What is Affiliate marketing?

Put simply, affiliate marketing is the practice of earning a commission by promoting someone else’s product or service. According to Forrester Research, affiliate sales affect a sizeable part of the online retailing industry, and the affiliate sector is projected to only continue to grow in size and spend.

There are two key players involved in the affiliate business – the party which wants their product sold and the party which offers their help in this endeavor. There’s also an optional third party, the intermediary which aggregates the available affiliate offers and manages the technical details so that individual players don’t have to:

  • Advertiser: this is the company or person that owns or creates a product that needs to be promoted.
  • Affiliate (also called Publisher): those are the people that promote the advertiser’s product or service in exchange for a commission – i.e. webmasters like you.
  • Network: a platform bringing together multiple advertisers and helping them find appropriate affiliates, and vice versa.

Let’s dive deeper and learn how you can profit from affiliate programs by monetizing your website or other web assets.

Four Steps to Affiliate Earnings

  1. Choose a niche. As defined by the Business Dictionary, a niche is a “small but profitable segment of a market, suitable for focused attention by a marketer”. In other words, a market niche is large enough to be monetizable (enough members to make it worth wile targeting) – and small enough to be described by just a couple of common parameters, such as age, interests, tech usage, habits, etc.

    Anything smaller than a niche is just a small bunch of people without sufficient aggregate purchasing power, and anything larger is a large swathe of the entire market that will require over-stretching.

    Choose a niche that interests you and that really excites you. Bear in mind that you will be building a website around this niche, you will be writing content, choosing products to promote and also helping people.

    So, how do you find a suitable niche? Well, you might already have an area of expertise that would meet the needs of a large group of people. It’s simply a question of identifying that group and then working out how to reach them.

  2. Prepare your online assets. Although a website will typically serve as your main marketing tool for affiliate products, there are several other online assets you can leverage to increase your reach. These include:

    Social media profiles – connecting with potential clients on their favorite social networks create opportunities for personalized interaction with your content and products. Additionally, networks such as Facebook, Instagram and Twitter enable you to create ads that reach a targeted audience, increasing the potential for conversions.

    Blog – usually a part of the website, but can be a separate subdomain or even domain. Providing relevant and useful information and opinions about your niche topic in a blog has many advantages: blogs help your website rank higher on search engines if regularly updated and optimized. They build your reputation as an authority in your niche. A blog also provides a platform for sharing a variety of content such as articles, photos, podcasts, videos, e-books etc.

    E-mail subscribers – creating an opt-in newsletter provides a great platform to regularly update your audience on news and offers, increasing web traffic and sales.

    Mobile assets – optimizing your website for mobile device users and creating other mobile tools such as apps provides access to an increasing online audience.

  3. Attract Visitors. This might be one of the toughest tasks of affiliate business, yet it is the final piece which makes the entire mechanism work and generate income. With the appropriate know-how and expertise it is doable even on a moderate budget. The main sources of traffic for your website include:

    Search engines: Most online users look for products and information through search engines like Google. This means that the higher your content ranks for a particular keyword in search, the more visitors you receive. Search Engine Optimization (SEO) is key in ensuring that your website’s organic traffic grows and converts.

    Social networks: Building a vibrant social media community can also be a great source of traffic to your website. Sharing a variety of content across social media platforms is a useful affiliate marketing strategy.

    Email subscribers:
    mailing lists provide high quality web traffic as they mostly consist of existing customers and potential customers who have opted in to access more information from you.

    Online advertising: you may want to leverage advertisement channels such as Google AdWords, Facebook Ads, or even offline ads to increase your reach. These are usually fairly easy to set up, provide unprecedented levels of targeting, and can be scaled to fit your budget.

  4. Earn Revenue. Ah, the best part! Affiliate marketing is not a “get rich quick” scheme as can sometimes be promised. It is a real online business that requires time and effort to make things happen.

    Affiliate marketing generates income in several steps –

    Affiliate placement: once there is a commission agreement between affiliate and advertiser (nowadays it is typically implied or comes in a form of a simple op-in form), affiliates start promoting the product using their online assets.

    Customer conversions: some of the visitors who click on the product links with affiliate tracking may choose to purchase the product. Sales from your links are recorded in the affiliate admin panel.

    Payouts: once in a given period or after a certain condition (such as minimum sales volume) has been met, all commissions earned from your visitors will be transferred to your chosen payment method.

    As a website owner, you can become an affiliate for multiple products and earn commissions from every purchase made through your online assets.

Affiliate Networks

Apart from looking for particular niches and individual affiliate offers, it makes sense to consider affiliate networks – aggregators that allow the publishers to manage multiple offers and get commissions from a single place, while removing the hassle for the advertisers of setting up their own programs. Below are some of the most affiliate networks:

CJ by Conversant – formerly known as Commission Junction (created back in 1998), this giant affiliate network now brings together offers from its various sub-networks including Commission Junction, ValueClick Media, Greystripe, and Mediaplex. The network boasts over 3000 merchants including big names like Apple and Home Depo.

ShareASale was launched in 2000 and acquired by Affiliate Window in 2017. This network boasts over 4500 merchants representing 1600 brands across all conceivable sectors. In 2015, advertisers on SaS collectively earned $297.6M in payouts.

Rakuten Marketing is a relatively “smaller” affiliate network with just over 1000 merchants (still a vast choice, though, by any standard). Created in 1997 under the arguably cool name of Buy.com, it was acquired by a Japanese e-commerce behemoth and rebranded as Rakuten in 2010. Advertisers can earn up to 5.5% commission of sales, with the percentage varying by product category.

ClickBank was established back in 1998, and this affiliate program primarily focuses on digital information products. It boats a network of over 1.5 million publishers, with an average of 50,000 transactions daily through affiliate sales. It is one of the few networks that offers recurring commissions from advertisers driven by a membership monetization model.

Avangate is another affiliate network aimed at producers and promoters of software products. There are over 30,000 items on offer, including big brands such as Kaspersky and HP.

Olymp Trade is a partner network dedicated to online trading, a great opportunity for monetizing finance-related traffic.

Amazon Associates – while not strictly an affiliate network (Amazon both maintains the program and sells the products offered there), it is worth a separate mention for the sheer scope of its offers and operations. AA was one of the pioneering affiliate programs, created in 1996 to enable affiliates to advertise millions of offers from the Amazon e-commerce platform. Advertisers can earn 2-10% commissions on referrals, depending on the type of product they are promoting. It is worth keeping in mind that there are different Amazon Associate programs based on geographical locations.

Maximizing Conversions

The most important result of your affiliate marketing efforts is income received as commissions for the visitors who purchase a product or service via your tracking links. If we divide the affiliate commissions by the number of visitors to the website and other web assets, we get the conversion rate – a useful metric which shows how well you turn clicks into dollars (euro, yens, etc).

Conversion rate allows you to have a better understanding about the relative performance of each traffic source and landing page of your website: while it is important to focus on growing the number of incoming visitors, it is equally useful to try to get as much value per click as possible – both will contribute to your bottom line as an affiliate marketer. This also means that quick wins can be made without spending additional money on advertising or SEO:

Optimizing landing pages – because your visitors have different needs, it is important to create separate landing pages for each offer; this allows the customer to focus on the specific product or service they were searching for, without being distracted. Each individual landing page also requires testing and optimization in terms its ability to induce the target action – a click-through, a sale, a subscription, etc.

Keeping content quality high – regularly creating and updating original, honest, high-quality content can boost your conversion rates by improving involvement and trust. High-quality content is useful, appealing, shareable and actionable, clear, concise and focused. Adding rich media, such as images, statistics, videos, and infographics will help make it even more engaging. You can read more about this topic in our in-depth guide on content marketing.

Using calls to action – while you might think that since you’re mentioning a certain product or service the visitors will automatically receive the message and start converting, clear and well-placed calls to action will do wonders compared to conspicuous references. They can be in the form of a button (the so-called CTA button), a link, an image or a form, yet in any case be easily noticeable and identifiable as such. There’s a balance to be maintained, though, between using clear calls to action and being too pushy with your marketing messages – cross the line and your visitors will feel as they’re being sold, abandoning your website.

Providing social proof – knowing that someone else has already made the same choice and is happy about it is obviously important to customers when making a buying decision. Providing testimonials from real people is one of the best ways of encouraging people to think harder about closing the gap between a click and a purchase.

Nurturing trust – make it clear to the visitors that they can trust you by using third-party verification, installing security certificates and, of course, promoting only genuinely useful items.

Pros and Cons of Being an Affiliate

Affiliate marketing is open to anyone regardless of age, country or sex. You don’t need any special credentials to be a successful affiliate. You also don’t need to be a computer genius – learning and taking action are the only things you need to get started. However, it is important to understand the pros and cons of engaging in this type of activity – let’s look at the most prominent ones below.

Advantages of affiliate marketing:

  • A stable source of passive income – the key word is “passive – even when you’re asleep, your web assets are generating money
  • Independence – being your own boss is something that might justify all potential challenges on its own for many people
  • Promoting something you are really interested in and passionate about; if you choose your niche well, you will be able to combine your hobby with your job
  • Relatively low required initial investment – as opposed to starting a physical business, where you need can’t bootstrap a lot of things and will need significant initial investments
  • Automation and outsourcing potential, freeing up more of your time – while affiliate marketing requires setup and initial ground work, once everything has been verified to earn income you can outsource most of the routines.

On the flip side:

  • Hard work and steep learning curve, especially in the beginning – most probably, you will need to get seriously far from your comfort zone, roll up your sleeves put in a lot of effort
  • Some initial investments are still required – while most elements you’ll need along the way, like hosting, content, website creation and management systems, analytics tools, advertising, etc, are inexpensive or free nowadays, the costs still stack up to a sizable amount, and you’ll need to plan for that
  • Sensitivity of your income to your website’s traffic is another issue which might not seem like a big deal in the short run, but will require you to constantly stay on your toes
  • Reputational risks, e.g. faulty products from your advertisers; by engaging in affiliate marketing you are implicitly taking third-party risks and in a sense putting yourself at a mercy of the advertiser when it comes to honestly recording and rewarding conversions.

Are You Up to the Challenge?

Affiliate marketing can be a very lucrative business for both the Advertiser and the Publisher. It’s a performance type of business, where the more time and effort you dedicate, the more income you can ultimately get, with virtually no upward bounds on your earnings.

There is a ton of things to learn and numerous potential challenges to overcome before you are able to see a steady income flow, but that feeling of earning your first commissions is priceless.

Feel like there’s something that can be added to this guide? Feeling energized but don’t know where to start? Want to share own experiences with affiliate marketing? Hit us in the comments section below, let’s discuss!

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by Kevin Balcker
A content marketing strategist at Residual Income Secrets by day, Kevin also loves running and playing football. His main goal is helping people to build an online business through affiliate marketing.

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