What is Affiliate Marketing

what is affiliate marketing
What is Affiliate Marketing? It’s the biggest business that nobody’s ever heard of — people outside the industry that is. Virtually every top household name business that you can think of from high street stores to supermarkets, airlines, travel companies, telecom companies, film companies to insurers, has an affiliate program that will pay you commission if you send them customers.

If you want to know how to make money online with affiliate marketing yourself, read on…

Also known as Performance Marketing, Affiliate Marketing is actually a very old business model — that of the ‘commission-only salesperson’, very attractive to the merchant because they only pay the affiliate if they sell something. No sale, no fee so it’s risk free for the merchant making it very attractive for them.

It’s also very attractive for the affiliates, primarily because of the ‘Laptop Lifestyle‘ it can provide. Not to mention the huge earnings it can generate if you get it right.

How does Affiliate Marketing work?

Imagine you want to be in business selling chairs. You’ve got to design them, manufacture them, hold stock, advertise, and sell them. In return you make say £40 on a £100 chair. Alternatively, you could be an affiliate for a chair manufacturer and receive a commission of say £5 every time somebody you send to their website buys a chair.

As an affiliate you receive a lot less money but you didn’t have to design and manufacture the chairs, hold stock or deliver them, and you don’t have to deal with the customer. The merchant does all of that, all you have to do is to send them the customer.

You don’t need all the resources and investment that the merchant needs. You don’t need to have a shop, just a website or an email list or a Facebook page.

All you do is to send the buyer to the supplier and receive a commission in return, the supplier does everything else.

What’s really attractive for the affiliate is the fact it’s all done online. Once you’ve built your website or whatever your traffic source is, then usually it all works automatically.

The website is busy selling for you 24/7 and all you have to do is lie on the beach, check your figures now and again, and bank your commission cheques. You can do this from anywhere in the world, it doesn’t matter where you are as long as you have an internet connection — you can be a Digital Nomad.

That’s the theory anyway…

In practice, it actually IS pretty much like that — if you can make it work. The difficulty is in finding firstly the right affiliate offers to promote that will make you a good commission, and secondly finding a means of driving traffic to those offers that costs you less than you earn in commission.

If you can do that successfully then the lifestyle this offers is unparalleled and you can make quite staggering amounts of money too. It truly is the dream life — you can work from anywhere in the world and do as much or as little as you want to.

Want to get started in affiliate marketing yourself? Get my free training…

The 2K Method: How to earn affiliate commissions by giving stuff away!

Does it really work – can I make money?

Sounds too good to be true doesn’t it? It isn’t.

Thousands of people all over the world make a very good living doing exactly this. I know because I’m one of them and have been for years. It’s not just a lucky handful, there are literally thousands of affiliates doing this very successfully.

Nobody wants to say how many affiliates they have but as far back as 2008, Amazon let slip that they had over 2 million affiliates worldwide. Now the vast majority of these huge numbers of affiliates are not earning very much money at all, and quite a lot will lose money before giving up, but there are still thousands who can and do make it work.

I don’t know any successful affiliate who would tell you it’s easy (although plenty of people will sell you a ‘system’ that promises guaranteed riches overnight), most have had to put a great deal of hard work into it over a period of time.

When you consider the potential benefits though — namely freedom from an office routine, the ability to work from anywhere in the world and earning money whilst you sleep — surely it’s worth a little work to achieve that?

eBay gave me permission to share some stats from their affiliate program:

  • More than 300,000 websites drive traffic to eBay through the eBay Partner Network.
  • More than one commissionable action per second takes place globally through the eBay Partner Network.
  • The top 100 eBay affiliates earn an average of $540K per year
  • Our top 1000 partners earn an average of about $70K per year.

The eBay affiliate program is such a huge opportunity that it deserves an article all to itself. Watch this space…

How do I get started with affiliate marketing?

Affiliate Marketing is a huge subject and there are lots of different ways you can make money. Which is best for you to start with depends very much upon your skills and interests. You may well try several different things before finding what works for you.

You will need to be prepared to invest some time, maybe even a lot of time, for little or no reward at first. You might well (probably will) even lose a bit of money at first. Not necessarily very much and you can limit it, but you will often be able to progress a bit quicker if you can afford to invest a little bit up front, rather than having to earn every penny before you spend it.

You can look upon any losses you make as the price of your ‘education’. Personally I’ve had a very expensive education but it was well worth it in the end!

Here are just a few examples of the sorts of things you could do:

  • Start a blog on a subject that interests you and earn money by recommending products that pay an affiliate commission
  • Write reviews of products or services and earn commission if people buy them
  • Build an email list and send them offers that pay you
  • Generate leads for other people and get paid for them
  • Find a product that you like and build a website to promote it

There really are lots of ways to make money online with affiliate marketing but whichever method you choose, there are some general principles and steps that are common to all.

1 – Pick your market (aka choose a Niche)

Whatever business model you choose, it’s going to be in a particular market. It goes without saying that the most obvious market is one that you already know something (or ideally a lot) about.

For example, don’t choose the Foreign Exchange Currency Trading market if you know nothing about it — choose something you know, it will be much easier. You are going to be spending a lot of time working on your affiliate marketing business so it makes sense to choose a market that you are interested in and enjoy.

Best of all would be something around your hobby or something you are passionate about — then it won’t seem like work.

The best job of all is to get paid for doing something you’d do for free

Niche is a much over-used and misunderstood word in Internet Marketing (and frequently wrongly pronounced to rhyme with ‘itch’!). A niche market is by defininition a small and specialist market that is too small for the big boys to enter. Niche markets could well suit an affiliate marketer because they will have less competition but that is because they are SMALL so your market is limited.

Too niche isn’t usually good, generally if nobody else is doing it that’s because it’s not worth doing.

So you need to make sure your market is big enough to be viable. You want to choose a market where customers are already spending money and where you know there is demand. That will usually mean there is competition so you will need to devise an ‘angle’ on that market — something to differentiate you from everybody else.

Lets say you are interested in photography and know a lot about it. It’s a huge market and thousands of people buy cameras every day but because of this there is TONS of competition. So you need to put your own slant on it, for example something like ‘pet photography’ where there is much less competition but still a good-sized market.

Lots of people have pets and want to take pictures of them. You could generate some really interesting, useful and unique content on this subject that people would want, and along the way you could expose them to offers of relevant products — books, cameras, gear etc. or even create your own product such as an eBook or a training course.

Actually the more I think about it, that’s a really good niche. It satisfies all the criteria, apart from one — I know nothing about pet photography and I’m not the slightest bit interested in it. So there’s a free one for somebody!

2 – Find a way to earn money in it (monetisation)

Having chosen your market, you need to find a way to make it pay. The most common way an Affiliate Marketer will do this is to sell a product — somebody else’s product that pays you a commission. Amazon is a good starting point, as the world’s biggest online retailer they sell pretty much everything under the sun and their pricing and customer service is very good.

One good thing about the Amazon Affiliate Scheme (called Amazon Associates) is if you send a customer to Amazon to buy a particular product, Amazon will do their very best to sell them something else as well and you will get paid on everything they buy on that visit — often 3 or 4 things rather than the one you sent them there for.

Virtually every retailer has an affiliate program that you can use to earn a commission on product sales. You can find and join these affiliate programs either by going to the retailer’s site and looking for ‘affiliate program’ or by joining a network such as Commission Junction or Trade Doubler who carry thousands of affiliate offers that you can promote.

You can also make money by carrying advertising on your site — Google AdSense makes that very easy. Whatever form of advertising you carry you will need a reasonable level of traffic before you make any significant money from it, but it can be a useful ‘top-up’ on top of other earnings.

Digital products (eBooks, training courses, software etc.) often pay very high commissions as there is no cost of goods or physical product. You can find lots of these at Clickbank. A lot of high-earning affiliates make their money with Clickbank products purely because of the high commissions which may be as high as 50% or more, compared with perhaps 4% or 5% on consumer goods.

A very common affiliate strategy is in fact to find a product on Clickbank first, and then build everything around that product. I’ve never done it myself but a lot of people have made literally millions by doing exactly that, possibly with several different products in several different niches.

One of the biggest niches in Affiliate Marketing is “How to make money in affiliate Marketing”… Yes that’s right — make money by teaching people how to make money! Some of the biggest players in the game do this – John Chow, Shoemoney and Jonathan Volk to name but a few. They have made millions from it but it’s probably not the best niche for you to start in!

Another important business model for affiliates is so-called CPA Offers (cost per action). This is where you get paid a commission when a user takes a specified action.

This might be something like taking an online survey, making an enquiry (sales lead generation), filling-in a form etc. There is no ‘sale’ as such, you get paid when the user does the action so it’s often easier to get the conversion than it would be to get a sale but consequently the payouts can be quite low.

You find these offers through CPA offer networks such as Max Bounty or Offer Vault.

Warning: Because of it’s ‘get rich quick’ potential, Affiliate Marketing does attract a lot of dubious people and dodgy offers. Steer well clear of anything spammy or low quality. Probably more than half of what you see will fall into this category but don’t give up hope. There are plenty of good quality, legitimate and profitable opportunities out there.

3 – Drive traffic to your offers

This is the hardest bit. So you’ve chosen your market, you’ve found the products you want to promote, you’ve built a website full of interesting and useful content that showcases your offers… now what?

Now you have to expose your offers to your potential customers – your target market. Hopefully in (1) above, you picked a market where there are already lots of customers looking for your offering, now you just have to get it in front of them.

There are two types of traffic:

  • Free traffic – ‘organic’ search engine traffic, guest posting, referrals etc.
  • Paid traffic – display advertising, paid search or Pay-per-click (Google AdWords), Facebook advertising

Free traffic is obviously very desirable as your earnings will then be 100% profit after any hosting costs etc. are taken account of.

Paid traffic obviously reduces the profit you make and you will be operating on a profit margin – the difference between your earnings and your traffic costs.

Which one do you want?

Both of course! Free traffic is great, you obtain it by doing well in the search engine rankings and having them send you visitors for free, and by other people linking to you and sending you visitors that way. The trouble is both of these are unreliable, can take a long time to get established and cannot be relied upon in the long term.

Free traffic comes and goes. You can influence it, you can do things to increase the likelihood of getting it, and hopefully you can build up a reasonable amount of it in time, but you can never count on it.

Paid traffic is much more reliable and predictable. Many affiliates steer away from it, and the unwary can get burned, but if you do it properly and control your costs there is no reason why paid traffic cannot be the cornerstone of your business.

The majority of my income comes from paid search, specifically Google AdWords. I earn a reasonable amount from organic traffic as well but this goes up and down and I never rely upon it. [One of my sites once suddenly started ranking really well in Germany for hundreds of diverse search terms — things like kitchen chopping boards and angle grinders. My organic earnings on this site shot up to around £1,000 per day for several days and then disappeared as suddenly as they came! Google gives and Google takes away…]

Traffic generation, both free and paid is a huge subject all on it’s own and I’ll cover this separately. I have written an introduction to paid search advertising with AdWords and I’ll follow up with more detailed articles later. In the meantime, I hope this has given you a good understanding of the basics of Affiliate Marketing and hopefully encouraged you to find out more and possibly to give it a try.

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