Affiliate marketing is a highly popular marketing method based on performance rewards, where a business utilizes external private marketers to promote its products or services.
In this method, the external marketer (or affiliate) advertises and promotes the business through various media channels they control. In return, the business pays them a commission for specific actions that lead to results such as sales, app downloads, registrations, lead generation, etc.
Tracking of activities and earnings for affiliates is done through a unique link provided by the business. Each affiliate has a unique ID embedded in their link, which they promote across their various channels. Any customer that arrives via their link earns them a commission. Typically, marketers have access to a dashboard where they can monitor their activities and earnings.
Affiliate marketing is a widely favored method among businesses (both small and large) worldwide because it is efficient, effective, and relatively cost-effective in attracting new customers to the business.
Common Terms
Anyone looking to start in affiliate marketing should understand a few basic and common terms in the industry:
1. Affiliate - or the marketer- is the party performing the promotion of the business. Affiliates can be individuals or companies with exposure power or traffic sources such as websites, blogs, social media pages, etc.
2. Affiliate Program - An affiliate program (or affiliate campaign) is the campaign itself created by the business. An affiliate wanting to promote the business needs to join the affiliate program and can only start promoting afterward. The affiliate program outlines all the rules and terms for collaboration with the business, such as the reward type, commission rate, rules, restrictions, etc.
3. Affiliate Network - An affiliate network is an intermediary company that brings together a database of advertisers and affiliates. The advantage of affiliate networks is that they provide a ready-to-use platform to both sides and save a lot of time and resources in managing and maintaining affiliate programs.
4. Affiliate Link - An affiliate link is the link with the unique ID of the affiliate through which the commission is attributed to the customer. The link directs to the advertiser's landing page and is provided to the affiliate by the advertiser (or affiliate network). This is the link the affiliate promotes across their various media channels.
5. Conversion - Is the action for which the financial reward is offered in a campaign, meaning the campaign's goal has been achieved. This can be a sale, form submission, click, website registration, and similar actions. The advertiser defines for themselves what constitutes a conversion action and what financial reward they offer for it.
6. CPA - A popular reward model for affiliate programs, where CPA stands for Cost Per Action. This means the affiliate receives a reward for any action taken by the customer on the site, such as registration, installation, form submission, contact creation, and similar actions. The type of action varies from campaign to campaign.
7. CPS - A reward model for Cost Per Sale. In this model, the affiliate receives a percentage or fixed amount for each sale.
8. Revenue Share - A reward model where profits are shared between the advertiser and the affiliate for every future purchase made by a customer referred by the affiliate. For example, 30% of the purchase amount. This model is particularly popular on sites selling monthly subscriptions.
Advantages of Affiliate Marketing
Affiliate marketing offers numerous advantages for both advertisers and affiliates. Here are some of the key benefits:
For Advertisers:
• Increased Exposure - Affiliate marketing allows a business to reach new audiences and media channels it wouldn't reach directly. Moreover, it pays commissions only on actual conversions, so exposure and advertising that don't yield results cost nothing.
• Efficient Advertising - Businesses pay only for actual results (conversions), so they don't waste money on ineffective advertising. In other words, the money invested in affiliate campaigns typically provides a better return on investment compared to other advertising channels.
• Increased Business Revenue Risk-Free - Affiliate marketing enables businesses to expand their customer base without risk. Since affiliate marketing is based on actual conversions, the business receives a security net that the commissions paid have provided value.
For Affiliates:
• Passive Income - Affiliate marketing can be a great way to generate passive income. While not completely passive and often requiring some maintenance, it is one of the most preferred methods available.
• Simple and Easy, Anyone Can Do It - Anyone with traffic sources, social media followers, or some knowledge of internet marketing can earn money through affiliate marketing. Moreover, there are no setup or operational costs - customer service, hosting, shipping, payment processing, etc., are all handled by the business, and the affiliate simply promotes their link.
• Work from Home - It can be done from home or anywhere else in the world. Furthermore, it can also be done on a part-time basis, which is a significant advantage in modern life routines.
Potential Earnings
In theory, the profit potential for businesses and affiliates from affiliate marketing is unlimited. It all depends on the exposure scope the campaign receives and its effectiveness. In reality, things are a bit more complex, and earnings can be divided into three main categories:
1. Professional Affiliates - Experienced affiliates who make affiliate marketing their primary job can earn thousands to hundreds of thousands of dollars per month.
2. Intermediate Affiliates - Affiliates who earn a few hundred to several thousand dollars per month. These affiliates typically have a stable digital asset that provides them with a steady side income in addition to their main occupation.
3. Beginner Affiliate - Novice affiliates at the beginning of their journey who try to succeed in the field but scrape small sums, if at all. Such affiliates often give up after a while. The few who invest and persevere over time succeed in moving to the next level and establishing a steady income.
As mentioned, in affiliate marketing, just like in any other field, some succeed and some don't. To succeed, you need to invest time, expand your knowledge, and most importantly, persevere. There are no magic solutions, and no one will do the work for you. Anyone who tells you otherwise is either working for you or trying to sell you something.
Getting Started
Have you decided to join the game and leverage affiliate advantages for yourself? Excellent! Now all you need to do are a few simple steps:
For Advertisers:
- Create an Affiliate Campaign
The first step is to create an affiliate campaign for the business. Initially, decide on the type of campaign that suits the business - rewards for purchases, registrations, app installations, etc. Once you decide on the campaign type, create the campaign. There are two options:
1. Self-Managed Affiliate Program - The business creates, promotes, and operates the affiliate program itself. To do this, create a tracking interface for clicks/conversions in the business, provide reports to affiliates so they can monitor their activities, and more. Such an interface can be custom-developed by a programmer or purchased as a ready-made affiliate system and integrated once. There are various ready-made systems in the market with various payment models.
2. Affiliate Network - Turn to an affiliate network and open an advertiser account there. The affiliate network provides all the necessary tools for the campaign and accompanies the advertiser in the campaign setup process. Most affiliate networks offer various payment models.
- Promote your Affiliate Campaign
Once you've created the campaign and everything is set up, it's time to promote it - to attract affiliates who will start promoting it. To do this, you need to conduct marketing activities for the campaign just like marketing for a business. You can promote the campaign through the following means:
1. Link on the business website
2. Social networks
3. Advertising in places dedicated to affiliate programs
4. Promotion on search engines
- Payments
You've created the campaign, promoted it, and everything is working smoothly? Excellent. Periodically (usually monthly), affiliates will request to withdraw the earnings they made with you. For this purpose, they will send you an invoice or receipt and request a transfer of funds using your available payment methods. This may sound simple, but those managing dozens of affiliates can attest that this accounting can be time-consuming. Those using an affiliate network don't need to deal with this. The advertiser consolidates the payment to the network, which then distributes the funds to the affiliates.
For affiliates:
- Joining an Affiliate Program
When starting a career in affiliate marketing, the most important thing is to focus on a specific niche that suits you and your audience. Choosing the right niche is critical to the income potential you will generate in the future. Once you've settled on your niche, start looking for campaigns on the network that you can join. You can use the following sources: Google search, social networks, affiliate websites, affiliate networks.
- Promoting Campaigns
Found campaigns that suit you and joined them? Great. Now you need to start promoting those campaigns and directing potential customers to the business. Advertise and recommend products/services through all available exposure channels. It's crucial to monitor the performance of each campaign and make optimizations and adjustments along the way to improve results.
- Withdrawing Funds
Once you've accumulated enough money in your account, you can make a consolidated withdrawal of funds. Each advertiser has their own terms for fund withdrawals, but in most cases, you can withdraw to a bank account or PayPal against an invoice or receipt.
In conclusion,
The potential inherent in affiliate marketing is enormous. As a business owner, it can serve as an efficient and smart tool for attracting new customers, while as an affiliate, it's a simple and easy way to create additional income sources. However, it's important to remember that this isn't something quick, automatic, or effortless. Like any other field, learning, experimenting, and specializing are necessary to achieve good results.