Business Marketing

How Does Affiliate Marketing Work

One of the best ways to generate passive income has to be affiliate marketing. We’re sure by now you must’ve heard of it and you probably have a general idea of how it all works, but in case you don’t, we’ve decided to help you out.

In just a few moments, we’re going to guide you through the basics of affiliate marketing – what it is, how does it work, how to get started and so on. After you’re done reading this article, we’re fairly certain you’ll have more than enough knowledge on the subject and perhaps even start making some money for yourself.

Without further ado, let’s jump right in.

Source: Corporate Finance Institute

What’s Affiliate Marketing?

Let’s start from the beginning. Affiliate marketing is one of many forms of online marketing. In essence, what we have are companies (or merchants, as some like to call them) that are paying certain individuals (affiliates) to promote their product or service through an affiliate link. To make it even more simple, you, as an affiliate, will get paid if a customer makes a purchase or visits the link you’ve provided them with.

Who Can Become Affiliate?

Generally speaking, anyone can become an affiliate, but that’s not entirely true. If you don’t have a worthy internet presence or a following, chances are, you’re not going to get into an affiliate program because merchants don’t really have any use of you. With that being said, if you do have somewhat of a following on social media or any other online platform – you can become one of them.

Source: Voluum

Who Are Affiliates?

More often than not, affiliates are bloggers, internet celebrities or notable content makers – regardless of what kind of content they’re making. A substantial following is the key factor for this marketing form, because if you don’t have a following that’s going to click the link or make a purchase – you won’t make any money. You could get the merchant to cooperate with you through an affiliate program even if you don’t have a large following, but then again, what’s in it for you?

Who Are Merchants?

Merchants or advertisers are the companies that advertise through the bloggers and content makers we’ve just mentioned. They’re willing and able to pay commissions or sales percentages to those same people in order for them to promote or advertise their product or service.

The relationship between merchants and affiliates is pretty straightforward. Merchants expect you to reach an audience and convert them into buying customers that will increase their revenue. That way, the merchant makes more money and when they do – affiliates make money, as well.

Source: Rock Content

How Do Affiliates Make Money?

As an affiliate, you’re paid solely based on how you perform and how much traffic or sales you generate for a merchant. In general, there are three performance-based models through which affiliates make money, PPC, PPL and PPS, or pay-per-click, pay-per-lead and pay-per-sale.

You can probably tell from the name how each of these ones works, but just in case, we’re going to cover the basic concept of all three of them, but if you want to know more about each of them, feel free to visit this website and learn more about them.

In a nutshell, here’s what all three of them mean.

  • PPC – An affiliate gets paid according to the number of valid clicks generated through their affiliate link. It does not matter whether a click results in a sale or not.
  • PPL – An affiliate gets paid according to the number of actions taken through their affiliate link. An action could be anything from a sale, installation of an app, creating an account etc.
  • PPS – An affiliate gets paid according to the number of sales that are generated through their affiliate link. In most cases, they will get paid a percentage, rather than a set amount per sale.
Source: Affiliate Marketer Training

What Are Affiliate Links?

We’ve mentioned them several times in the article already, so it’s only appropriate to explain what they actually are. Basically, once you agree upon an affiliate program, you’ll get an affiliate link. That link will contain your ID, in some shape or form, and every time a click, lead or sale is made through that link, the merchant will know it was because of your successful marketing campaign and you’ll earn some money. And oh, if you’re wondering how merchants know you’re the one responsible for a click, lead or a sale – it’s because of the web browser cookies.

How Does It All Work?

So, let’s sum it all up! A merchant pays an affiliate for them to advertise their products, but instead of paying them an upfront fee for the ad, they pay them based on how successful their marketing campaign is. If this becomes a successful endeavour, both parties make money and if it doesn’t turn out to be lucrative – well, at least nobody’s losing money.

Source: ThirstyAffiliates

How Can You Become An Affiliate Marketer?

Generally speaking, all you have to do is get in touch with some companies that are known to run these programs and approach them about collaborating together. Finding them won’t be hard, as many of them are eager to run an affiliate program, because quite frankly, it’s the cheapest form of advertising for them.

However, you will have to have an online presence that can convince merchants you can actually help them grow their business or improve sales. So, before you even get started with marketing, you might want to start building your online presence first. On the other hand, if you got that covered, chances are, you won’t even have to seek out merchants – they’ll come looking for you.

Affiliate marketing can allow you to have a steady stream of passive income. Check out this guide from Yieldstreet about how you can generate passive income with alternative investments.

Should You Become An Affiliate Marketer?

Should or shouldn’t you do it is not for us to say. What we can say is, it’s a fun and relatively easy way to make some money. The truth is, most bloggers or other content creators have more than one affiliate program going for them, so, you could say that if you could do it – you probably should.

Source: Johannes Larsson

There you have it. Hopefully, our brief overview of affiliate marketing was helpful and informative and you now know how it works.

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