What is an Affiliate Marketer?
An affiliate marketer is someone who promotes another persons product or service, hopefully in return for a commission. Upon signing up to the vendors affiliate program they create their own affiliate links for the products they wish to promote. An affiliate link is essentially a URL to the vendors target page containing an extra piece of code which identifies who the affiliate is. Affiliates then promote the product using this link.
What Determines Whether a Commission is Earned?
Should someone click on the link and take the required action, the affiliate earns a commission. Commission can be earned when the visitor,
- Clicks a link (pay per click)
- Completes a form (pay per lead)
- Makes a purchase (pay per sale)
Cookies are used to track sales. When the visitor clicks an affiliate link a cookie is place on their web browser. This cookie contains information such as,
- The affiliate ID
- The date/time the cookie was placed
- When the cookie expires
If a sale occurs before the cookie expires the affiliate earns a commission.
Affiliates fail to earn a commission if,
- The visitor has disabled cookies or uses cookie blocking software
- The visitor deletes their cookies but subsequently goes on to make a purchase
- The visitor does not purchase in this visit and makes the purchase via another affiliates link
The duration for which a cookie is valid is dependent on the merchant and is something the affiliate should bear in mind when signing up to the program. Some programs, such as that run by Amazon, only offer 24 hour cookies. Other programs offer lifetime cookies.
Physical v Digital Products
Physical products are those which need to be shipped to the customer. Digital products are either available for immediate download once payment is received, or are something you login to, such as a membership site. Although an affiliate can promote both types of products, different factors tend to determine how much commission can be earned from them. These include:
- Commission Rates. Physical products have a far higher cost of sales than digital products. Furthermore, they can only be sold once. Digital products have minimal distribution costs and can be sold an infinite amount of times, unless restricted by licensing terms as in the case of some private label rights (PLR) products. Because of this commission rates vary significantly.
Amazon is predominantly a retailer of physical products. Their commission rates start from as low as 4%, although they do increase slightly depending on the type of product sold and the volume of sales.
Clickbank on the other hand is an affiliate network for digital products. These products can attract commission rates as high as 75%.
- Ease of Promotion. Consumers tend to relate to physical products more easily than digital products and hence trust them more. The level of convincing required to sell most digital products is often higher and therefore the amount of work the affiliate has to put in to pre-selling is higher. For some affiliates promoting physical products may be seen as taking the low hanging fruit.
The reputation of the vendor also has an impact on the amount of pre-selling required. Although commission rates at Amazon are low, they shift product 🙂 Last year alone they sold over $48 BILLION worth of goods. Everyone’s heard of Amazon, and it’s easier to buy from a well known established brand than from someone you’ve never heard of. This makes the job of the affiliate easier.
- Additional Income. Commissions earned via the sale of physical products, generally only relate to that product. Digital products however, are often part of a longer sales funnel. Once the initial purchase has taken place, the buyer is often presented with another offer. In many programs, if the additional offer is also purchased, the affiliate will also earn a commission for this, albeit often at a lower rate.
Digital products also include membership programs. These can net the affiliate a recurring income, i.e. they will be paid each month for as longer as the buyer remains a member. If the program is something such as a training course, the purchaser may only remain a member for a few months. However, if it’s something that is integral to the purchasers hobby or business, such as website hosting or an autoresponder service, membership can last for years.
- Refund Rates. Refund rates tend to be far higher for digital goods than physical ones. This may be because a physical product has to be returned in order to receive the refund, which is an inconvenience that some people just don’t bother with. Refunds for digital products on the other hand, can be just a click away.
Ultimately the profit you make from affiliate marketing will be determined not only by the type of product you promote but by the success of your marketing campaign. As well as quality products you’ll need to have an effective traffic generation strategy and a landing page that converts well. Whether it’s physical or digital products you promote, the best thing you can do is to make sure they’re relevant to your website.
Over to You: Are you an affiliate marketer? What type of products do you promote? What made you choose the products you did?