Welcome to the vast world of affiliate marketing. This is the best page to land on if you want to learn how does affiliate marketing work, and whether it’s worth it?
Affiliate marketing is a business and advertising model, in which one company offers commission fees and incentives to other companies that promote their products. Also, this is a great way to generate leads and traffic to their website.
How Does Affiliate Marketing Work?
The way affiliate marketing works is relatively simple and straightforward. One company promotes the products or services of another company. In return, the first company receives a commission or other kinds of incentives like a free trial, business leads, and so on.
Here’s an example.
Let’s say we have Company A which specializes in software for logo creation. Then, we have Company B, which is an organization that creates and develops websites. Company B has an affiliate deal with Company A, and they write and publish an article about the best logo makers on their WordPress blog. They feature Company A in their article and include a unique affiliate link towards their product.
Every time a user clicks on that link and purchases the product of Company A, Company B receives a percentage of the sale – 5, 10, 20, or whatever deal both organizations agree to.
In practice, the process is the following:
Product recommendation →User clicks on link →User gets sent to the website →User makes a purchase →The website records the transaction →You receive your commission.
Naturally, there’s more to it than that. There are different variations of affiliate marketing programs, and that’s exactly on what we’re going to focus.
Types of Affiliate Marketing
In 2009, renowned affiliate marketer Pat Flynn differentiated three main pillars of affiliate marketing. They showcased the different ways, in which people can earn money online, without too much of a hassle.
Let’s take a look at how these affiliate programs work.
This is the easiest way to generate passive income without too much preparation, or actual work. You see, generally, affiliate marketing focuses on building a connection, and trust with the audience, and then promoting products or services which are related to your business niche.
Here, however, websites usually do not have any authority or connection with the niche. It’s simply placing affiliate links on your website with the hope that users will click and make a purchase.
Contrary to the unattached model, the related one puts a strong emphasis on gaining influence with your audience and establishing yourself as a trustworthy source. The products you recommend are not necessarily related to your niche, but you can promote them with ease since your subscribers will trust your opinions.
The only big issue here is that quite often, people recommend products that they’ve never tried before. It could be the worst service or product ever. In addition, there’s a risk of losing the trust of your audience if you don’t make sure it actually does what it says.
That’s why it’s always important to be honest and transparent when offering affiliate marketing deals. Let your audience know if you tried the product or not, and set proper expectations. This will benefit your business efforts in the long run, instead of just obtaining those one-time commissions, and losing your viewers/readers.
This type of affiliate marketing relies 100% on only recommending products and services you’ve tried and genuinely like. Once again, gaining the trust and having authority with the audience is very important. You should never mislead or lie to them for the sake of commission fees.
In a way, this approach makes it much easier to advertise. You don’t need to hide behind ads or think of false ways to recommend the product. You can simply be honest and share your opinion. Chances are, people will be more likely to purchase a product or service, since they know and trust you, and acknowledge the fact that you are sincere.
Pros & Cons of Affiliate Marketing
Naturally, everything has its ups and downs, the same goes for affiliate marketing. Next, we’ll take a look under the hood and try to find out: is affiliate marketing worth it?
Pros of Affiliate Marketing
It’s easy to outline the benefits of affiliate marketing. For starters, it’s quite simple to use his business model and scale it. As we mentioned earlier, all you need to start doing affiliate marketing is a channel – blog, social media, YouTube, etc., and an existing affiliate deal.
From thereon, you can take different approaches to how to advertise the products or services. You can make a video, set up ads, write a blog post, and share photos – it all depends on you.
Considering all this, you can say that affiliate marketing is a business model with little to no risk involved. After all, you are not making investments, you do not work with clients, instead, everything depends on you and how you decide to place your affiliate links.
Furthermore, you don’t need to be an expert to do affiliate marketing. You just need to know the basics of the product or service and experiment with paid or organic campaigns throughout the process. Of course, any marketing experience would be useful, but it’s not mandatory.
- Easy to start
- Simple to scale
- Safe business model
- No expertise required
Cons of Affiliate Marketing
On the downside, affiliate marketing programs usually have a set of guidelines you must comply with. This makes you dependent on the rules and regulations of the company you’re working with.
Additionally, no one can guarantee that you will start making money, as you rely solely on referring people, and you only receive a percentage of the sale, should they complete it through your affiliate link.
What’s more, it does take time for you to start earning, so you need to be patient and strategize long-term ways to drive more traffic to your blog/social media. This increase the chances of users clicking on your links and buying products.
- It takes time
- Must comply with rules
- Based on commissions
- No revenue guaranteed
Examples of Successful Affiliate Marketing Websites
It’s time to see some successful examples of affiliate marketing websites and to review how do affiliate programs work, in practice.
Skyscanner is a travel-advising giant that has affiliate deals with airlines, hotels, and car rental companies. Their website is a huge database of the best options for flights, booking places to sleep, and renting cars.
What’s more, Skyscanner always displays the best deals for customers, even if they do not have any affiliation with the featured company. This helps to build trust with their audience.
The current estimated monthly revenue of the company is $2 million. Not bad for an organization founded by three university graduates in 2001, and later purchased by the largest travel company in China – Ctrip.
2. VPN Mentor
VPN Mentor is a great example of how to build a niche website, use affiliate marketing, and establish authority and trustworthiness.
As the name implies, these are the go-to-guys for everything VPN-related. Browsing through their site, you can find dozens of coupons, “best VPN for” articles, and a knowledge-based blog. It’s where you can take advantage of discount codes for different VPNs, using the affiliate links on the site, to add more value to your user experience.
The key to the success of VPN Mentor is their consistency in updating publications and publishing very in-depth and extensive information. On top of that, they have a bunch of free tools like VPN Comparison, Hide My IP, and IP Leak Test.
Wirecutter is a journalistic-style affiliate website, listing the best gadgets and gear to help people save time.
In fact, Wirecutter reviews some very high-priced products, earning them large commissions – their estimated revenue in 2016 was $1.5 billion! It’s also why it’s no coincidence that Wirecutter was acquired by The New York Times for more than $30 million in that same year.
However, what makes Wirecutter stand out from the thousands of affiliate websites? They have a huge team of experts in their fields – journalists, scientists, and researchers. These experts conduct tests, interviews, and thorough research to find the best products to recommend.
This research is also the main difference between testing hundreds of products, and then selecting 10 to recommend, and just randomly selecting 10 products to “recommend”.
How Does Amazon Affiliate Marketing Work?
One of the most popular affiliate marketing programs worldwide is that of Amazon. It’s only natural that a lot of people are wondering how it actually works and is there any difference from the standard procedure?
The short answer is no. Amazon affiliates are pretty much the same as any other company, with the only difference being that you need to only promote products that Amazon offers.
Tips to Becoming a Successful Affiliate Marketer
Not all affiliate endeavors end well. Let’s take a look at some tips to help you become a successful affiliate marketer.
- Build an audience. There’s no point in dealing with affiliates if you don’t have an audience. Try to find your niche and the people who would be interested in the products you’re recommending. Otherwise, you could end up trying to sell sand in the Sahara.
- Develop trust. Trust is hard to build and even harder to maintain. Try to position yourself as a trustworthy and reliable source of information. Then, chances are, visitors will trust your recommendations and purchase products through your links. Naturally, you could easily lose that trust if you mislead and/or provide false information.
- Review products and services. It goes without saying, try to be genuine and cover the topics in-depth, instead of just urging people to buy something they’ve never heard about, or are not sure whether they need.
- Utilize multiple channels. Are you writing reviews on your blog? Why not share them on Facebook, Instagram, or Twitter? Make a YouTube video, if possible. The idea is to promote your product recommendations and to make sure you reach as many people as possible.
- Follow the trends. Not everyone likes to follow the latest trends. However, it’s important for affiliate marketers to keep themselves in the loop, and adjust their strategies accordingly.
A quick example of this is, how many websites started writing “best face mask” reviews after COVID started?
Writing about masks before the pandemic would have made little sense, but as they became a very popular item it made sense to focus on them, or on anything related to wearing masks or making mask-wearing more comfortable.
In a Nutshell
How affiliate marketing works is now, hopefully, something you better understand. Also, as you can see, starting and developing your own affiliate network takes time and effort. It’s certainly not a process that happens overnight.
Thankfully, there are many great examples of successful affiliate marketing programs that make it possible to earn money online. However, as stated, you need to properly understand the ins and outs of affiliate marketing.
Let us know in the comments about your experience with affiliate marketing.
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