In this post, I’ll introduce you to affiliate marketing basics and explain how it works in practice. I’ll also explain to you how you could benefit from using it and give you some help in getting started.
What is Affiliate Marketing?
Without affiliate marketing, my blogging success would not have been possible. When I first started making money online, it was through earning commissions on Amazon.com and sending new visitors to their site.
Back in the day, when I referred a customer to Amazon and they made a purchase, I would then earn a commission on that sale. Jump ahead to 2010 and affiliate marketing has expanded like crazy and is making more people more money than ever.
With over a decade of experience, stories of success/failures, and a passion for affiliate marketing, that became my gateway into starting my own blog. Without the passion and interest in writing about my blog topic, I would have had a much harder time becoming a prominent voice in this industry, and the blog would have probably failed.
In summary, affiliate marketing is the foundation of how many successful blogs and businesses earn money online.
And I want to explain some affiliate marketing basics to you in this post, please keep reading.
This guide was created for the use of both blogging and affiliate marketing. Before starting into building your blog, you must first know the affiliate marketing basics.
How Affiliate Marketing Works
In the past, how did companies measure return on investment for their advertising methods, such as billboard advertising and TV commercials? It wasn’t easy.
No longer are companies putting all of their advertising dollars towards billboards, print, and television and just hoping for results. Businesses have presently been turning their promotion budget towards affiliate marketing and the internet.
With affiliate marketing, everything is tracked, businesses can tell exactly what the profit on their promotion investment is. Who purchased what… when, where, how, plus sometimes even why. This is very important to know about affiliate marketing basics.
Let’s use a big online book store’s affiliate program as an illustration.
Let’s say, as a blog owner, I write a review of a wonderful book I just read. I can either place a link in my review directly linking someone to the bookseller, in which case they (the bookseller) receives full credit for the sale, or I could join their affiliate program (if they have one) and become an affiliate of the bookseller. As an affiliate, you would earn a commission on all referred sales or actions taking place on the merchant’s site.
Once accepted by the retailer, I can immediately log into my affiliate account and create an affiliate link to any product on their website.
Rather than direct linking to the online book store, if someone visits my website, clicks on my affiliate link, and performs a purchase, I would make a commission on that sale.
This is the first thing you need to know about affiliate marketing basics.
By affiliate marketing, you never have to manage any orders, deal with customer service or billing, and most importantly, there is no inventory.
Everything is tracked online also as an affiliate, you are paid weekly or monthly depending on your favored affiliate program or network.
While maybe oversimplified a bit, this is why affiliate marketing is one of the best ways to run a business and how anyone can start making money online without requiring to pay thousands of dollars on staff, inventory, or even an office.
To Understand Affiliate Marketing Basics, You Need to Know Affiliate Pay Structures
Amazon.com’s associate program is one of the world’s earliest, biggest, and most thriving programs of its kind. Not only did it help build Amazon.com into the company it is today, but it paved the way for others to realize the power of affiliate marketing.
Earning commissions on the sale of a product (Pay Per Sale) is just one way to earn money using affiliate programs. The majority of affiliate businesses are divided down into three sections; Pay per lead, Pay Per Sale, and Pay Per Click.
Pay Per Lead
This is what affiliate marketing is all about, being paid for the action. Most programs fall into this category as it means being compensated for an action taking place on the advertiser’s site.
That can be anything from taking a survey or filling out a form to ask a free trial. There is no set limit for commissions in the cost per action (CPA) market. You will see email submit offers payout in the $1-$2 range, while there are much higher programs like weight loss trials (with credit card submit), that pay in the $40-$60 action range.
Pay Per Sale
Very similar to Cost Per Action, but more targeted towards selling and purchasing. A Cost Per Sale method of advertising usually pays a set price or a percentage of the final purchase. Amazon.com’s associate program can be considered Cost Per Sale, as you will only earn a percentage (commission) on every purchase referred to their site.
Pay Per Click
Most affiliate businesses are working on a Per Per Lead or Pay Per Sale structure.
Businesses using a Pay Per Click way, are paying affiliates based on the number of clicks they create for an advertiser despite the sale. You won’t see as many affiliate businesses using a Pay Per Click basis, as it leaves the door open for dishonest activity and lower conversions on final sales.
Using Affiliate Networks to Make Money Online – Affiliate Marketing Basics
In the mid to late 1990s, there were only a handful of companies utilizing affiliate marketing. Now there are thousands. Which systems are most suitable for you also which you should trust, are the biggest factors when joining a new affiliate network.
In this section, I will breakdown the benefits of using an affiliate network, why some are better than others, and identify a few of the top-performing affiliate networks in this business.
What is an Affiliate Network?
The best way to describe an affiliate network is to think of a mediator between merchants (advertisers) and affiliates.
If you’ve ever bought a house, you normally have a lawyer and use an escrow account. The seller and buyer won’t exchange money and/or the house until both parties are satisfied… The same concept can be applied to an affiliate network.
The affiliate network stands between the merchant and affiliate and ensures legitimacy for both sides. The primary reason why affiliate networks exist is so an affiliate can find a wide variety of offers in one location, and merchants can have access to many affiliates.
The affiliate network does the overhead of recruiting affiliates, bringing in new advertisers, tracking leads, and sending out payments.
For performing this overhead, affiliate networks receive a commission, usually receiving commissions in the 15- 30% range for their work. (If an offer is giving $10 per lead, the advertiser is presumably paying $13 and the network earns $3 per lead.)
Why You Should Use an Affiliate Network?
As an affiliate, there are many choices for running offers and making money online. The best and most effective method to find new offers and get started is to join an affiliate network.
Not only do networks have plenty of offers/merchants to choose from, but they also offer affiliate support, creative services and can normally pay more on offers if you can provide increased volume.
Most importantly, you can run several different offers at the same time, and then receive one check at the end of the week/month.
Benefits of Using an Affiliate Network
Some of the benefits gained from using an affiliate network include, all tracking and payments are done by the network, networks act as a middle man and in many cases will pay their affiliates even if the network itself is not paid by the advertiser.
Rewards programs and incentives are likewise offered by affiliate networks. Many networks wish to drive their affiliates to bring in more capacity and make more money.
From time to time, some networks give a 1-2% bonus on monthly earnings or will reward affiliates with vacations or other prizes to boost affiliates to raise their performance level.
Recommended Affiliate Networks
I’ve had the chance to work with plenty of affiliate networks, as well as send many new affiliates their way. Some of the tops suggested earnings and most recommended networks are listed below.
With over 4000 active affiliate offers and ranked as the Number #1 affiliate network in the world by Website Magazine, ClickBank has quite an established position in the affiliate industry. Not only is ClickBank a great company to work with, but they have an awesome staff and affiliate support team as well.
Over One Million Dollars has been earned by affiliates that have signed up to Neverblue through my blog. Not only are they one of the largest affiliate programs around, but they are one of the longest-running and most successful. I profoundly recommend Neverblue and they are also accepting of new affiliates than other platforms.
A well-respected network with over 300 various offers, concentrating on Email/Zip Submits, Healthy, and Beauty, and As Seen on TV offers. Recently, I’ve joined offers from PeerFly with a few of my smaller blogs and have seen a large growth in revenue by running their offers.
Now you have understood affiliate marketing basics, all you need to do is take action and join these affiliate platforms and start to earn.
If you want to learn more on how to make money online, make sure read this article:
I hope you can achieve a big success.