I’ve been using Affiliate Marketing for a while now and have learned a lot during this time. However, I am not an absolute affiliate marketing ‘guru’ and therefore will certainly not be able to solve all the problems and also not have the all the answers for every possible questions.
I will share my knowledge with you and it will do my best to help you to make money online with affiliate marketing. One never learn if not taking any actions!
Introduction to Affiliate Marketing
For all those who have not yet worked with affiliate marketing, I would like to explain the concept behind it first.
If companies want to bring their products and services to the public, and this can be done in different ways and various advertising platform are available. After all, thousands of companies are trying to sell their products.
The Internet offers one of the possibility to advertise their products or services to wide range of people, therefore a new advertising platform has emerged, called Affiliate Marketing.
By incorporating a certain product link into the pages/post on the website or blog, you can get commissions if someone visit your website/blog and goes over this link, and buy something through your link.
Let’s take Amazon as an example. There you can register as an affiliate for free and generate specific links to categories or an individual products in the Amazon website. You then create a page/post with the affiliate link, then you’ll get commission of a few percent, if someone clicks on these links and bought something at Amazon through your website/blog.
You sell as an affiliate, so you would not be keeping anything in stock, you are simply a ‘middle man’ to the ‘supplier’.
Of course, you can apply this method to hundreds of products without any financial risk and collect commissions after every sales generated. But, commissions are never as high as selling the product itself.
The most common way to earn affiliate commission is the Pay per Sale. For example, you create a link to a product on Amazon on your website, and someone clicks on this link and then buy this product at Amazon. You’ll then get, e.g. 5%, of the product price as commission.
Besides Pay per Sale, there are a number of other commission models:
Pay per Sale
As mentioned, it pays commission when you referred a client to the links to the merchant. Most of the time, a cookie will ensures that you’ll receive the commission even if this prospective customer purchases the product later. (Usually 30-60 days after clicking on the affiliate link)
Pay per click
Similar to Google AdSense, you’ll get commission when someone clicks on the affiliate link. However, these payouts are usually quite low.
Pay per Lead
This type of commission is quite popular and is used, e.g. in insurance. You’ll get commission if someone click on the affiliate link and leave a contact information, such as email, phone number, to the merchant, e.g. the insurance company. This form of commission is often used in consultancy-intensive products, since hardly anyone immediately buys or orders anything after clicking on the links.
Pay per Sign-Up
For example, someone subscribed to an online game through your affiliate link. The commission is usually quite low, but there are high demand for this type of offers.
Pay per View
Usually, you’ll receive commission for every 1,000 Banner views. However, this commission model actually contradicts the advantages of affiliate marketing.
There are some affiliate programs that not just pay one-time, but pay over a longer period commissions. This is usually the case with merchants who sell subscriptions / memberships. As long as the customers still subscribed at the merchants, you’ll get commissions every month. This can be very worthwhile if the referred customers remain with the merchants for the long term.
Basically, there are 2 types of affiliate programs.
The first one, you cooperates directly with the merchant, for example, Amazon. You can register as an affiliate directly at Amazon, choose the products you like to promote and generate the affiliate links.
Secondly, there’s affiliate networks. The affiliate networks acts as an intermediaries between merchants and affiliates. They provide the platform for tracking sales, clicks, etc., and also payments for the affiliates.
As a result, many small businesses and affiliates use affiliate networks instead of contacting each merchants by themselves. In this way, you can find hundreds of interesting affiliate providers and everything runs through an account you created on the affiliate network.
The affiliate market continues to grow despite the economic crisis. Affiliate marketing grows stronger than other online advertising market (+10%), even if the volume is still much lower.
For whom is Affiliate Marketing?
Of course, affiliate marketing is not the best choice for anyone.
There are still many other ways to make money online. This includes blogging and sell advertising space, freelancing, Google AdSense and many other sources of income.
Affiliate marketing has a lot of potential and if you drive the right traffic to the right affiliate links, then it is possible to earn very well.
According to a recent study in US, 450 Affiliates took part in the study, 17% of them earn over $20,000 per month. Almost half of affiliates (46%) made relatively low, between $0 and $500.
Again, it shows that there’s a learning curve for affiliate marketing. Only if you really focus and constantly tests and optimizes your affiliate campaign, and improve your income.
Pros and cons of Affiliate Marketing
Advantages of affiliate marketing
- There are no advance costs for affiliates. You do not have to build an expensive shop, or buy products for stocks before you start selling.
- You have wide selection of partner programs, products and services.
- Affiliate links or banners are very quick and easy to incorporate into your blog or website.
- You have full control on what you really want to displayed on your website. Therefore you are able to present the affiliate links to target group.
- Affiliate marketing offers great potential. Although it required some work, it is possible to make most of your income compares to any other income source.
- Affiliate marketing is suitable for the long term. If would be perfect of you have a website or a blog with hundreds or thousands of old articles.
Disadvantages of affiliate marketing
- It is very much depending on the merchant sales letter. If the sales letter is badly crafted, there will hardly be any sales and commission no matter how much potential customers you drive to the merchant.
- There are no revenue guarantees. If you want more security, you are better off offer to sell banners space on your blog / website.
- There’s issue in transparency. Since the merchant usually track the commissions manually, therefore no one can really tell if the merchant paying all sales correctly.
- There are some affiliate programs, which are not quite legally concerns. For example, if you are applying medication or gambling affiliate programs, this may lead to legal consequences.
I hope this introduction has provided you a comprehensive and understandable picture of affiliate marketing. I am happy for any suggestions and criticism, just comment below 🙂