how affiliate marketing works

Affiliate marketing is without doubt one of the quickest ways to get started in online marketing.

It's easy to see why this relatively new industry has grown at the exponential rate that is has, and why so many people now want to learn affiliate marketing skills.

An affiliate marketer doesn't have to come up with their own product idea, or worry about procurement and logistics.

And the producer of the product or service also gets a great deal because it’s a “pay per performance” arrangement.

As the product owner, you only pay when the affiliate marketer brings you a lead, or a sale. You determine what triggers a pay-out and how much that pay-out is.

What Is Affiliate Marketing?

My favourite affiliate marketing definition is this:

Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products“.

Pat Flynn

I think you'll struggle to find a better affiliate marketing definition than that.

Sometimes there are 3 parties involved:

Product Owner/Seller  Affiliate Marketer ⇒ Customer

And sometimes there are 4:

Product Owner/Seller  Affiliate Network ⇒ Affiliate Marketer ⇒ Customer

In the first option noted above, the product owner hosts and manages their own affiliate program. The affiliate marketer then applies to sign up to that specific affiliate program directly with the product owner.

In the second, the product owner distributes through an affiliate network and the affiliate marketer applies to market their products through the affiliate network.

How Affiliate Marketing Works

how affiliate marketing works diagram illustrating a six stage process
How Affiliate Marketing Works

To put it very basically, an affiliate network hosts the affiliate programs of many different product owners, allowing the affiliate marketer to use the network like an affiliate program supermarket.

Affiliate networks take a commission as they are not only bringing the parties to the arrangement together but will also be managing the payment of future commissions etc.

Some of the better known networks include the following 5:

What Does An Affiliate Marketer Actually Do?

An affiliate marketer promotes one or multiple products and/or services, and works to attract interested potential customers who may, or may not, go on to make purchases.

If a purchase is made as a result of a customer clicking through to an offer via the affiliate marketers link, the affiliate marketer will be due a commission from the seller.

Is Affiliate Marketing A Passive Business Model?

It is absolutely possible for this business model to eventually generate passive income for you, once the hard work has been put in at the start.

And it's like everything else in this life…the more effort you put in, the more success you will enjoy, and conversely, neglect will undoubtedly show up in your results before too long.

In broad outline, there are 8 steps to follow:

  • Choose a potential niche;
  • Check for a decent amount of keywords around the niche, both short-tail and long-tail;
  • Check for products/services in that niche that you can genuinely recommend (and that will be profitable);
  • Research your niche for indications of it being a good buyer’s market without excessive competition;
  • Build a high-quality website around your niche, the days of throwing up trash micro-sites are long gone;
  • Attract targeted visitors to your website (organically and/or through PPC ads);
  • Build an email list from the visitors to your website;
  • Make affiliate sales either directly off your website or with follow-ups to your email list (earning an income).

If you are real serious about making an ongoing income from affiliate marketing, I would strongly suggest that you follow the guidelines below from day one:

  • Only recommend products/services that you know and understand well — do not promote stuff that you cannot genuinely recommend.
  • Simply recommend products/services based on your experience – try to avoid telling people to make a purchase.

Try and keep this thought at the front of your mind:

Are your recommendations likely to help people?

If the answer is yes, then it's all good.

If not, simply move on and find another niche, where what you can offer to potential product buyers will be genuinely helpful.

Let's take a closer look at the critical first step…

Choosing A Niche

Undoubtedly one of the most important steps when starting out is finding and deciding on the right niche for you.

crowd of people at airport

What will your site be about?

Who will it be for?

The first three steps noted further above are all about selecting and qualifying a niche that is right for you.

Get this part wrong and you will have nothing to sell and no market to sell too.

Start by thinking about what interests you!

What do you like doing? What excites you, or at leat interests you?

Don't get me wrong here, I'm not saying your chosen niche has to be a passion. It absolutely doesn't.

But it does need to be something you find interesting enough to build a website about. If you come up with a potential niche idea but the thought of spending hours researching and producing content about it bores you, it's probably not the niche for you.

Anyway, possible niches…

…these could be absolutely anything…and I really do mean anything, try this lot on for size:

how to become an actor, how to be a better DJ, muscle building, great fitness in middle-age, best vacuum cleaners, cake decorating, home schooling, virtual worker advice, career change, being a better public speaker, best home robots, home fitness equipment, alternative energy advice, learn to play the guitar, self-sufficiency, wilderness survival, best home coffee machines etc.

You get the picture.

Let your mind wonder, and when you think you've got an idea for your first niche, start your research.

Don't rush this part, but equally don't make the mistake of looking for the “perfect niche” and end up spending all of your time on this part, without ever getting your site up and running.

Ideally, you'd want to promote products that you've used and benefited from yourself, and as long as there is an affiliate program available for them, you can do exactly that.

If choosing the right niche is like building the engine of your car, the next phase is all about the putting in the chassis and frame.

Build A Website

Your website is going to be the gateway to your business and will be your chance to make a great first impression.

My preferred route is to use the Schema theme for WordPress by MyThemeShop because these guys know how to turn out speed optimised, SEO ready, responsive themes.

I get all my hosting done with WPX Hosting where I only moved to in June 2018. Can't quite believe I didn't move sooner, never any downtime, unbelievably fast and customer support that's is pretty much unbeatable.

Whichever theme and hosting provider you choose, you have to make sure that your website is fast and mobile friendly, if it isn't either of these things you will be on the back foot when trying to rank in search.

Do not get bogged down spending weeks and weeks building out your website before launching it.

Get a few pages of outstanding quality, core content up, and get it launched. You can then continue building out your site with additional quality content related to your initial core pages.

Attracting Targeted Traffic

Being able to find and attract targeted internet traffic is the lifeblood of an affiliate marketer.

Do not focus only on volume, focus on targeting

If you can repeatedly attract well targeted people to your website and have them sign-up to offers then you are well on target to achieving online success.

In fact, many people would say that if you can do this part, you are an affiliate marketer.

Finding targeted visitors is crucial.

People are relentlessly searching for all sorts of things on Google, YouTube and on all of the social media platforms.

You need to get in front of them when they are searching, with quality content that is of interest and that will potentially help them in their decision making process.

Make Sales And Earn An Income

The global industry is now a multi-billion dollar industry and is getting ever stronger.

Spending online continues to rise as each year and many affiliates are continuing to see explosive growth in their businesses.

You can claim your share of this amazing industry.

Learn the skills, find your niche, choose your preferred affiliate program and provide great value to your target audience.

And never forget that people can tell when you're sincere about wanting to help them, just as easily as they can tell when someone's just trying to make a quick buck out of them.

The Future Of The Industry

A study of affiliate marketing spending in the United States from 2010 to 2022, published by Statista, shows that U.S. affiliate marketing spend is projected to reach 8.2 billion USD by 2022, up from 5.4 billion in 2017.

Image: Statista

3 Key Factors That Will Drive This Growth:

1. Consumers Hunt for Content

Consumers are becoming ever more savvy in how they buy online.

They expect to be able to find high quality content online to help guide them in their decision making process.

This is huge for affiliate marketing and confirms that the days when just putting up a micro-site offering no real value are well behind us and with no signs off making a return.

The study expects that retailers will increasingly partner with content affiliates (bloggers and authority site owners) to help educate customers and to drive purchases.

Savvy consumers have come to expect a higher standard of native content resulting in a rise of investment toward influencer marketing programs and affiliate marketing in particular“.

Melissa Feemster of Rakuten Affiliate Network

2. Increasingly Sophisticated Methods of Attribution

First-click and last-click attribution doesn’t provide enough insight into the impact that affiliate marketing has throughout the full consumer purchase journey.

Many advertisers risk overlooking the blog post that made consumers aware of available products or services, the article that laid out the options available among different competitors, or other content that helped the customer choose the accessories for their recent purchase“.

Melissa Feemster of Rakuten Affiliate Network

Product owners that only focus on first-click or last-click attribution will fail to properly identify what is really influencing sales.

3. Value of Expertise

The study notes that affiliates tend to market themselves to product owners by emphasizing traffic volumes and site quality.

But retailers place high value on product and industry expertise when deciding which affiliates to work with.

If an advertiser wants to appeal to a niche market, then a publisher with lower traffic but deeper penetration into that niche market will be much more attractive to an advertiser“.

Melissa Feemster of Rakuten Affiliate Network

If you want longevity in your affiliate marketing business…

…either help solve peoples problems…

…or fuel their passions.

I really hope you've found this article useful.

I know it's super basic…but that's the point.

Maybe, hopefully, you now know just a little bit more about what affiliate marketing is, as well as how to become an affiliate marketer.

Reasons Why New Affiliate Marketers Fail

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Unfortunately, quite a few new affiliates never find any real, consistent success.

Here are some of the major reasons people fail in building their affiliate marketing businesses:

  • Failing to decide on a niche;
  • Choosing the wrong niche;
  • Selecting poor quality products to market;
  • Not keeping control of their PPC budget;
  • Failing to build an email list;
  • Giving up too soon.

This list is still missing the biggest reason most people will fail with their affiliate marketing dream…

…and it's this:

Most people will simply never get started!

Sure, they'll talk about it, they'll think about it, they'll dream about, they may even spend a ton of hours asking the universe to deliver them affiliate marketing success.

But they just won't act!

That's not going to be you is it? You're going to take action…just a little bit each day will put you at the front of the pack.

Still Interested In Getting Started With Affiliate Marketing?

I hope that while this ‘how affiliate marketing works' article is just a super brief outline, it will still have given you enough information to peak your interest further in this online opportunity.

Affiliate marketing success takes work, a lot of work. Some people don't want to hear that. But actually, you should be delighted by that statement, because it's why most people will give up and go home.

And when most people quit, you get to move to the front of the pack through straightforward ‘stickability'…I'm not sure that's a word by the way!

Maximising Your Chances Of Success!

poker chips in case

There is a ton of free information out there all about getting started as an affiliate.

It will take you quite a bit of time sorting through what's good and what's not, plus some trial and error…but it is possible.

But, if you're more like me, that is to say, the sort of person who always wants to try and fast-track everything, you may want to consider buying a top-level training course.

If you do go down this road, make sure you pick a good one.

My preferred training for new and intermediate affiliates is Authority Hacker's outstanding course ‘The Authority Site System‘.

I have a full review of this course on my site, you can find it here: The Authority Site System Review

Or if you want to see my current top 5 Affiliate Marketing training courses, check out this post: Best Affiliate Marketing Courses

How Does Affiliate Marketing Work? – Wrapping It Up

That's my basic run-down of how Affiliate Marketing works.

If you're looking for an online opportunity that could give you a great business for years to come, this surely has to be a top contender.

Personally, I would absolutely recommend that you get some help, but you don't have to, it is possible to figure it out for yourself…alongside loading up on free online resources.

Either way…

…good luck with your Affiliate Marketing business.

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