What Is Affiliate Marketing And How Does It Work?

Affiliate Marketing isn’t a very new concept. However, it has expanded with the growth of the Internet. On a basic level, the affiliate marketing stands for a process in which a company pays individuals to promote the products and services. These individuals are known as affiliates.

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A company pays its affiliates on the basis of various factors:

  • When an affiliate makes a sale.
  • When an affiliate generates lead for the company (pay-per-lead).
  • When an affiliate’s referral causes some sort of action, such as signing up for company’s free trial (pay-per-action).
  • When an affiliate meets the threshold of impressions (number of times the ad has been shown on the website).
  • When somebody clicks on the company’s campaign using the link provided by the affiliate (pay-per-click).

Amazon is known for initiating the very first affiliate program. Jeff Bezos, founder of Amazon, needed an affordable marketing program to sell books on his fledging online book-site.

So, he decided to join hands with some associates and decided to pay them whenever they referred a book to buyers or other individuals. In this way, people started recommending and talking about books. Soon it turned out that his online bookstore had become a huge success and was trafficked by a lot of potential buyers.

The best part of this program was it didn’t cost anything upfront to Jeff Beznos to market his books. His team did all the marketing for him and he paid them for that exposure AFTER the book was sold. Woah!

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Inspired by this marketing theory, other companies also came up with their own affiliate programs and soon it became a revolution. Today, you can choose to become an affiliate for thousands of companies’ altogether. Affiliate networks like commission Junkie and Linkshare have made it extremely easy for people and companies to manage their different affiliate programs under one space.

In a nutshell, affiliate marketing is a concept in which you promote a product or service and get a commission from those who purchase it, through your unique affiliate link.

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So, how does affiliate marketing work?

There are two ways in which affiliate marketing can boost your business. Let’s understand them in detail.

1. As a supplement to your current business

It’s a great way of earning additional income from your existing business stream. As there are millions of products and services that form a part of one or the other affiliate program, so the good part is you’ll find a program that is related to your business niche. Let’s say if you are a doctor, you can promote health and fitness products or if you’re a blogger, you can write reviews and articles for others mentioning the link of your blog affiliate program.

Therefore, it is imperative to choose the right affiliate program that suits your brand. Selecting a right affiliate program will help in promoting your business to a different level by recommending some basic products.

Also, you MUST carefully understand how and when you’ll be paid for referring a particular product or service. Different affiliate programs have different criteria and it is important for you to study them before you join.

2. Opt for your own affiliate program

 What can be better than having a team of people promoting your products and services and getting paid only after they make a sale for you?

Nothing!

That’s the answer for infamous question- how does affiliate marketing work!

And coming up with your own affiliate program is a great idea. It’s not as hard as you think. There are thousands of resources and tools both online and offline that can help you with it. The most successful affiliate programs pay generous percentage of commissions to their affiliates (50% or more of the sale) and the payment is done frequently.

But the question is- are there really any benefits of affiliate marketing and can you really make money with it?

Umm, let’s find out.

Benefits Of Affiliate Marketing Programs

There are various benefits of affiliate marketing programs. However, we’ll run you through some of the major advantages of undertaking it.

1. Startup costs are pretty low

Starting up any new business requires thousands of dollars including the rent, inventory and servicing and staff costs, whereas you can get registered for an affiliate program at the cost of burger and fries. Literally.

2. Staff is not required

Save yourself from all that office politics and payroll issues. You can manage it all by yourself and when the business grows, outsourcing is the best option. This is one of the major benefits of affiliate marketing programs.

3. You don’t need to come up with your own product

Yes, this is one of the important benefits of affiliate marketing. Instead of taking all the headache of your products, all you need to do here is to promote the products which are already out there for sale.

That is all.

How does affiliate marketing work- more successful you are in promoting such products, more money you can make!

4. You don’t need any expertise

You can start as a beginner and get going!

If you want to be an affiliate for a blog affiliate program, you don’t need to be a writer. You simply have to promote the link for that particular blog affiliate program.

Similarly, benefits of affiliate marketing include the ability of being an eager learner and targeting the right product to right people.

5. You can make extra-income

It is exactly like owning a house and giving it on rent. As long as you own that house and give it for rent, you’ll earn money. In a normal job, you get paid only once for the work you have done per month. But how does affiliate marketing work?

You keep on making money for the work that you have done already and every new recommendation adds to the money flow.

6. Work on your own hours and terms

It’s not like you’re sitting on a beach, having pina coladas and expecting the money to flow in from the very first month. But you certainly have the flexibility of working in your spare time or whenever you want to.

After all, being one’s own boss sounds good to everyone.

Making Money With Affiliate Marketing

Yeah, that’s true that one can make some good money with affiliate marketing but clearly, it requires a lot of efforts and patience. You cannot expect the money to pour in instantly with minimal efforts.

Generally, those who are good at marketing and know how to reach the target market for their products and services are successful. It’s actually better as you don’t have to have your own products and services. All you need to do is to promote the products and services provided by the other firm.

Business which start their own affiliate programs, have more potential to earn money with minimum investment. However, it is important to promote your affiliates and make sure that the products and services you offer for affiliate marketing are great, so that the affiliates feel confident while promoting them.

These little details can change the game. It might make you earn a lot or nothing at all.

How Much Money Can You Make With Affiliate Marketing?

Well, again, it all depends on how much efforts are you willing to make.

If you’re really serious and dedicated towards your affiliate marketing program, who knows you end up making a FULL TIME income from the same. However, for that you need to treat it like your real business and give nothing less than your 100% to it.

The more hours you spend on it, the more you earn. Let’s do some calculations to understand how much you can actually earn from it.

So, just assume that you are an affiliate for a training program. Consider that you earn over $106 from this. Say, that if you take this up a little more seriously and make at least one SALE per day, you end up earning $840 extra per week.

This accounts for an additional income of $3360 per month and over $40,000 per year.

That’s definitely a huge amount to earn!

This proves that affiliate marketing does have a lot of scope in every niche, provided you take it seriously and make some sincere efforts to make money from it.

Nowadays, various blog affiliate programs are doing really well. There are many e-commerce firms which are going strong with this kind of strategy and both the company and the affiliates are benefitting greatly from it. Affiliate Marketing has a sound future and a lot of innovations are yet to be done with this kind of business model.

Was this information helpful for you?

Name some popular affiliate marketing programs to us.

Also, let us know what kind of challenges you face if you’re a part of the affiliate program and how much do you make on average. You can share your answers and suggestions on this in the comments section given below.

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