The $6.8 Billion Industry
According to market research, that’s how much the affiliate marketing industry will be worth in 2020. Now, that’s a pretty big industry by any measurement, and in this Beginners Guide to Affiliate Marketing, we’ll show you how to enter the field of play.
Moreover, $6.8 billion isn’t even the global figure; it’s only accounting for the United States. Seeing as affiliate marketing is now a phenomenon across the world, the global figure will be much higher.
Not that this should really be surprising. Particularly, if you consider that it costs next to nothing to start affiliate marketing, and there are no barriers to entry.
Translation: Anybody can start affiliate marketing.
So, Exactly, What is Affiliate Marketing?
OK, maybe you heard about affiliate marketing as a way of making money online, monetising your blog or by promoting products for financial rewards?
I’d say Affiliate Marketing covers these and more, so what we’ll do in the next few articles is provide a clear definition of the concept, look at various affiliate marketing methods and wrap up with an outline of some ways you can get into the mix.
What we’ll cover in the following articles is:
This guide is aimed at beginners and it’s not just for Australians either. Affiliate Marketing lets you market products and services right across the world!
So, without further ado, let’s dive straight in.
How does affiliate marketing work?
Well, the good news is that affiliate marketing is not rocket science, and that’s probably why it is becoming increasingly popular as a way to boost income. The principle is simple:
You earn money by referring customers to an online merchant.
The picture illustrates a typical Affiliate Marketing process. In this scenario, you have a website of your own and use it to funnel people to a merchant’s website. If the person buys something from the merchant, then you get a commission payment.
Merchant? In this context, we’re talking about any company or individual who is selling a product or service online and run an affiliate program.
The merchant’s affiliate program is something you join before you begin promoting their products or services. In most cases it’s straightforward and we’ll walk you through an example in Lesson 6: Joining Affiliate Programs.
One of the more famous merchants you’ve probably heard of is Amazon. They built their business on a foundation of affiliate marketing.
Here is a quick video example of how an affiliate link works in practice. If you can understand this, then you’ll have understood the basic principle of affiliate marketing.
In the video, we showed a couple of basic examples of:
- Getting your affiliate link
- Adding it into your blog content
- Showing how you make a commission from a sale
The video also illustrates that not all affiliate programs are equal.
Amazon offers a low percentage of the sale. GetResponse is a Software As A Service (SaaS) platform paying out higher commissions that recur monthly.
When you begin affiliate marketing, you’ll discover there are thousands of affiliate programs you can join covering all types of products and services.
Do I have to have a website of my own to do Affiliate Marketing?
The straight answer is no. You can do affiliate marketing without a website.
However, I say this with a caveat – you’ll be far better with one than without.
Having a website of your own will give you a more extensive range of opportunities. For instance, when you apply to join merchants’ affiliate programs, many will expect to see your website address in the application form.
Think of having a website as being the equivalent of having a degree when looking for a job. You might find work without one, but your range of opportunities will only increase if you have it in your promotional arsenal.
Setting up a website / blog is as easy as A-B-C
If you are a technophobe or the thought of setting up a website sounds a bit intimidating then don’t worry, you’re covered here.
I put together a straightforward tutorial for you to follow. You’ll have your very own WordPress website up and running in less than 20 minutes and on a shoestring budget.
We cover this in Lesson 5: How to start Affiliate Marketing.
Other channels you can utilise with Affiliate Marketing
Even though having a website is both prudent and desirable, there are plenty of other ways you can promote products and services. Here are a few to consider:
Social Media Channels:
Question and Answer Sites:
- Experts Exchange
- Yahoo Answers
- Various Niche Message Boards
Smart Affiliates use a combination of methods.
We cover promotional channels and sales funnels in Lesson 7: How to promote products and services with Affiliate Marketing.
How does a merchant know where the referral came from?
When you join a merchant’s affiliate program, the affiliate links and promotional materials provided contain a unique tracking code so the merchant can identify any customers that you refer.
How does an affiliate link click generate income?
The merchant outlines the payment schedule in their affiliate program. The terms of which define the following:
- What type of customer action triggers a commission (reward)
- How much the merchant pays you
- The date of payment
- The method of payment
- Cookie Life
- Agreed ways you can promote products and services
Let’s break this down:
What type of action customer action triggers a payment?
There are different types of affiliate models, including:
- CPS (Cost Per Sale)
- CPA (Cost Per Action / Acquisition)
- CPC (Cost Per Click)
- CPI (Cost Per Install)
- CPM (Cost Per Mille).
We cover these in more detail in Lesson 2: The Different Types of Affiliate Marketing
As this article is part of a Beginners Guide to Affiliate Marketing, we’ll keep it simple. For now, let’s focus on CPS (Cost Per Sale) Affiliate Marketing.
CPS Affiliate Marketing means you get paid a commission if the person you referred buys something from the merchant.
How much commission does the merchant pay you?
You’ll usually find that merchants pay either a bounty (fixed amount) or a percentage of the sale. For example, a web hosting company like Bluehost pay a fixed $65 per referral.
In contrast, Amazon pays a percentage of the sale. You’ll usually find most Amazon products have a 3-5% commission, although the broader range is 1-12%.
In fact, many affiliate programs offer better incentives than Amazon; we’ll show you where to find them in Lesson 6: Joining Affiliate Programs.
The Payment Date – When do you get paid?
Payment schedules vary a lot across affiliate programs. It’s purely dependent on what the merchant outlines in the terms and conditions. Some merchants might pay out within a week; others may take around three months.
Payment Method – How do you get paid?
While some companies will still send you a paper check; most merchants pay digitally. Either by direct deposit into your bank or through a payment provider like Paypal or Payoneer.
Promotional Methods – Restrictions
The terms of the affiliate program also define the conditions of promoting the merchant’s product and services.
Some affiliate programs may forbid certain types of promotion. Each merchant is different.
Our advice is to seek clarification from the affiliate program manager if you are in any doubt.
What is an Affiliate Cookie?
If somebody clicks the affiliate link on your website or social media, they are referred to the merchant’s website.
As a result, the merchant stores your affiliate ID in a tiny text file known as a cookie). Cookies are stored in the visitor’s web browser to track website visits.
Every cookie has an expiry date and it’s set by the merchant.
To explain how the cookie expiry date works, let’s assume the merchant is giving a 30-day period.
Now, if the person you referred makes a purchase from the merchant’s site within 30 days (the cookie expiry date) then you get credited with the sale.
The website remembers that you had referred them initially because the cookie is still “live”.
The period is known as the “Cookie Life” and 30 days is average.
To summarise, the process for starting out as an Affiliate Marketer in Cost Per Sale (CPS) affiliate marketing is as follows:
- Decide on your niche (area of speciality) and decide what products or services you wish to promote.
- Find providers (merchants) who sell the product or service.
- Sign up for the affiliate program
- Promote the products and services on your website, blog or social media channels.
- Get paid commissions for referrals who buy from the merchant.
I hope this helped provide a clear (albeit basic) outline of affiliate marketing. This is only the beginning of the article series, but please feel free to provide feedback or drop any questions in the comments below.
In the next instalment of A Beginners Guide to Affiliate Marketing, we’ll take a look at some different types of marketing models.