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What Is Affiliate Marketing and How Does It Work?

What is affiliate marketing
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If you’re considering ways to monetise your blog or website, then you’ve probably come across the term affiliate marketing. There are plenty of opportunities to generate a sizeable passive income from affiliate marketing. The industry is worth over $12 billion, with room for more growth! But what is affiliate marketing? How does affiliate marketing work? And, more importantly, is it worth becoming an affiliate marketer in 2021? Stay tuned, this is a long read that covers everything you need to know! To start, let’s take a look at what affiliate marketing is.

 

What Is Affiliate Marketing?

Affiliate marketing is an advertising model where affiliates promote the product or service of a merchant in return for a commission. This is usually based on the number of sales or the increase in traffic to the merchant’s site that the affiliate marketer generates.

So, affiliates aren’t the ones producing the product or delivering the service. Instead, they connect the merchant with the customer by promoting a product or service to their audience. Let’s take a closer look at the process.

 

How Does Affiliate Marketing Work?

Affiliate marketing usually starts with a content creator and a product or service that they like. The content creator then may promote that product, for example a Hosting service, and they promote it using a unique link. This link has an ID or reference number attached to it. When someone clicks on that link and buys something through it, the provider then tracks the link back to the content creator.

When they do this, they can then pay them the commission they owe, which is usually a portion of the sale. The unique tracking link allows for seamless integration on the part of the content creator, and an automated system for the merchant. They might even use an automated service to monitor sales and automatically pay their affiliates when they direct a customer to their products.

Using Affiliate Marketplaces

Affiliate marketers can also look to online marketplaces like ClickBank to source products to market. Merchants list their products and services on these websites and affiliates can request a link for the ones they want to promote on their website or blog. This link is unique to you as an affiliate.

The link takes customers to the merchant’s original product page, but it’s attached to your unique ID. This allows the merchant to track how much traffic you’ve driven to their website and how much commission to pay you, just from one simple link! Affiliates help merchants find customers, customers buy products from merchants, and the affiliates make a commission. It’s a win-win-win.

If you’re using an affiliate site like ClickBank, you receive payments from them rather than the merchant. You can choose to receive payments once a week or biweekly, through bank transfers, direct deposits, or checks. There’s no direct interaction between the affiliate and the merchant, as the affiliate site moderates the transaction. This makes the process easier, faster, and safer!

But even with affiliate sites, building up a profitable affiliate marketing strategy can take some time. So, is it worth it?

 

Is Affiliate Marketing Worth It?

Affiliate marketing is worth it if you’re willing to put in the effort. Affiliate marketing is not a short-term side hustle or a get-rich-quick scheme. It’s a business model you need to build up over time to generate a decent passive income from it.

It’s possible to make a lot of money from affiliate marketing. Average commission rates range between 5%-30%, and these can be significantly higher if the product is more expensive. This range of commission rates is just the beginning. For some niche products like website hosting, VPNs, and finance products, the sale commission affiliates receive can be huge.

Is Affiliate Marketing Illegal?

Affiliate marketing is not illegal. As long as the products and services that you promote are legal, and you don’t engage in fraud yourself, affiliate marketing is a legal way to make money.

An Example of Affiliate Marketing

Let’s look at Bluehost’s affiliate program. Although their web hosting prices for customers start at $2.95/month, Bluehost pays affiliates $65+ per sale. If you do the maths, Bluehost pays affiliates more than what they make from the customer in their first year. Their strategy is that they will make a return on their investment if customers continue using their hosting service beyond the first 12 months, when their prices increase.

That might sound impressive, but how much do affiliate marketers really make?

 

How Much Do Affiliate Marketers Make?

Affiliate marketing income depends heavily on website traffic and reader engagement. Essentially, it comes down to how many people buy the product through your referral link.

On average, mid-tier affiliate marketers make between $1,000 – 10,000 a month. It’s not unusual for those new to the affiliate marketing game to make nothing or close to nothing when they first start, since they are still building up their audience and traffic to their website.

However, top affiliate marketers can easily make more than $100,000 a month! But keep in mind it might have taken them years, or even decades, to build up to this level of passive income.

Affiliate Marketing Income Examples

One of the best examples of a top affiliate marketer is Pat Flynn, founder of the business and blog, Smart Passive Income (SPI). His blog guides people who want to build an online business, especially one that generates passive income.

Pat claims that he has made over $3 million in affiliate marketing revenue alone, and consistently brings in over $100,000 a month! However, this million-dollar passive income business didn’t magically appear out of thin air. Pat worked hard to develop his website and build up to this level of affiliate marketing since starting the blog in 2008.

Another great example is fellow blogger Neil Patel. His website neilpatel.com helps people improve their SEO strategy. Neil Patel owns multiple million-dollar blogs, and a large portion of his revenue comes from affiliate marketing. According to Neil, one of his blogs brought in $380,000 in a single month!

If these people can make $1,000, $10,000, or even more than $100,000 a month, you can definitely make some money with affiliate marketing. But you’ll need to put in a lot of time, and possibly some upfront investment. Let’s find out more about becoming an affiliate marketer.

 

How to Become an Affiliate Marketer

Before you jump straight into affiliate marketing, there is one important thing you need to have: A target audience.

This target audience can be a hobby group, your subscriber base, or readers of your blog. Ideally, you have a sizeable audience with a good level of engagement. Your target audience determines which products you can market and how many sales you can drive. After all, the commission you receive comes from their purchases.

If you don’t have a target audience, we strongly suggest that you build one first. Affiliate marketing is a passive income solution that takes time to scale. Most successful affiliate marketers start with a business idea that helps people, and they slowly use this to build up their subscriber base. Once they grow their business, affiliate marketing becomes a viable way to generate some income. But you can also use the wrong strategy to become an affiliate marketer.

 

How Not to Become an Affiliate Marketer

Some affiliate marketers spam group chats, hoping to convert a sale or two, rather than organically building a target audience. If you take this approach, you’ll undoubtedly fail, and affiliate marketing sites can ban you from using them again. So, we strongly suggest that you don’t take this route.

If you don’t have a sizeable audience yet, focus on developing your business for now. Put your energy into creating value for your readers, users or customers. Whether it’s a blog you’re building or a simple affiliate site, quality is key. Quality content brings in quality traffic, which in turn creates more opportunities for making money through affiliate marketing. For those who have already established a target audience, here’s how you can become an affiliate marketer.

 

How to Start Affiliate Marketing in 9 steps

1. Optimise Your Subscriber Base

The first step in your affiliate marketing journey is to review what you already have in terms of a subscriber base. Take a close look at your target audience, whether they are subscribers to your blog, followers of your social media page, or even part of your Facebook group.

Then identify the right niche for your target audience. Find a common topic that lots of people have an interest in. Usually, this common interest is the very reason they’re your subscribers in the first place. For example, it’s easy to identify the niche of sites like WPBeginner. As hinted from their name, they help people starting a website, especially beginners, and offer resources on how to use WordPress. So, their niche is WordPress.

Finally, optimising your subscriber base also means understanding them. You should try to learn more about what your audience wants and needs. This helps you identify your ideal niche and brings you closer to the goal of making passive income from affiliate marketing.

 

2. Identify Your Marketing Strategy

The main idea of affiliate marketing is to convince subscribers to buy products from merchants through your link. So, you’ll need a marketing strategy to convert traffic into clicks.

Your marketing strategy is the technique you use to prompt your audience to act. When it comes to affiliate marketing, you want your audience to click on the affiliate link and buy a product. There are lots of ways to approach digital marketing, including through content marketing, email marketing, video marketing, and PPC ads.

Choose One That Suits Your Audience

Choose a marketing strategy to suit your platform and audience. Let’s say your main audience is made up of followers of your photography page on social media. The best marketing strategy for this might be to focus on social media marketing and incorporate video marketing to complement your photography.

Many experienced marketers don’t stick to just one strategy, but instead they play around with many. Take your time to figure out which works best. It may take some trial and error before you land on the winning combination.

 

3. Pick a Type of Affiliate Marketing

Just like there are different types of digital marketing, there are also subcategories of affiliate marketing. Below are a few types of affiliate marketing.

Unrelated Affiliate Marketing

Unrelated affiliate marketing is a strategy where you promote any product or service, even those completely unrelated to your website or niche. With unrelated affiliate marketing, merchants can offer high commission rates, but you may not have the expertise, or the right audience, to market their product effectively.

We don’t recommend choosing this type of affiliate marketing. Your target audience won’t appreciate it and it could ultimately cost you website traffic. Think about it from your audience’s perspective. Who wants to constantly see affiliate links for products they have zero interest in or need for?

Related Affiliate Marketing

Related affiliate marketing instead focuses on picking the right product for your niche. You choose products based on your target audience and what you think they’ll like best. This is the most common type of affiliate marketing.

The main advantage of related affiliate marketing is that it prioritises user experience. You’re adding value to their experience on your website by linking to products your audience genuinely wants or needs, rather than spamming them with links to irrelevant products.

Ambassador Affiliate Marketing

Ambassador affiliate marketing is a way of promoting a specific brand that you’ve agreed to be associated with. This approach is uncommon for newbie affiliates as it requires an established audience. It’s also very common in the lifestyle niche and with influencers on social media.

If a company offers to partner up with you, this is great news! You can establish a deeper connection with a company, and as an ambassador, you’re not ‘just another affiliate’ in the industry. This means you can get better deals for your subscribers and higher commissions for yourself. However, you will need to have a large audience already, which rules this out for most beginners.

 

4. Find Product Vendors

Now that you’ve done all the planning, it’s time to start sourcing products to market. To do this, you need to find merchants looking for affiliates. There are a few main ways you can do this. You can use affiliate marketing networks like ClickBank noted earlier, ideal for those trying to promote physical products, or you can look to the products and services you already use. If you’re a content creator, you probably use at least one of the following:

  • Web hosting provider
  • VPN
  • Email clients
  • Amazon
  • WordPress Plugins

These are all examples of products and services with lots of opportunity for affiliate programs. Their programs often come with requirements, and you may need to fill out application forms, but it’s usually pretty easy to become an affiliate for products you already use and love. Plus, this means you can offer authentic affiliate links to your viewers, rather than products or services you’ve never used. However, you can also just reach out to businesses directly.

Cold Outreach

Cold outreach involves building a list of potential businesses and products and then reaching out to them to see if they’re interested in your services as an affiliate marketer. The benefit of this approach is that you’re more likely to establish a long-term relationship and maybe even become a brand ambassador to a merchant.

But cold outreach does take more time and involves more legwork, as you’ll need to do a lot of research to identify potential merchants. You also won’t have a third party to manage the transaction, so there’s a lower barrier to entry for scammers.

Do Your Due Diligence

Regardless of whether you find your products via a third-party site, through your own relationships with products and services, or by cold outreach, it’s important to do some due diligence before agreeing to become an affiliate for a product.

While the subscription fees for merchants on affiliate marketing platforms usually filter out the scammers, you should confirm that the merchant and the product are legitimate. And if you’re finding products via cold outreach, take the time to investigate the background of the business and its products to make sure they’re genuine.

 

5. Choose the Right Products

Choosing the right products to promote is no easy feat, and few people get it right the first time. It can be difficult to identify products that will resonate with your audience. Choosing the correct niche is relatively easy. Finding the product that converts your website traffic into clicks is the more difficult step.

For starters, make sure that you’re looking in the right product category. Use filter functions to navigate to the correct category of products/services, and scan through them. When you find an interesting or unique product, save them to look at later. Once you have sifted through a few pages worth of products, review and evaluate if they’re suitable for your niche and audience.

Some things to consider when choosing a product include:

  • Vendor reliability
  • Affiliate cookie lifespan
  • Commission rates
  • Product “sellability”

Vendor Reliability

When choosing a product, a trustworthy vendor is key. Check any previous reviews of both the vendor and the product, the number of products sold, and membership level. Whether it’s a physical product or a digital one, finding out more about the seller is key.

Affiliate Cookie Lifespan

Cookies keep track of how many customers visit the merchant’s product page via your affiliate link (and how much commission you then receive). Unfortunately, just like the tasty treat from which they get their name, cookies have an expiry date. The longer the cookie’s lifespan, the higher your chances are of earning money if the person buys through your link, even if they only buy after going back to the website days or even weeks later.

Commission Rates

Usually, commission rates are percentages of the product’s price, but fixed sums are possible as well. Always check how much you’ll make after selling a certain number of the product, so you can gauge if it’s worth marketing or not. This is especially important if you’re also doing any form of paid marketing for your content. This doesn’t just include paid advertising, as you might hire an expensive SEO expert to boost your traffic that might not be worth it for low commission rates.

Product “Sellability”

To sell the product, it needs desirable qualities that appeal to your audience. If the item is nothing more than a cheap replica with high commissions, it’s best to avoid that product. Your primary goal is still to help your audience, and so you should only recommend high-quality products. Is it something you have used or would use? If the answer is no, then you shouldn’t be recommending it to your audience!

 

6. Create Content With the Affiliate Link

After finding the right product and obtaining your unique affiliate link, you now have to share the affiliate link. However, you can’t just post the affiliate link online and expect people to buy the product. Here’s where your marketing strategy comes in.

For blog owners, it’s easy to work affiliate links into your blog posts. Most bloggers hyperlink the affiliate links in one of the keywords, so interested viewers can click on them to find out more about the product. Remember, you should be upfront with your audience and tell them that it’s an affiliate link right away. You must include a disclosure clearly at the top of your page or post, or next to the link, that explicitly tells your readers that there are affiliate links on this page. You can see an example of this disclosure at the top of this and every other post on Sophical Content.

Another great idea is to include an affiliate link to a product you’re actually using or reviewing in that content. Some influencers, who are also ambassadors for merchants, create content reviewing products and leave affiliate links in the description. For social media marketers, this is in sync with your strategy and can be a simple yet effective way to drive sales.

 

7. Promote Your Content and Optimise the Page

People won’t see your content if you don’t promote it. This is especially so if you have a small target audience or an inactive group of subscribers. The first step is to reach out to your subscribers. Try your best to notify them of the new content, whether it’s through email, social media, or other channels. Then, you should share the content on social networking platforms, targeting your audience on Facebook, Twitter, and Instagram as well. If you can, post on various forums like Reddit to reach discussion groups.

On top of your existing marketing techniques, you can also pay to advertise your content. For example, you can buy pay-per-click (PPC) search ads on Google. This gives your content a better chance of ranking on Google’s front page, and so can lead to more clicks and conversions. However, quality PPC search ads aren’t cheap. Make sure you have the budget before investing in this strategy.

You also need to optimise your content. This means adding pictures or videos, and making the content as engaging as possible for your viewers. Adopting a more promotional tone can also help you promote your affiliate link, so keep this in mind!

 

8. Check Your Sales and Rankings

You need to measure the performance of your affiliate links so you can adjust your marketing strategy where necessary. Third-party affiliate sites usually have a page where you can check how your affiliate links are performing. URL link shorteners like Bit.ly also provide link tracking features and analysis.

When it comes to your overall digital marketing campaign, use tools like Google Trends and Ahrefs to check your page views, ad views, and conversions. If a campaign doesn’t seem to be working, you may need to adjust it or try a different approach. But you’ll only know what is and isn’t working if you have some sort of data to work with.

 

9. Persevere

Keep in mind that trial and error are all part of affiliate marketing. If a particular product or service isn’t resonating with your audience, review it and adjust your affiliate marketing strategy.

The top affiliate marketers earning more than $100,000 a month have been in the industry for years. John Chow, the 2012 Affiliate Marketing Awards Winner for Best Affiliate Marketing Blog, first started using affiliate marketing in 1998. He continues to generate a six-figure income from it today!

While there’s no limit to how much you can earn with affiliate marketing, it’s definitely not a get-rich-quick scheme. It’s a process you build on over time, and finding the right products lies at the core of this technique. Once you find the right products and services to promote, you just need to work on your content and your marketing approach. From there, you too can generate passive income from affiliate marketing!

 

Get Started With Affiliate Marketing Today

Affiliate marketing is an extremely lucrative way to monetise your website if you do it correctly. Hopefully this article gives you the information and confidence to start your affiliate marketing journey!

Want to know if affiliate marketing is for you? Check out this article. If you want to find out more about website creation and monetisation, check out our other articles on the Sophical Blog.

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