Affiliate marketing has taken the online advertising world by storm.
Indeed, many online shoppers now begin their searches for products or services by reading blog posts.
But did you know that those posts are most likely crafted by affiliate marketers who advertise for various companies?
Those marketers could be you in the future.
Affiliate marketing has gained a reputation as an accessible way to earn passive income, even if you don’t have marketing experience personally.
And that’s true!
Affiliate marketing can be a great way to earn passive income over time.
However, you must know how affiliate marketing works to get the most bang for your buck.
Today, let’s break down what affiliate marketing is and how you can start marketing in 2022.
What is Affiliate Marketing?
Affiliate marketing is an advertising method by which content publishers earn commissions (percentages of product sales) by promoting products or services on behalf of others.
Affiliate marketers advertise or promote products for other companies.
They receive a commission if those promotional efforts lead to sales, conversions, or other desirable metrics.
Simple, right?
Let’s take a look at an example.
Say that an affiliate marketer partners with a company that produces cleaning supplies.
The affiliate marketer then creates a blog post detailing cleaning strategies.
In the post, the affiliate marketer references one of their partnered cleaning company’s products.
If a blog reader clicks on a linked cleaning product and makes a purchase due to reading the blog, the affiliate marketer earns a commission.
Pretty easy, right?
But it gets even better for you, the aspiring affiliate marketer.
Affiliate marketing programs are either free or very cheap to join.
They can be highly profitable and advantageous for content creators, bloggers, and other online business owners.
What’s not to like?
Affiliate Marketing Definitions
Here’s a breakdown of some of the most important affiliate marketing definitions:
- Affiliate link – An affiliate marketer’s website links to a product, service, or page for one of their partners.
Affiliate links inform the affiliate’s partner that a viewer/customer came from the affiliate marketer’s blog/website - Affiliate program – A program where an advertiser or business owner pays commissions to affiliates in exchange for promotions on that affiliate’s blog, content network, or other materials
- EPC – Earnings per click. EPC is the average amount of money earned each time a person clicks an affiliate link
- CPA – Cost per acquisition/action. It’s a metric that measures conversion rate compared to money spent on advertising
- RPM – Revenue per mille. Mille is another word for thousand.
This metric breaks down the revenue per 1000 page views for a webpage and can be used to determine the efficacy of affiliate marketing content or programs - ROI – Return on investment, which measures how much of a profitable return an affiliate marketer, an advertiser, or another party receives in exchange for their investments
How Does Affiliate Marketing Work?
Affiliate marketing works a little differently for each party involved.
But the basic process is ultimately the same:
- An advertiser or company enlists the help of an affiliate marketer to promote their products or services
- The affiliate marketer creates content.
Then they either directly advertise for the advertiser/company in that content or weave subtle promotions into the content depending on the strategy - A consumer views the affiliate marketer’s content, like a blog post or YouTube video, and clicks on an affiliate link
- If the affiliate link click leads to a desirable outcome – such as a page view or purchase – the affiliate marketer receives a commission or percentage of the resulting sale
Let’s take a closer look at how affiliate marketing works for each party involved in the affiliate marketing process.
How it Works for Product Owners
Product owners, product creators, or sellers kickstart the affiliate marketing process.
After all, they’re needed to enlist the help of affiliate marketers in the first place.
Product owners seek out affiliate marketers to perform a specific type of advertising or product promotion.
For example, a graphic design company might enlist an affiliate marketer to create web copy, like blog posts.
They hope that the affiliate marketer’s content will bring visitors to their site and convert them into clients/paying customers.
How it Works for Publishers and Affiliates
Affiliates or content publishers can include companies or individuals, depending on the size of their organizations.
In any case, affiliates and publishers join affiliate programs that product owners or companies run.
Once they join an affiliate program, they create content to appeal to their partners’ target audiences.
For example, if an affiliate marketer promotes a cleaning company, they create blog posts breaking down cleaning tips, great cleaning products to purchase, and so on.
The affiliate marketer only gets a commission or portion of the revenue made if their efforts lead to conversions, impressions, or sales.
It all depends on the specifics of the affiliate program in question.
So, while affiliate marketing can be easy money, it can also lead to no money.
It’s a far cry from a guaranteed paycheck!
How it Works for Consumers
Consumers are also necessary for the affiliate marketing process to work.
Consumers read or consume the content from the affiliate marketer, then either click affiliate links or choose not to.
If they click on affiliate links, they count as impressions or leads generated by the affiliate marketer.
Notably, consumers must be made aware that affiliates receive commissions for advertised or listed products in their content.
Legally, all affiliate marketers must disclose their relationships to retailers or product manufacturers.
This allows consumers to make educated decisions on whether an affiliate marketer’s content is trustworthy.
How it Works for Affiliate Networks
Affiliate networks are groups of loosely associated companies that produce complementary or compatible products.
They team up and pass leads to each other to improve everyone’s success.
For example, an auto repair shop might join an affiliate network with an auto cleaning supply company.
Both companies create content that directs traffic between each other.
In theory, this leads to greater sales and more traffic for both companies across the board.
Types of Affiliate Marketing
As affiliate marketing has become more popular and profitable, distinct affiliate strategies have become more well understood.
There are three broad types of affiliate marketing you can pursue.
Unattached Affiliate Marketing
Unattached affiliate marketing means that affiliate marketers have little to no authority in the niche or specialization in which they advertise.
There aren’t any connections between affiliate marketers and their customers.
In many ways, this is the easiest way to affiliate market, but it runs the risk of not being profitable.
Since unattached affiliate marketers don’t build connections between them and their viewers or consumers, they rely on pay-per-click advertising campaigns in most cases.
They create a lot of content and hope that consumers click on the affiliate link, earning them a small commission in the process.
On the downside, there’s no audience trust.
So getting those clicks can be tougher than you think, especially if the target audience relies on trust before buying something.
Related Affiliate Marketing
Related affiliate marketing involves affiliate marketers promoting services or products they don’t personally use that are nonetheless related to their niches.
Related affiliate marketers have target audiences in industries or niches and often have dedicated audiences who regularly consume their content.
In other words, they build up trust with their readers/consumers.
This makes them very valuable to companies who want effective affiliate marketing services.
For example, a baking company might rely on the affiliate marketing of a recipe website.
The recipe website may not have personally tried the baking company’s foods.
But since they do have expertise in cooking in general, their audience is still likely to trust their opinion (in theory).
Involved Affiliate Marketing
Involved affiliate marketing involves only recommending or promoting products and services that you’ve used personally and will believe in.
It’s the exact opposite of unattached affiliate marketing, and it takes the longest to become profitable.
That said, it can be very advantageous.
Involved affiliate marketers build up a lot of audience trust and have dedicated audiences they advertise to regularly.
Since they use the products and services they promote personally, they offer trusted recommendations and opinions that their audience members are likely to take to heart.
This type of affiliate marketing takes more time, but it might just lead to a very sustainable business model… and lots of passive income for you.
Types of Affiliate Marketing Programs
The nature of an affiliate marketing program – and the consumer actions it wants to generate – can heavily affect whether one or another is right for your goals.
Let’s take a look at the four common types of affiliate marketing programs.
Pay-Per-Sale
Pay-per-sale affiliate marketing programs are the simplest and most common type.
In short, you (the affiliate marketer) get a commission for each sale a customer makes, provided that the customer came to the product creator’s site through your affiliate link.
Pay-Per-Lead
Pay-per-lead affiliate marketing programs instead reward affiliate marketers whenever a consumer signs up for something, like an email newsletter, a website membership group, a subscription, etc.
Companies may use pay-per-lead affiliate marketing programs for sweepstakes offers, lead generation, and more.
Many beginning affiliate marketers enter pay-per-lead affiliate programs since it’s easier to make leads than sell products.
The reverse is true after an affiliate marketer builds an audience.
Once a marketer builds enough audience trust, they may find it easier to sell products directly.
Pay-Per-Click
Pay-per-click affiliate programs provide marketers with commissions each time a consumer clicks on an affiliate link.
These are rare affiliate programs since they reward affiliate marketers for the least consumer activity.
Generally, larger merchants who want to build or bolster brand awareness use pay-per-click programs.
Pay-Per-Install
Pay-per-install affiliate programs pay marketers for each time a consumer clicks on an affiliate link and installs software or mobile apps.
This is a distinct affiliate marketing model since the consumer doesn’t have to necessarily pay for the software or mobile app if they’re free.
Technically, there is a fifth type of affiliate marketing program: pay-per-action.
However, this generalized affiliate marketing program may include each of the above types.
Pay-per-action programs provide affiliate marketers commissions whenever a consumer does a certain action.
This can include submitting a form, signing up for a newsletter, making a sale, etc.
Types of Products to Promote
Affiliate marketers can promote a wide range of different products.
Generally, the most successful affiliate marketers stick to a single industry or niche and exclusively advertise products or services in that area.
For example, a yard supply affiliate marketer might exclusively advertise physical products that yard owners should find useful when maintaining their properties.
Such a marketer likely won’t advertise digital products like software (with perhaps a few rare exceptions).
Digital Products
Digital products are among the most common for affiliate marketers to promote.
Digital products include:
- Software
- Mobile apps
- Cloud software (shared/hosted by cloud servers)
Naturally, digital product affiliate marketing is more common in the IT industry, B2B marketers, and similar situations.
Physical Products
Affiliate marketers promote physical products even more commonly than digital products.
That’s because companies make physical products for practically every conceivable need and purpose.
Affiliate marketers promote physical products in industries including but not limited to:
- Car maintenance
- Yardwork
- Cleaning supplies
- Construction supplies
- Toys
- Outdoor equipment
- Household machines
- Computers and computer accessories
Because physical products are available in such sheer variety, most affiliate marketers in this field follow unattached or related affiliate marketing strategies.
They don’t necessarily use any of the products they promote or advertise.
Depending on their audiences, though, they can be more or less experienced/trustworthy regarding the quality of those products.
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