The whole How to Start a Business Online series is built on the topic of a blog that utilizes affiliate marketing because that topic had the highest number of votes in an email survey of the email list subscribers.
I felt it important that there’s also a post on the definition of affiliate marketing and what it’s all about.
Affiliate marketing is one of those keywords that you hear often, but may not really understand. A vast majority of social media influencers have made affiliate marketing a significant part of their income.
So, what is affiliate marketing, and how does it work? Let’s find out.
Defining Affiliate Marketing
Affiliate marketing is a marketing and income generating strategy where brands use affiliates to promote their products through affiliate links.
Affiliate marketing involves three parties in the whole process.
- The Brand: Also known as the merchant, this is the individual or company that actually creates the product to be sold. It could be a Fortune 500 company with their millions of products or a local author with one book in her portfolio. An example of a Brand is Amazon.
- The Affiliate: Better known as the affiliate marketer, this could be an individual or an organization that will be doing the affiliate marketing. Affiliate marketers are the ones who sell the merchant’s products. This blog is an example of an affiliate.
- The Customer: This income channel cannot be complete without the most important piece of the puzzle, the customer – the one who actually buys the products because they need or want it.
Depending on the number of sales made through affiliate links, affiliates are paid a commission as a fixed amount or a percentage of a sale. But not all affiliate commissions require a sale too.
Here’s an example of an Amazon Affiliate promotion for their Amazon Baby Registry and doesn’t require a purchase:
Clicking that banner ad will give take you to a page to sign up for a Baby Registry. After you sign up, I will receive $3. You haven’t paid anything, but I receive $3 from Amazon by promoting their Baby Registry service.
Try it out 🙂
Affiliate Marketing from a Brand’s Point of View
If I’m an Affiliate, why am I looking at this from a Brand’s point of view?
Because it’s important to understand what brands look for in affiliates and why they’d want to utilize affiliate marketing. The more you can step into the shoes of the brands, the better you’ll be able to increase your own affiliate income revenue.
Why would a Brand want to utilize and pay Affiliates to promote products and services?
Well, there are a lot of good reasons for that:
- Affiliate marketing performance is easily measurable. Unlike other marketing strategies, where it becomes hard to know if they are working or not, affiliate marketing’s performance is straightforward. The number of sales or accomplished goals like free trials made from a specific affiliate link give concrete metrics to Brands and Affiliates.
Brands know whether or not an Affiliate and his audience are right for their brand’s product or service. On the flip side, Affiliates know whether or not their audience likes a particular brand’s product or service. Affiliates should always be looking to offer products and services that will be useful to their audiences.
- Affiliate marketing allows brands to expand their audience reach significantly. Affiliates could belong to a variety of backgrounds and platforms. This means the audience they bring is also diverse and undoubtedly large in numbers.
- The strategy could also be used to improve brand reputation. When you partner with affiliates who have a great reputation in their niche, it also helps the brand’s reputation, because support is coming from the affiliate.
- Lastly, affiliate marketing is extremely cost-effective to market their products and services. Most marketing strategies involve investing money first and then waiting for the results. In many cases, the returns are only a fraction of the investment. However, brands only pay after the sale has been made. Unlike other marketing strategies, affiliate marketing doesn’t require the brand to build a whole marketing campaign from scratch.
Affiliate Marketing Process
Affiliate marketing always begins with a brand’s product or service. If the product or service is of low quality, it won’t sell. So brands do need to first ensure that their product or service is high quality.
Then, brands need to think about the product or service they want to sell via affiliate strategy. It’s best to focus on individual products for affiliates, because the full product line of a brand may not work for all the individual affiliates.
Affiliates could be anyone – from a popular Influencer to a blogger in the brand’s niche. Affiliate audiences should have crossover with the brand’s target audience. Affiliates should also have enough traffic to help a brand increase sales.
Here’s a generalized affiliate marketing process:
- The affiliate promotes the brand’s product on the affiliate’s blog. An affiliate link is inserted in a blog article, page or elsewhere on the site.
- When a customer clicks on an affiliate link, they are taken to the brand’s website. The customer can read more about the product and decide if they want to make a purchase.
- If the customer purchases, the sale is credited to the affiliate’s profile.
- The affiliate is then paid a commission for the sale that was made.
That’s pretty much it. There are various types of affiliate marketing, but this is the basic, general process that will help you generate passive income.
Affiliate marketing is mutually beneficial to brands and affiliates. Brands have additional marketing channels that reach targeted audiences. Affiliates receive the benefit of potential income if their audiences purchase or try a brand’s products or services.
If you haven’t noticed yet, I have affiliate links as well. At the top of all my posts, including this one, there’s an affiliate disclaimer that says:
Disclaimer: There may be affiliate links, which means I’ll receive a commission that helps the site continue providing great value to you, if you sign up for a free trial or purchase through the links, but there is no extra cost to you.
It’s a win-win for you and me. You might get free trials and/or discounts, but definitely will not incur extra costs. All the information I provide in the blog posts are free to you as well. If you find certain products or services useful, I may get commissions and that’s part of where my income comes from. You’ll also notice ads too, so if you click on any of the ads, I may also get paid by Google Adsense, because you clicked on ads. So it all helps in generating income to continue providing content to you!
Here’s another example of Amazon Affiliate link to a product that if you purchase, Amazon will pay me a commission, but there’s no extra cost to you. You don’t need to actually purchase, but you can click through the link and open up a new browser window to Amazon to search for the product. You’ll see that the price is the same. The only difference is the url as there’s a tracking id in the url that will credit the affiliate, which is my blog in this case.