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What Is Affiliate Marketing?

by | Nov 4, 2018 | Making Money | 0 comments

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Earning money comes in many forms and one of them is affiliate marketing. It’s become a proven option for individuals looking to make money and understand the world of business. Whether it’s advertisers increasing revenues, affiliates earning a commission, or customers finding out about new products, this continues to remain one of the most powerful business strategies on the planet. Here’s more on affiliate marketing and all that it stands for.

Affiliate Marketing Explained…

Affiliate marketing refers to the idea of marketing another person’s product/service and earning a commission (percentage of the sale). In general, the affiliate will do the selling whether it’s posting about a product on their blog, going door-to-door, or putting up a Facebook ad, which will help promote the product and eventually lead to a sale. This acts as a “referral, ” which means the business gains a sale due to the affiliate’s work. To make sure each sale is tracked, an affiliate link is produced for the affiliate. This is intriguing for a number of reasons and helps all parties in making money. Affiliate marketing is designed to offer a wholesome solution that’s easy to manage, effective, and builds brand awareness at the same time. Each product/service will have its own affiliate rules with regards to how an affiliate is paid for their effort. These stipulations are mapped out in advance and are part of the agreement an affiliate signs with the advertiser. Please note, the affiliate is not an employee of the advertising company and does not act like one. They are a separate entity independent of the business and are simply linking out to the product/service depending on what’s being sold.

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Affiliates Can Be Paid In Three Ways:

  1. PPS (Pay Per Sale)
  2. PPL (Pay Per Lead)
  3. PPC (Pay Per Click)

PPS

(PPS) pay per sale, the affiliate is paid a set percentage of the sale price. This amount is only available once the consumer has purchased the product/service and used the affiliate’s link. This is often the most common strategy used by merchants.

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PPL

Pay per lead (PPL) refers to a setup where the affiliate is paid per lead. This means if an affiliate gets a lead to go to the merchant’s website, complete the required action (i.e. Fill out a survey), they are paid for the acquisition. Remember, in this scenario a lead doesn’t have to convert into a sale. Sometimes, all the merchant wants is a simple subscription to their newsletter. It will vary from merchant to merchant depending on what they are after and what their long-term vision is.

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PPC

The final method would be PPC or pay per click, which refers to any lead that is redirected to the merchant’s site. It doesn’t matter what the lead does as soon as they get onto the website but the affiliate has to make sure they make it to that step. In general, the rates are lower in comparison to the other methods since there’s no conversion involved.

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Participants in Affiliate Marketing

Advertisers

Affiliate marketing is built on the shoulders of advertisers, which can include any type of business online. It can include Amazon, auto insurance agencies, or even a clothes shop at the local mall. It doesn’t matter as long as they have something to sell online.

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Affiliate Marketer

The second participant is an affiliate marketer. This individual can be anyone. They are expected to set up a referral link, put it in front of potential leads, and bring new customers to the advertiser’s website. If they do a good job, they are paid based on the signed agreement. In some cases, affiliate marketers have their own websites, which are used as a way to market the referral links. However, this isn’t necessary as some make use of community pages (on Facebook) or other social media platforms depending on their following.

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Affiliate Network

Affiliate networks have a key responsibility in this form of marketing as they do the tracking. They make sure everything is tracked whether it’s the number of leads, how many sales have been completed, and all other relevant metrics. This is important information and is also the way an affiliate marketer is paid. Most of the “middle man” work is done by the affiliate network. Larger businesses might have their own in-house network but this will depend on the organisation, it can also be used to help link building which will increase SEO factors.

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How Does Affiliate Marketing Work?

While asking “what is affiliate marketing?” it’s important to know how it works. Affiliate marketing is a simple concept at its core. Let’s imagine Rebecca is an affiliate, she might have a website that talks about dogs. She will often post how-to guides, tips, and more around this particular topic, which will start to gain attention among dog lovers. Over time, she will start to add more information on products she’s used and which ones are her favourites. Her followers will pay attention to the advice and might even act on it. In such posts, she will also put in a referral link to a product. If the readers click and buy, she gets a commission for her effort. Please note, this doesn’t have to be on a website and many people use different platforms such as YouTube, Facebook, and Twitter to promote affiliate links. However, the website is a common example seen in this form of marketing. What if a person doesn’t want to buy as soon as they click through? What if they take a few weeks to make up their mind? In this case, a cookie tracker will make sure to record the sale and ensure the affiliate marketer does get his/her share. However, it’s important to note, each advertiser will have their stipulations when it comes to how long this period is. Some may not record the sale as a legitimate one unless it happens within a set period (i.e. 2 days, 2 weeks. Or 3 months).

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Benefits of Affiliate Marketing

1) Helps Brands Sell More

While thinking about what is affiliate marketing, it’s best to look at the benefits. In general, this helps brands sell a lot of products, which is something they want. Instead of hiring sales representatives, building an army of employees, and not being sure about the results, this is a hands-free option that continues to bring in leads.

2) Helps Affiliates Leverage Established Products/Services

Affiliate marketers love this method because they don’t have to build a new business from square one. Instead, they can grab onto an established product/service and start to spread the word while making money. For those asking “what is affiliate marketing?” this is what it is all about and how it works in the long-term. It’s a useful method that helps all involved parties and is a wonderful option for merchants to bring in new customers.

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Want to take it to the next step? Read our guide on Top 10 Affiliate Marketing Companies.

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