What is Affiliate Marketing And How Does it Work

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everything you need to know about affiliate marketing

If you are a beginner marketer, this guide on what is affiliate marketing will help you understand the business model. How it works and how you can get started.

Even if you have not run a blog before, you will find answers to many of your questions in this guide.

There are several ways to earn passive income from affiliate marketing, but blogging isn’t the only way. Though blogging proves to be more sustainable, video, podcast, microsites, and email marketing are some of the ways to do affiliate marketing.

Affiliate marketing has changed many online marketer’s life for the better, for example, Pat Flynn, Anil Agrawal, Adam Enfroy, Ryan Robinson, and many more.

If you want to earn a full-time income through affiliate marketing, this post is for you. So let’s dive in together…

PS: I’m running a free 10-part email series that teaches How to go From Zero to $100 and above within 30-days of starting an affiliate marketing business. You can sign up from this page.

It’s only subscribers’ exclusive content that never gets discussed or shared on the blog. You’ll discover the truth, tools, and reality of making money from affiliates’ marketing businesses. Click Here to Sign up Now

What is Affiliate Marketing?

In simple terms.

Affiliate marketing is an online business model where you promote other people’s products/services in return for a commission. Or percentage of the total sales purchased through a unique affiliate code or URL given to you.

Affiliate marketing is a performance-based business. You only earn when sales are made, or leads are generated for the merchant.

This is very different from contextual advertising programs such as Google AdSense, which allows you to earn a small commission on each qualified click on banner/text ads on your blog.

In affiliate marketing, you only get rewarded for results like when a sale is made or generated leads.

In the affiliate marketing definition above, I use the word “online” for a purpose. Even in the physical world of brick and mortar, affiliate marketing does exist, too.

I once fully participated in it.

I do affiliate marketing offline for about five years or more before dabbling into this online thing. In the real world, affiliate marketing exists in many forms and deals.

Here you don’t need an affiliate code, tracking ID, or link to direct a prospect to the merchant product/offer page.

What you need to do is to find a potential buyer – someone who is already in buying mode but doesn’t know exactly where to purchase the goods or is skeptical of his buying decision.

Find this person, and convince him to buy from your partner (the merchant). Once the deal is closed, you earn from the actual product or service sales.

How the commission is determined offline differs from online affiliate marketing. You can negotiate terms and conditions with the merchant before making the sale.

In some deals like real estate, your earnings may be determined by a predefined percentage of the actual sales. 1%0 for purchases above a million bucks, and 5% for sales below a million.

How Does Affiliate Marketing Work?

Affiliate marketing involves four (4) parties to make smooth transactions of the program:

  1. The merchant.
  2. Affiliate marketing network company.
  3. The affiliate (you – sometimes referred to as the publisher).
  4. And the consumer (the paying customer).

Here are how these four interconnected links work together to ensure transparency, accountability, and profits-oriented business – win-win for everyone.

how affiliate marketing works

The first step is for you (the affiliate) to find relevant, high-demand affiliate products/services through an affiliate network company or directly on the merchant website.

The affiliate network company is responsible for managing the merchant affiliate program. This frees the merchant from handling risk associate tasks that come along with affiliates management:

  • Payment.
  • Tracking affiliate ID.
  • Marketing tools.
  • Affiliate reports, etc.

These affiliate network companies, in most cases, don’t get involved in product delivery. Their primary duty is the management of affiliates. Such as affiliate registration, tracking URL, traffic reports, clicks reports, payment options, etc.

If a potential buyer clicks on your affiliate URL, it will redirect to the merchant’s website. This is where he has access to the product sales page, shopping cart, payment options, etc.

How to Find Relevant Affiliate Products?

The success of your affiliate marketing campaign depends on product relevancy, trust and authority, transparency, and an engaged audience.

You can achieve all these attributes from years of consistently offering value to the community. Through the content and valuable advice you published, you build trust and establish your blog as a voice in your industry.

To find products and services to promote, you need to sign up with affiliate marketing programs.

Let’s take Shareasale Affiliate Network for a case study.

How to Create an Affiliate Marketing Account

First, you need to sign up with an affiliate network company like Shareasale.

Shareasale has hundreds of merchants with over 4,000 plus products/services accessible to affiliate marketers upon merchant approval.

In most affiliate accounts opening, you need an email address and a unique password.

Shareasale merchant feature page

If you want to promote a merchant affiliate product, you need to apply to become part of their affiliate program.

You can do this right there on the Shareasale website. In most cases, you won’t need to navigate to the merchant website to do this.

After submitting your application form, the merchant may approve it automatically. But in some cases, it will require more marketing information from you and days to review it.

One of the advantages of affiliate network companies like ShareAsale is that you have one central dashboard to access all merchant’s affiliate reports. From clicks, and impressions to qualified sales, every detail about your affiliate performance is in one central dashboard.

It makes it easier to reach the payment threshold on time since all your affiliate earnings are tied into one central account. And you can promote several affiliate products within one affiliate network company.

This means that you can promote the WP Engine Affiliate program, which earns you $200 on every affiliate sale you make. Also, you can promote the TOP10 Ware affiliate product, which can earn you $109.90 in affiliate commission from a single sale. And have both commissions paid through your ShareaSale affiliate account.

Top10 ware affiliate earnings.

You don’t have to visit the WP Engine website to receive your affiliate earnings or the Link-Assistant website to request your affiliate commission.

No!

You will receive all your affiliate earnings through ShareASale on their due or payout date.

How do Affiliate Marketers Get Paid?

This is an exciting question and one that needs a bit of explanation.

When I first started with affiliate marketing, I wasn’t sure that this whole thing was real.

I feared that how on earth will this merchant know the sale is from my website? I might just be sending customers that buy from the merchant and never get rewarded for my hard work.

Don’t worry, and thanks to your affiliate ID. The technology that is used to track sales to an affiliate.

What Are Affiliate Links?

When you register as an affiliate, you get a unique code, URL, or, let’s call it, “affiliate links” that represent you as an affiliate for that particular merchant.

When users click on this affiliate code, URL, or ID, your affiliate ID is stored on the user’s browser in a text file known as a “cookie.”

This cookie stayed in the browser for a period, such as 30 days, 45 days, 60 days, 120 days, etc. This allows the merchant to track a sale to your affiliate ID even if the customer didn’t buy on his first visit.

Although the cookie can be cleared manually from the browser, such as when the user reformats his computer, removed all cookies manually, etc.

In such a case, it will be impossible to track the sale to your affiliate links if the user later buys from the merchant.

The lifetime of a cookie depends on the merchant cookie terms; it is not something you control on your part.

These cookies help track the sales to you because it has your unique affiliate ID and tells the merchant where the sales traffic originated.

Affiliate links, codes, URLs, or IDs are unique and exclusive for you only. No two affiliate marketers shared the same affiliate codes or ID.

This has never happened!

Through your affiliate code, URL, or ID, you start promoting the affiliate product/services. Take a look at the TOP10 ware affiliate cookie lifetime below. It lasted for 90 days.

top10 ware cookie life time

How Affiliate Marketers Make Money

Affiliate marketing can become a real business.

A business that makes you full-time income if approached with the right mindset. The more you put into making it work for you, the more you make from it

It is like any real business; you won’t make much out of it if you don’t give it the required attention.

Apart from one-on-one blog coaching, affiliate marketing has been the #1 source of income for this blog since its inception.

I have earned a decent income from it and I am still doing it.

One of the best strategies that have made a significant difference in affiliate marketing is review posts. These are posts published to promote discount sales. Especially during specific times like black Friday, Summer sales, Xmas sales, etc.

This strategy has worked well, backed by targeted paid content marketing. I have great success each time I do this and a better return on investment.

Facebook paid advertising has worked well for promoting content to a target audience. And Reddit paid advertising hasn’t done badly, too.

Aside from these marketing channels, search engine traffic has been better. It seems to be the overall leader in the percentage of traffic that ended up buying through my affiliate links on this blog.

Also, I like to promote high-ticket affiliate products and recurring commissions. This is because it’s easier to reach $500 and above in commissions with fewer sales than with $27 affiliate products.

You may think it will be easier to sell products under $50 vs. selling products that sell for $500 and above.

The truth is that it requires the same marketing efforts and resources to sell a product for $50 and $1,000. The only difference is your knowledge and marketing budget.

It’s all about knowing what you’re supposed to do and making sure you’re doing it right. If you can’t get buyers for a product that sells for $1000, I bet you can sell a $50 affiliate product.

Though, it will take more investment on your part to look good selling high-ticket offers than it is to sell low-ticket offers. But it is all about making sure you’re doing the right thing.

Here are other ways you can make money from affiliate marketing.

  • Join a reliable affiliate program.
  • Promotes quality high in-demand Products.
  • Build a niche-specific website – this is huge if done right.
  • Build a list of active Subscribers – this is very important.
  • Write quality honest product reviews – be honest.
  • Take advantage of sales promos, discount codes, summer sales, etc.
  • Offer extra freebies to your readers.
  • Give away a bonus to intending buyers.
  • Give away flyers with your affiliate signature on them.

Why You Should Consider Affiliate Marketing

1. Doesn’t Require Huge Traffic

You don’t need thousands of website traffic daily to make money from affiliate marketing. What you need is high-quality targeted traffic.

The kind of traffic that is looking for what you’re promoting.

With 500 regular daily visitors, you can make good money from affiliate marketing compared to other known monetization methods like Google AdSense.

AdSense requires thousands of unique daily visitors to earn significant income from it.

2. You Don’t Need Specialized Knowledge

You don’t need to have any qualifications in marketing to be an affiliate marketer.

If you want to start promoting health-related products, you don’t need to be a qualified Doctor, nutritionist, or whatever.

What you need as an affiliate marketer is the readiness to give what it takes to make things happen. The right strategies and tactics to discover the right affiliate product. And effective marketing tactics to get this product in front of targeted buyers.

3. Zero Startup Cost

Affiliate marketing is the reality of starting with zero or empty pocket business on the internet. You can even start without a website or blog.

Yes, you can.

Besides having a blog, many intelligent marketers have recorded tremendous success with forum marketing, social media promotions, and other content marketing channels.

Having a site for your affiliate marketing business is going professionally on building a long-term business. A place where people can transact business with you on-demand.

In our next blog update, I will discuss ways to start affiliate marketing without a website and still make good money.

4. Better Than Sponsored Post

Yes, affiliate marketing is better than sponsored posts on your blog.

Unlike sponsored posts where you get paid once for your work, affiliate marketing provides the opportunity to earn continuously from your one-time publishing efforts.

Here is an example of what I am talking about.

shareasale affiliate dashboard

The content that generates the commission in the image above will continue to do so for as long as it remains relevant and drives traffic. The product discussed in the post is an evergreen product—an essential product that is required to start an online business.

Suppose I had considered taking $100 for a sponsored post back then to publish the same post. That would have been the end of it. Only the advertiser will keep enjoying the long-term benefits.

5. You’re Not Selling Your Readers for a Penny

Affiliate marketing doesn’t work like contextual advertising, where the number of clicks determines your earnings.

In affiliate marketing, you offer quality content to your readers— You’re helping them solve a problem. You’re helping your audience make better buying decisions based on honest product reviews and recommendations.

6. You Earn Passive Income

If done right, affiliate marketing can earn you passive income regularly from your one-time effort.

A review post you publish today has the potential to earn a referral commission for as long as that post remains relevant and attracts the targeted audience.

And if you’re promoting recurring affiliate products, you keep earning commission for as long as the customer remains subscribed.

7. You Don’t Need to Create a Product

It is not an easy task to create a product/service; affiliate marketing saves you from all the hassle. All you need to do is find other people’s products/services already gaining attention. Then you promote it as an affiliate.

You’re not involved in product creation, management, delivery, handling customer complaints, etc.

All you need to do is to presell the affiliate product by publishing a review post. You describe the benefits, features, and pricing details in the post.

Conclusion…

Affiliate marketing is a serious business and one that can earn you a lifetime opportunity to live your dream life. But like any other real business, it requires your utmost attention and readiness to give it what it takes to make it work.

PS: If you have not subscribed to my 10-part affiliate email series that teaches How to go From Zero to $100 and above in affiliate marketing, click here to subscribe now.

24 thoughts on “What is Affiliate Marketing And How Does it Work”

  1. Hello Adeshokan,

    Awesome post. Affiliate Marketing is one of the best monetization methods and requires very fewer efforts compare to other programs. All you need to choose the right product or services that suits your users need. My primary way to make money is from affiliate marketing and it suits almost every niches. You have shared some great tips here. Thanks for this brilliant post.

    Regards,
    Vishwajeet Kumar

    1. Hi Vishwajeet,

      Thanks for reading through.

      Like you rightly said, affiliate marketing fits into almost any niche monetization strategy. The beauty is that it doesn’t require massive traffic to make money from it. With the right product and the right audience, one can quickly make decent money fro it.

      Thank Vishwajeet, nice having you here.

  2. For my website mohanmekap.com affilate marketing is now working and perhaps so far I have not found relevant and absolute affilate products.

  3. Hi Shamsudeen,
    Great to read yet another informative and educative post from you.
    A good lot of information and the great features are well explained in this post. Though I have a website I never knew some of the aspects of the importance of Affiliate marketing. Thanks for sharing it well in an easy to understand form.
    I found this post link from the BizSugar IM platform I up-voted and commented on.
    Thanks
    Phil

    1. Hi Phillip,

      Thanks for taking the time to visit. I appreciate your time spent here and the valuable comment left.

      Affiliate marketing is one of the few online business models that has been long used by many to make money online. And to date, still one of the best business models for blog monetization.

      Glad you find the post useful, thank, Phillip.

  4. I really want to learn affiliate marketing and i know a bit about it. i have gone through this website and come to know more about affiliate marketing. thanks for sharing.

  5. Hi Shamsudeen (Nigerian ?)

    I love this piece alot because it reflects your own experience of affiliate marketing.

    The topic can never be written or beaten to death, things keep changing every minute and we need to keep updating.

    Cheers, Folajomi

  6. That’s quite an interesting post and I must confess I have learnt quite a lot from it. I have been dependent on Google Adsense and sponsored post. It’s high time I tried affiliate marketing.

    Thanks so much for the update. I appreciate.

    1. Hi, Mr. Richard,

      Google Adsense and sponsored are good for blog monetization methods too, but if done right, affiliate marketing could be a better option for blogs. Thank you, and I’m glad you find the post useful.

  7. Affiliate marketing is term that attracts everyone who tries to make money online. But the hard truth is only few of them gets over it. Using the right product with the right targeted audience and with the right platform to promote it, makes you a successful affiliate marketer. Nice article.

    1. Thanks, Neha,

      Yes, the right product together with right marketing channel promoted to the right audience makes an effective affiliate marketing campaign.

      Thanks.

  8. Hey SHAMSUDEEN, I appreciate your efforts for taking your time to explain all the basic concept in Affiliate Marketing, I have been hearing a lot of people talk about Affiliate Marketing and how they usually make money from it, this made me went on research to know more about it and luckily for me I came across this post where u explained everything in details. You deserve an accolades for sharing this wonderful Post with us just for Free.

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