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  • What Is Affiliate Marketing and How Does It Work for Beginners?

What Is Affiliate Marketing and How Does It Work for Beginners?

Category: B2B News
What is affiliate marketing?
Affiliate marketing is a marketing model where a business rewards a partner or an affiliate with a share of a sale that an affiliate brought using their own marketing efforts. It consists of the vendor, platform, seller and customer all working together to sell a product.

Imagine waking up in the morning and, instead of looking at what’s in the news or on the latest baby video from your neighbor, you see how much you’ve earned when you were asleep. Passive income is the dream, after all, but how do you get there? Affiliate marketing can be a good way to start.

Affiliate marketing is based on the concept of revenue sharing. For vendors, affiliate marketing enables them to reach a market that would be otherwise closed to them, thus earning more. For affiliates, you can promote a product and get income from it. It’s a symbiotic relationship that won’t work if either party is not willing to share revenues.

This marketing model can be difficult to navigate for beginners, so we’ve prepared a short but essential guide on what you can do to begin. After reading this article, you’ll learn the basics of affiliate marketing, the different players that make it work and where you fit in. For vendors, meanwhile, we understand tracking affiliates can be a pain, especially if you have hundreds of partners. SaaS-enabled affiliate marketing software can allow you to manage your affiliates and create campaigns for them. You can skip to the last section of this guide to find the platforms most suitable for you.

what is affiliate marketing

Affiliate marketing may sound new, although it has existed as long as the consumer part of the internet. Amazon Associates was one of the first, and from there the idea of passive income merely by promoting another’s products has stuck.

Today, it’s enjoyed both by vendors and marketers as a cost-effective way to push their products and services to public consciousness. In 2016 alone, vendors have spent a total of US$ 4.7 billion, which is expected to rise to US$6.8 billion in 2020. This represents the spending of 81% of vendors who are using (and have used) affiliate marketing.

affiliate marketing investment

On the other hand, affiliates have published 175% more content in the last few years, with a correlative 240% increase in revenue. This is why some affiliates have taken to calling themselves “content creators”, especially YouTubers.

With a global investment of over US$16 billion and an annual growth of 10.1%, affiliate marketing is only growing. It might be high time for you to jump on the bandwagon.

What is affiliate marketing?

What is affiliate marketing and how does it work? Also called AM, it’s a marketing model where a product creator pays a commission to an external marketer for sales or traffic generated by that referral.

When you become an affiliate, you promote a vendor’s product on your own channel. When a user buys the product, you get a share of that sale. Products are not the only things that you can earn from this way, though. Some vendors even reward affiliates with earnings when a consumer does a desired action, such as clicking the affiliate link, signing up for a webinar, or subscribing to a newsletter.

Affiliate marketing involves four components:

  1. The vendor (also called the seller or the brand);
  2. The affiliate (also called the partner or the publisher);
  3. The affiliate network (also called the platform)
  4. The consumer (also called client or customer).

Some publications look at the affiliate marketing ecosystem as just the first three, while still others condense it to just the vendor and affiliate. In any case, all four are important for affiliate marketing to succeed.

There is a reason affiliate marketing is a steady and mature revenue stream, but don’t just take our word for it. Here are key affiliate marketing facts you should know:

  • It accounts for approximately 15% of digital advertising revenue in 2019 (Business Insider).
  • It’s also growing 10% every year since 2015 (Business Insider).
  • 81% of brands and 84% of affiliates leverage affiliate marketing (Mediakix).
  • Almost 30% of affiliates earn up to $20,000 a year (Finch Sells).
  • The Amazon Associates program is the longest-running affiliate program since it launched in 1996 (Shopify).
  • Amazon Associates commands almost 40% of the affiliate network market share (Datanyze).

affiliate marketing how it works

How is influencer marketing different from affiliate marketing?

Influencer marketing derives its value from a brand having a relationship with a social media personality (the influencer), who will then promote the brand to their followers. By contrast, affiliate marketing is akin to a business model, where referrals are the main source of revenue. Some affiliates, however, can become an influencer in their own right, especially if they do most of their content curation and promotion using social media.

They’re not mutually exclusive, however. Influencers, particularly those on YouTube and Instagram, also leverage affiliate marketing as another income stream. Likewise, affiliate marketers can tap influencers for the same purpose.

How to earn in affiliate marketing in 6 steps

You can simply make a sponsored post, but for people to click your affiliate links, you should be positioned as an authority in your field. After all, why would anyone believe what you say, let alone buy what you’re promoting?

If you’re looking for ways on how to start affiliate marketing, follow these six steps.

1. Make a website or blog

If you don’t have one yet, create a website or blog as it will be the foundation for your affiliate marketing efforts. CMS software will give you all the features you need to publish and promote your affiliate offers. This is, fortunately, the easiest part of the process.

affiliate marketing content

2. Find your niche

Next, you should find a topic—a niche—that you want to promote in. This is the most important (and arguably the most difficult) step of affiliate marketing. Like any business that hopes to offer a market-changing product, you need to ask yourself key questions.

  • What am I passionate about?
  • Is there demand in this market?
  • Can I create dozens of content (even hundreds) for this market?
  • Is there an affiliate program for this market?
  • Is this market saturated with affiliates?

3. Find your affiliate network

Next, choose an affiliate network. You can certainly have an agreement with a small business and promote their products on your own website or blog, but that’s dreaming small. Dream big—find an affiliate network that offers a catalog of products in your niche that you can promote to your followers. In this step, narrow down the things you want to promote. Do you want to focus on products or services? Or would you market physical or digital goods?

It’s also a good idea to research the product itself, as promoting it will invariably link it to your image or persona. That means finding a high-quality product that you can stake your reputation on. Bad products will only make your authority plummet.

affiliate marketing search

4. Create authoritative content

Speaking of authority, the next step is to create content that will make you an expert in your niche. For some affiliates, this is where the bulk of their work goes. Being an authority is extremely important when making content that generates leads. For example, someone who doesn’t know how to swim can’t hope to sell a course on diving.

Being an authority doesn’t happen overnight, however. To do it, you need to produce high-quality content consistently. This is where the third question on the “Find your niche” step is going to matter. Do this by making several types of content in several days—60% of marketers usually make one type of content every day. Other kinds of content include evergreen content and product reviews, but whatever the case, mind your SEO. These SEO statistics will give you a heads-up on how to create a strategy in this field.

5. Build an audience

Before you promote products as an affiliate, you need to promote your website or blog. No one will buy anything, no matter how world-changing, if no one knows about it. The easiest way is to promote it on your social media accounts. Another is to guest-post in high-traffic blogs that are relevant to your niche. Still another way is to invest in one of the top email marketing tools or to opt for paid advertising. Once you have enough followers going, it’s time for the next step.

6. Advertise your affiliate offers

This is where you finally promote the product. When promoting, the idea is to offer something that will be of further value to your followers other than the advice they get from your content. You can approach this in several ways. The easiest is to give discounts and promos, which is useful if the product you’re promoting is on sale or if you have a special discount code as an affiliate. Otherwise, you can do product reviews (see the “Create authoritative content” section), ads (such as banner or sidebar ads), or even emails. You can even in-line link to your product in a blog post, but make sure it’s organically inserted.

Repeat steps 3 to 5 every time you need to promote an affiliate offer, but remember: content is king. Most people will trust the product you’re promoting if they already trust the content on your website or blog.

Examples of affiliate marketing networks

It’s all well and good that we now know how to earn from an affiliate marketing program, but where exactly do you find a product that you want to promote? Googling “affiliate marketing programs” gives you a slew of networks choosing one may simply cripple your ability to decide. Here, we list the three of the most common that can give you a headstart on your affiliate marketing dreams.

Amazon Associates

Everybody knows Amazon; people flock to this platform to buy anything from Madagascar hissing cockroaches to your next Kindle. As an affiliate, Amazon is one of the best ways to begin your affiliate marketing journey. Amazon guarantees up to 10% commission for any qualifying product referral from your link plus anything that the user purchases from that link. Many people consider Amazon to be a rabbit hole due to its massive inventory, so it’s easy to rack up big bucks as long as consumers see the content relevant.

There are two drawbacks to this program, however. First, Amazon only pays by check, bank transfer, or Amazon gift card. Second, their affiliate cookies only last for 24 hours. This means if the user just bookmarks your referral and only makes a purchase a few days later, you won’t get a share from the sale.

For vendors, listing your product on the Amazon platform allows you to tap into their enormous consumer base with over 900,000 affiliates (which Amazon calls “associates”).

ShareASale

ShareASale is one of the biggest AM platforms with over 19 years in the business. It has over 4,000 brands ready for affiliates to choose from, with over a thousand of them ShareASale exclusives. On the other hand, it has over 700,000 affiliates, 80% of them active members of the platform. Affiliates also find that the platform’s metrics, which help give you an insight into each product’s performance, are also attractive features. These metrics include average earnings per click and average commission.

ShareASale also offers a quick and flexible payment cycle and support both standard and digital payments. They pay out on the 20th of each month, assuming your balance is at least $50. The only downside with this platform is that they usually take more time to set up than their competitors, which might turn off some novices who don’t know where to start.

Clickbank

Clickbank is one of the original affiliate marketing programs. It originally focused on digital goods, though it has diversified its portfolio and now offer physical commodities. This is why Clickbank is the go-to affiliate marketing platform for vendors selling digital products, especially online courses. Among its useful tools for vendors include an affiliate finder utility that lets you find the affiliates that market products similar to yours.

The biggest snag of Clickbank is on the affiliate side, though. The platform enforces a maximum of $150 commission for each sale. Plus, all sales also have a 60-day money-back guarantee. This can improve conversion rates, but it may also mean that you may not earn as much as you think you could.

Affiliate Networks Market Share

Amazon Associates VigLink CJ Affiliate SkimLinks ShareASale Others
Amazon Associates (39%) VigLink (9%) CJ Affiliate (9%) SkimLinks (8%) ShareASale (7%) Others (28%)

Source: Datanyze

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Examples of affiliate marketing software for vendors

For a vendor, tracking affiliate marketing activities takes a lot of work. Fortunately, there are several solutions to help you stay on top of everything. The best tools in 2019 often use the cloud, allowing you to use them anywhere and scale them to your needs. We’ve compiled a few affiliate marketing examples that can manage your program, whether you’re just a small, one-person seller or a retail giant.

Post Affiliate Pro

Post Affiliate Pro can monitor commissions for your affiliates, with the ability for mass payouts and performance awards. It has a simple UI that can accurately track and manage your partners. The main thing that differentiates it from others on this list is its excellent value for money; Post Affiliate Pro pricing starts at $97 a month. With Post Affiliate Pro, you can improve SEO for external affiliate links, use its open API for integrations with the tools you use, and scale it depending on the size of your partner network. All in all, with support for multiple languages and plugins, Post Affiliate Pro offers a no-nonsense approach to managing your marketing enterprise.

Tipalti

Tipalti is one of the most robust and fully featured platforms we’ve come across, but this is thanks to its all-in-one payment management system. This powerful software automates and simplifies finance management, including payouts to your affiliates. It can rival that of leading tax software solutions, as it has a module that allows it to comply with tax regulations and VAT rules for international markets—up to 190 countries! Thanks to its payment automation features, Tipalti is the favorite payment system of CEOs and COOs worldwide, serving up to 250,000 payees worldwide and transferring over US$1 billion annually in payments. Other Tipalti benefits include a remittance validation system that checks more than 26,000 international standards for compliance, support for 120 currencies and 6 payment methods, and advanced report generation.

Trackier

Trackier is another popular solution, especially with advertisers and ad agencies. This platform provides these individuals with a platform that they can use to handle their entire marketing and advertising endeavors, allowing them to create, customize, and automate marketing campaigns with their affiliates. Trackier features more than 99% uptime and fraud detection, among others, which means users will never fear data loss and security issues. The platform’s developers are more than happy to accommodate users who need a customized solution for their specific needs that don’t come out of the box.

post affiliate pro dashboard

Affiliate marketing software like Post Affiliate Pro makes it easy to track your clicks and earn your dues spot on.

Are you a seller? Leverage technology

Affiliate marketing is a great way to earn passive income, and for vendors, it’s also a great way to reach an audience that would otherwise be out of reach of your traditional marketing methods. Using it to your advantage takes a bit of work and moxie, but so do other forms of marketing or strategies. Do it right, however, and earning while sleeping will not only be a dream but a reality.

That said, if you’re a seller, make technology works for you. Turning to affiliate marketing software helps you manage affiliates better and deliver commissions with accuracy. You can choose from among the top affiliate marketing solutions in the market today.

By Nestor Gilbert

Senior writer for FinancesOnline. If he is not writing about the booming SaaS and B2B industry, with special focus on developments in CRM and business intelligence software spaces, he is editing manuscripts for aspiring and veteran authors. He has compiled years of experience editing book titles and writing for popular marketing and technical publications.

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