What Is Affiliate Marketing?
⏱ Reading Time: 5 minutes
Based on the promotion of quality content, affiliate marketing relies heavily on improving sales. That’s exactly why businesses like Amazon, Shopify, eBay opened up their own affiliate programs.
As you are reading this article, money is made with a click on a link that has a tracking code embedded. In the US alone, estimated affiliate marketing spending in 2017 reached $5.4 billion. It’s predicted that in 2020, affiliate marketing spending will be over $6.82 billion.
What is Affiliate Marketing?
Simply said, affiliate marketing is a system or better-said type of marketing where you as an affiliate marketer receive a commission by promoting products from other people and companies. Those commissions are received every time a customer buys a product or services through their recommendation.
There are a few ways to earn your commission, but the most common way is by placing affiliate links on your website or blog. When someone buys a product through that link, you earn some percentage of the total price of a product. Commission rates depend on which type of product you promote. For example, on the Amazon affiliate program, if you promote PC and electronic devices you will get 2.5% for every customer you bring through your affiliate link. On the other hand, if you promote women fashion and jewelry you can get up to 10% of every sale.
You will want to track those conversions, which is why each affiliate link is unique has its own code. Otherwise, it wouldn’t be possible to know from which associate the customer came. What does this mean for you? This means that you have the opportunity to make money by selling a product that isn’t yours. The more you sell, the more you earn. It’s a great deal since you don’t have to worry about shipping, overhead costs, or customer service!
To make money as an affiliate marketer, you have to understand all parties involved and what they want to get out of the relationship between them. Knowing each role and how they can potentially help you make money is an essential first step when starting out.
Pillars of Affiliate Marketing
Your overall success requires building relationships that rely on three particular parties: Advertiser, Publisher, and Consumer.
Picture 1. Affiliate Marketing relationship
This is the party that’s selling the actual product or service. An advertiser is the one who created a product and needs to sell it. It can be anyone, from solopreneur to big company. This is the party that you, as the affiliate marketer, will be working with.
Affiliate is the publisher, more commonly referred to as the affiliate marketer. This is the individual working with the advertisers/merchants to sell in exchange for a commission. A relation between the advertiser and the affiliate is of high importance. Because of both need to make money for the relationship to continue.
This is the party that will be (hopefully) buying product that you promote. Therefore, the relationship between the affiliate and the consumer should be one of trust. Will customer know that he is buying from affiliate marketer it all depends on the marketer.
Thus marketer decides if he/she will be transparent and mention that they promote a product through some affiliate program. This might be required by law in some countries. In either case, this doesn’t affect on customer either way around. What affects customer the most is the reliance and affiliates credit.
Network is an intermediate between advertiser and affiliate marketer. Usually, it offers advertisers to offer their products on it, and affiliates to choose the desired affiliate program. One of the most known networks of this kind is as mentioned before: Amazon Associates.
When every aspect of affiliate marketing works together, every party benefits. Consumers get their product, merchants generate revenue, and the affiliate makes a commission.
Pros and Cons of Affiliate Marketing
First, it’s the low cost to get started. Most affiliate programs are free, so you can start without a single penny! Then, you don’t have to create a product or service, you promote products from others, remember? Since you don’t own any of those products, you don’t need to worry about shipping. It’s great passive income potential. This type of marketing is great for those want to create an additional income stream without directly working for it.
There are challenges when it comes to making money from affiliate marketing. It can take time to generate the needed amount of traffic to result in income. In rare occasions it can occur, because of poor tracking systems, they don’t attribute your credit for the referral. Affiliate marketing can easily ruin your credibility. It’s important that you choose quality businesses to work with. Great programs and great products have many promoters. Therefore, there’s a lot of competition among affiliate marketers.
The Reality of Affiliate Marketing
The problem with affiliate marketing is get-rich-quick programs that suggest affiliate marketing can be done fast, earn $100k in a few days and with little effort. The reality in affiliate marketing is that it’s like any other ventures; there are a few exceptions who were with the right idea and right place at the time that are filthy rich.
A good number who are successful enough to meet their goals, and a ton who aren’t making anything. The question isn’t really whether affiliate marketing is a viable income option for you.
For someone that’s willing to go slowly, becoming an affiliate is a dream come true. You can grow as you make money, and eventually can create a higher source of income. If you’re interested in becoming an affiliate, check out the Paldesk affiliate program.
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