of money during your first month. In fact, there is always the chance that you might not make anything at all.
The secret to becoming a successful affiliate is being patient and continuing to build your portfolio. The more products that you can promote, the higher your possible income becomes. That being said, it can take a long time to create meaningful content that will convince your audience. You cannot expect to quit your day job immediately upon signing up to be an affiliate.
You Have No Control Over the Program
When you sign up to be an affiliate with any company, you’re required to follow their rules. If you don’t, then you won’t make any money from the program. Most companies with an affiliate marketing program have an affiliate manager. This is the person that oversees the program and will reach out to you if you aren’t following the rules. You must present the product in the way that the program requires you to. If this isn’t something you want to do, then you shouldn’t consider becoming an affiliate marketer.
Affiliate marketing is a symbiotic marketing relationship. It can benefit both businesses and affiliates.
Businesses can reach into affiliate marketing networks. Here they can find renowned affiliate marketer professionals to market their products. This helps them to reach their ideal consumers directly. And they spend less effort on marketing, which can take a huge amount of time.
For affiliates, they can make a good amount of money with affiliate marketing. This is if they can convince their audiences to buy affiliate marketing products with affiliate campaigns. Then they are able to generate income. For example, a well known affiliate marketer, Ryan Robinson, made over $19,000 in commissions in one year.
Affiliate marketing is highly effective and can be seen in all modern forms of media.
FAQs About Affiliate Marketing
How Do I Become an Affiliate Marketer?
There are 6 steps to becoming an affiliate marketer:
- Choose a niche
- Evaluate the market demand
- Analyze the competition
- Research affiliate programs
- Choose your marketing methods
- Create and publish engaging content
Why Is Affiliate Marketing So Hard?
Getting into affiliate marketing is no easy feat. It requires determination and effort, as well as a lot of patience. The reason that it is considered so hard is because it is an attractive way for people to gain a decent income. If you can become a skilled affiliate marketer, the rewards can be very handsome.
What Type of Content Is Best for Affiliate Marketing?
There isn’t a straightforward answer to this question. Generally speaking, blogs, videos, and social media tend to be the most popular ways to create content.
How Do Affiliate Marketers Make Money?
Affiliate marketers make money on commission. When the content they produce generates a sale, the brand gives them a cut of the money.
Is Affiliate Marketing Ethical?
Affiliate marketing is legally considered ethical. Most affiliate marketers will either have a disclaimer or make it otherwise evident that this is a paid advertisement. Marketing in secrecy is considered unethical, and illegal, though.
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