One of the most common ways of making money online is affiliate marketing. But what exactly is affiliate marketing?
Put simply affiliate marketing is the promotion or selling of someone else’s goods or services in return for a commission. Goods can be either physical or digital, and commission can be earned for lead generation as well as actual sales.
The role of the affiliate marketer is to send traffic to the product owner’s pitch page, allowing them to convert the prospect into a buyer. The more targeted the traffic, the higher the conversion rate will be.
Benefits of Affiliate Marketing
Affiliate marketing has many benefits for both the product/service owner (merchant) and the affiliate. Under traditional marketing methods, the merchant would have a marketing budget which would be spent across various channels, e.g. print, radio and television.
It’s very difficult, if not impossible, to determine the return on investment (ROI) for any particular marketing campaign. Although the merchant would probably suspect that a significant proportion of their marketing spend was ineffective, they wouldn’t know which parts were and therefore wouldn’t know what to change. Old style marketing is very cost inefficient.
Affiliate marketing is essentially a pay per performance activity. As such the merchant achieves a far higher return on their investment. Furthermore, if the marketing campaign is online, affiliate tracking software and reporting tools make it easier to identify what is and isn’t working. This allows the merchant to change their marketing methods, thus increasing ROI further.
From the affiliates perspective, affiliate marketing programs can offer them an opportunity to monetize their websites. Sites which present quality content on a specific niche and attract a good amount of visitors are ideal for affiliate marketing. The website owner is already offering value to his visitors, and by deciding to promote products which complement his content, he can monetize this traffic whilst maintaining the value he offers.
Furthermore, affiliates don’t have to worry about developing ideas and creating products. Neither do they have to deal with customer service follow-ups.
Affiliate Marketing Networks
Many sellers, particularly the larger ones have their own affiliate programs. A quick search on their site should reveal the link to their programs details. Have a read through and, if you’re happy with the terms and conditions, sign up. Most programs are free to join.
Identifying affiliate programs via individual sites can be time consuming and trying to keep track of new promotions and monies due and paid can turn into an administrative nightmare. Therefore many people decide to join affiliate networks instead.
An affiliate network is an intermediary between the merchant, i.e. the party offering the affiliate program, and the publisher, i.e. the affiliate marketer. The benefits to the merchant are:
- They can reach a larger audience by having more people promoting their products
- The tracking technology and reporting tools offered by the network provide a cost efficient way to help them manage their business
- There’s no need to implement a payroll system as payment processing is undertaken by the network
Benefits to the affiliate include:
- It’s easier to find programs to promote and hence increases their propensity to earn
- The program signup process is streamlined
- Reporting tools are provided which, amongst other things, can help affiliates decide which products are likely to be profitable to promote
- Provides greater confidence that commissions will be calculated correctly
- Reduces the risk of not being paid
Perhaps the best known affiliate program is offered by Amazon, but other top affiliate programs are offered by networks including,
Physical Goods and Services
Lead Generation (CPA)
What You Should Look For in an Affiliate Program
While the benefits offered by affiliate programs vary depending on the merchant, there are some things that you should always consider when deciding which programs to sign up to. These include:
- Stability of the Merchant. Promises of high commissions are great, but worthless if you never get paid. A website can not only be put up in minutes, but can also be taken down just as quickly. Before signing up, do your research and satisfy yourself that the merchant is stable and financially secure.
- Synergies with Your Site. While you’re in this to make money, choosing which offers to promote based on the highest commission is probably not the best way to achieve this. Your visitors come to your site for a reason – you provide value. Look for affiliate programs that offer products which are a natural complement to your sites content. If you view them as a natural extension of your site, chances are your readers will to and your conversion rate will reflect this.
- An Account Manager. Good affiliate management is priceless. Having someone who can answer your questions quickly can make your life easier and your business more profitable.
- Promotional Assistance. Your job will be easier if the product owner provides you with tools to help you promote their product. Many merchants realise that their success is directly related to your success and therefore do this. A promotional toolbox usually includes readymade emails, web reviews, and banner ads you can use with your own link embedded in them for instant plug-n-play success.
- A Professional Sales Site. Always check the merchants sales site before signing up to a program. The last thing you want to do is put time and money into driving traffic to a site only for poor presentation or site performance to kill the sale.
- Long Cookies. Obviously the longer the cookie lasts, the more chance you have of maximizing your income from the lead.
- Tracking Software and Good Reporting. There’s a saying that you get what you measure. Robust affiliate tracking software and a comprehensive suite of reports allow you to analyze your results, continue to do what’s working and change what’s not successful. It also provides confidence that the affiliate program is being run professionally.
- Opportunity for Repeat Business. It’s easier, and more cost efficient, to sell to an existing customer than a new one. All businesses rely on both new and repeat business and yours is no different. Look for a program which offers products with recurring income.
How You Get Paid
You get paid when someone clicks on your affiliate link, is directed to the merchants site, and performs the required action. Your link could be a text link or a banner ad. Text links work particularly well when they’re seamlessly integrated into your sites content. Banner ads can attract attention through their visual impact.
Typically the action required by the merchant will either be the completion of a form (lead generation), or a sale. Amounts paid for lead generation tend to depend on the value of the product being promoted and the amount of data captured. Details such as name, address, e-mail address and telephone number generally pay more than offers requiring just an e-mail address.
Amounts paid for sales could be either fixed amounts or a percentage of the sale. Some programs, such as Amazon, pay higher percentages as the volume of sales increases.
Make sure you also check other payment criteria such as,
- Minimum Commission Earned. Many programs will not pay out at all until you’ve earned a minimum level of commission. You need to satisfy yourself that this has not been set so high that you’re unlikely to receive a payment.
- Frequency of Payment. These generally range from weekly to quarterly. If you’re looking to become an affiliate marketer because you want to earn some quick cash, don’t select a program which pays quarterly. At least, not as your first program.
- Method of Payment. Many programs pay by electronic transfer, but only if you’re a national. If you’re based in a different country, you may find that check is the only payment option available to you. Therefore you need to factor in the delay in payment when making your decision.
You now have a good understanding of what’s involved in affiliate marketing. Once you signed up to a program you need to get your affiliate links and start driving traffic to them. But that’s for another article.
Over To You. Are you an affiliate marketer? Do you have any tips you can pass on? Can you recommend networks to join? What are the pitfalls to avoid?