what is affiliate marketing

AFFILIATE MARKETING – WHAT IS IT AND WHERE TO START?

November 25, 2020

For anyone working with digital marketing, you may have heard of affiliate marketing.

However, few still know what affiliate marketing means and what you can do with it in practice. Although this is a market that has grown more than 100% per year over the past five years, it remains a small market when compared to other niches, such as marketing agencies, content producers, freelance services, etc.

Still, forecasts suggest that the affiliate market will continue to expand at an extremely accelerated rate over the next few years.

The affiliate marketing market is, in fact, a tremendous opportunity to make money on the internet and will continue to be for many long years.

However, as in other markets, there are professionals who do things the right way and professionals who do things the wrong way. You will need to understand first how it all works and what its possibilities are, in order to try to extract the maximum potential from your projects.

Another important thing is that affiliate marketing has nothing to do with multilevel marketing; they are two totally different markets.

What is affiliate marketing?

Affiliate marketing is a way for you to generate income through sharing, recommending and promoting products or services from other people or companies. Basically, when you help another company to sell a product, you get paid a commission for that work.

There are several forms of commissioning, but the concept is similar in all of them, that is, you promote something in exchange for a slice of the value of this generated sale.

Affiliate marketing is not new. People have been working on similar commission models for hundreds of years, and so-called commissioners have been around for hundreds of years. A good example of this type of work would be real estate agents. They advertise properties on and off the internet, receiving a commission on the sale of that property.

On the internet, this sales commission model is called affiliate marketing. The first internet affiliate program was created in 1996 by Amazon and was called Amazon Associates.

The program continues to exist today and was one of Amazon’s main growth drivers, as thousands of affiliates promoted the company’s products in the United States, receiving a share of sales. If they did not generate sales, Amazon would not be investing any money in this advertising either, since it would pay a commission only for sales made.

The affiliate market is as extensive as your imagination. There are affiliate programs and offers to promote in practically all areas of business that you can imagine working on the internet. This means that, through the internet, you can promote offers from other people and companies on your websites and blogs, and use that as a way to monetize your content and traffic.

Advantages of working with affiliate marketing

There are numerous advantages for you to work with affiliate marketing, but the main one is that you don’t have to worry about creating a product to sell on the internet. Someone has already created this product and you can become an affiliate of that product, promoting it through affiliate links and sending traffic through those links to that same product. From that moment on, your responsibility ends.

The producer, or owner of the product, becomes the person responsible for sending the goods to the buyer and keeping that customer satisfied. You will receive a commission for generating this sale, but you are not responsible for anything else.

Among the various advantages of working with affiliate marketing, I would say that the most interesting is the profitability potential of this market.

There are products that pay very high, recurring commissions, per click, per sale, per impression, etc. There are also affiliates who work to promote these products through advertising platforms and others who take advantage of affiliate programs as a way to monetize the traffic on their websites and blogs.

Both models are perfectly viable and generate results.

The good thing about affiliate marketing is that you don’t need to create anything at all. If you want, you can earn a lot of money working with this market, promoting product offers, without actually having to create a blog, website or anything else.

There are affiliates making a lot of money and the only thing they do is advertise on Facebook, Google AdWords and native ads. There are also those who prefer to use more advanced strategies, such as buying traffic to promote affiliate programs.

In summary, you have two possible ways to work with affiliate marketing: creating websites and blogs, working with content and monetizing your traffic through affiliate programs, or directly advertising affiliate offers through advertising platforms like Facebook, Google , native ads or traffic purchase.

Regardless of the model you choose, the important thing is that your results are positive. There are no better or worse models. There are a lot of professionals making a lot of money on both models, so you should choose the one that makes the most sense for you and your digital marketing strategy.

Commission models in affiliate marketing

In the affiliate marketing market, there are different commission models, which vary depending on the marketing objective of the company or producer. Contrary to what is often thought and said, there are affiliate programs not only for physical or digital products, but also for actions and contacts.

If a company’s marketing objective is to generate registrations of potential interested in buying a product, for example, that company can launch an affiliate program that pays a fixed amount for each registration made. The company would not be promoting a product, but a specific action, in which case the user would be filling in the registration form.

There are also differences in an affiliate’s disclosure strategies, when the goal is actions or conversions. Each marketing objective and commission model automatically requires the adoption of a different advertising strategy.

When entering this market, you should look for the commission models that make the most sense for you and your digital marketing strategy.

CPC (cost-per-click)

The CPC (cost per click) commission model is one of the oldest on the internet as well. When on October 23, 2000, Google decided to launch Google AdWords, this commission model started to be widely used in the world. Together with Google AdWords, Google launched the Google Adsense program, which is nothing more, nothing less, than an affiliate program that pays per click on text or image ads.

In this CPC commission model, the affiliate receives a fixed or variable amount for each time the advertising banner or text link receives a click from a user. This model has the advantage that the affiliate is not dependent on the final result, that is, on the user to buy the product, but it has the disadvantage of being a model that is difficult to scale, since to earn a lot of money it would take hundreds of thousands of people’s clicks.

CPM (cost per thousand impressions)

The thousand impressions commission model was widely disseminated when the internet reached the general public. In this commission model, the affiliate received a fixed amount for every thousand impressions of an advertising banner, regardless of whether the user clicked on the banner or not. Logically, in the 80s and 90s, the number of clicks on advertising banners was very high, with click-through rates reaching 96%, which invariably caused most users to click on the ads.

This model started to be used in practically all the major portals and communication agencies, which sold their advertising spaces in the CPM model to their advertisers, because they considered that the user who browsed their sites was already being impacted by these ads, simply view them, even if you didn’t click. Even today, the CPM value is used in ad platforms like Facebook and Google AdWords and is an extremely important metric for performance and cost analysis. Furthermore, it’s impossible to set an ad’s clickthrough rate (CTR) without taking into account the number of impressions on it.

CPA (cost per action)

The per-action commission model, widely known as the CPA commission model, is one of the most popular and effective commission models in affiliate marketing. In this model, the affiliate only receives his commission when the user clicks on the banner or link and performs a specific action, which may be filling out a form, purchasing a product or any other action.

As a rule, the CPA model is associated with the purchase of products, in which the producer shares a fixed commission amount for generating sales of his product. This model is one that pays the best, and there are several affiliate programs offering very high CPA values, with commissions reaching $ 800 in CPA commission.

CPS (cost per sale)

The sales commission model is widely used in e-commerce affiliate programs. Amazon’s affiliate program, for example, works on a CPS commission model, in which the affiliate receives a commission of 3% and 7% on sales generated in Amazon’s e-commerce. This model is extremely interesting to work with, when directing a user to buy on Amazon, you receive a commission on all purchases made by that user, and it doesn’t matter if he bought the items you suggested or not.

For those who work with affiliate marketing, this commission model is very interesting, because you receive a fee on all purchases that the user makes during their session after clicking on your advertising banner or your affiliate link.

CPL (Cost Per Lead)

The CPL model is extremely used in B2B businesses, in which the objective is to capture contacts from potential new customers. In this commission model, as a rule, the affiliate receives a fixed amount for each lead generated.

This model is also widely used in mobile applications, such as Uber, which pays a fixed commission for each registration generated in its application.

Other examples for a lead commission model would be recruiting companies that are looking for professionals to fill a specific job vacancy, companies that are looking for more budget requests, companies that want to generate more registrations in the Trial version of their software, etc. In all of these cases, the affiliate receives a fixed commission for generating this lead, regardless of whether that lead becomes a customer or not.

CPI (cost per installation)

The CPI commission model only appeared when smartphones and mobile apps started to appear. It is a commission model focused on mobile traffic, in which the affiliate receives a fixed commission for generating installations of a given application. There are several companies dedicated to this niche market, with dozens of offers of different applications and in different areas, that the affiliate can promote in their mobile traffic.

The purpose of this type of commission model is to generate the installation of the application on the user’s smartphone, even if the user may or may not use this application. The affiliate receives his commission for the installation and not for using the application.

RVS (revenue share)

The revenue sharing model, better known as Revenue Share, is a commission model in which the affiliate receives a percentage commission on the purchases made by users. This model is extremely used on sports betting sites, porn sites, relationships, stock investments, forex, etc.

This commission model is extremely interesting, because it is recurring, that is, when the affiliate generates a user for a social networking site and that user buys a subscription. Whenever he renews the subscription, the affiliate receives his commission. When the user cancels the subscription, the affiliate stops receiving his commissions.

Frequently Asked Questions about Affiliate Marketing

For those who are starting to work with affiliate marketing, you may have some of the following questions. These are frequently asked questions that many new affiliates ask in order to understand how this market works and what the real possibilities are.

Working with affiliation is extremely interesting, but you need to understand how it all works.

To help you cut your way and not waste time looking for information to clarify your doubts, I have compiled some of the main questions that new affiliates usually have and that you will probably have too.

Is it illegal?

Although there is no specific legislation for affiliate marketing, it is not illegal. Working with affiliates is not illegal, let alone cheating people (as many think). You will simply have to declare income from your work, as you do with any other type of business.

Can I use Google Adsense affiliate programs and ads at the same time?

Yes you can. According to the terms of conditions of the Google Adsense program, you can use affiliate programs on your websites and blogs, simultaneously with the presentation of Google Adsense ads. Although affiliate programs pay much better than Adsense, it is common to see websites and blogs that use both forms of monetization.

How do I find affiliate programs to promote?

There are several affiliate platforms that include affiliate programs from various companies for you to promote. The best way to do this is by performing a Google search for the company name, followed by an affiliate program or “affiliate program”. Although not all companies offer an affiliate program; the vast majority already work with this market.

Do I need a blog to work with affiliate marketing?

Not necessarily. You can work on advertising your affiliate links in ad campaigns on Facebook, Instagram, Google AdWords, Taboola, Outbrain and other ad platforms. You can also buy traffic to promote your affiliate programs, for example. There are many affiliates who do not work with blogs, much less with content or SEO.

How much do I need to pay to be affiliated with a company?

You don’t have to pay anything. I would say that 100% of the companies that offer an affiliate program do not charge you absolutely anything to enter and start promoting their products. However, it may happen that you are not accepted into a particular affiliate program, because that company considers that you do not fit the type of affiliate it seeks.

If someone is asking for money to allow you to sell their products, it’s most likely a scam.

Is it possible to earn money by promoting affiliate programs?

Of course, yes. There are professional affiliates who have been working with advertising affiliate programs for many years, earning more than $ 20,000 per month in commissions. Logically, the vast majority of the market gains a fraction of that. However, just like any other type of business, you need to work hard to stand out and really earn a lot of money.

Is affiliate marketing the same as watching advertising or clicking on ads?

No! Please do not confuse affiliate marketing with this type of offer. I would say that 100% of the offers that exist on the internet for you to watch ads or click on advertising are fraud. That is not affiliate marketing. Stay away from such offers.

Advantages and disadvantages of this business

The affiliate marketing market is not just about advantages. There are also some disadvantages compared to other niche markets.

Understanding these differences is fundamental for you not to enter this market with expectations out of line with reality and not to be frustrated up front.

The great advantages of working with affiliate marketing are:

  • Reduced cost to start. Virtually all affiliate programs are free, which means that you can sign up and start advertising these companies’ offers today. As you work as an affiliate, you don’t have to worry about the relationship with these customers. The company you are affiliated with takes care of this, so you will have plenty of time to work on your strategies.
  • You don’t need to create your product. Another great advantage of affiliate marketing is that you don’t have to create your own products, set up your e-commerce, etc. You simply take what someone has already created and advertise it with your affiliate link. You receive commissions on the sales you generate without having to create anything.
  • No specialized training is required. All the knowledge you need to work as an affiliate is available on the internet. You don’t need to go to college or specialized training, unless you really want to learn like some professionals do.
  • It is not necessary to relate to customers. Since you are not the owner of the product or company, your goal is just to generate sales or leads, which means that all retention and conversion work is the responsibility of the company or the producer. Your job is different and you don’t have to worry about it.
  • You can follow everything in real time. In affiliate marketing it is possible to track everything in real time, be it clicks, sales, leads, etc. All of your outreach initiatives can be followed in real time on the affiliate platforms you use, which will certainly help you make decisions faster.

The major disadvantages of working with affiliate marketing are:

  • It takes time to generate results. As I said earlier, working as an affiliate is time-consuming. In many affiliate programs, you will need to generate a large amount of sales in order to earn any money.
  • You need to understand traffic. If you do not understand anything about digital marketing and traffic generation, you will probably have great difficulties to do well as an affiliate. A good part of the success with affiliate marketing is the ability to generate quality traffic, whether organic or paid.
  • You need to understand advertising. Regardless of whether you generate affiliate commissions with your website or blog, you will always need to understand advertising and how to advertise on social media, Google AdWords or native ad platforms. If you don’t understand any of this, you may find it difficult to work with affiliate marketing.
  • You need to understand blogging. You don’t need to know programming, but it will be important for you to know how to use your affiliate links, what nofollow links are, how to publish banner ads on your blog, etc. All of these things will be important for working with affiliate marketing.
  • You need to adapt quickly. Many affiliate programs have severe restrictions on disclosure. Many do not allow you to advertise on social networks, others do not allow email marketing campaigns, etc. The advertising networks themselves constantly change their rules, which means that you will have to adapt quickly and look for new solutions to continue generating results.
  • Objective surveys. A good part of the affiliate programs only allows you to withdraw your commissions after reaching a certain amount. Google, for example, only issues Google Adsense payments starting at $ 70 USD in commission. For those just starting out, this can be a problem.
  • Now that you understand the advantages and disadvantages of working as an affiliate, let’s look at some important rules and strategies to consider before starting to work in this area.

Rules and strategies

If you are starting out or already working with affiliate marketing, it is important to understand that there is a set of rules and strategies that we usually call good practices.

Understanding this market is essential to be successful working with it. Regardless of whether you have websites and blogs or prefer to work with advertising affiliate programs, understanding these good practices will help you avoid unnecessary mistakes.

  1. Choose the best strategy first
    To work with affiliate marketing, there are only two possible strategies: you either work on advertising on your websites and blogs or you do the advertising directly on ad platforms. There is no other way to work with affiliation than these two. Therefore, the most important thing is to decide in advance if you intend to develop websites and blogs, which will require content and a good SEO job, or if you intend to start advertising through Facebook, Google AdWords or native ads platforms.
  2. Choose the product to promote well
    Not all products are good. This is a fact. If you intend to publicize a product that is considered by the public to be a scam or fraud, be careful. Before you start promoting any product, do a search on Google and look for customer testimonials. See the product’s Facebook page, look at the complaints on the Claim Here, etc. Choosing the product you are going to promote well will make all the difference in the results of your affiliate marketing actions. Furthermore, a good product tends to perpetuate for a longer time.
  1. Understand your audience first
    If you have a blog about automobiles and are advertising affiliate programs on how to lose weight, because you think everyone needs to lose weight, it is very likely that it will not work. Understanding your audience and how they behave within your website or blog is critical to the success of your affiliate marketing campaigns. The more relevant your ads are to your audience, the greater your chances of being successful. If you imagine that even Google has made your ads contextualized with the content of websites and blogs, you understand the importance of being relevant.

  1. Create relevant content about products
    If you think that just placing an advertising banner in the sidebar of your blog to start making money with affiliate marketing, you are sadly mistaken. Your audience is far more demanding than that and you are simply undermining your own authority. Remember that one of the most powerful weapons on the internet is the power of recommendation. If your readers like your content and like you as a professional, your recommendations will have a much greater power than anything else you do.

In this sense, it is recommended to produce relevant content about the products you are promoting on your website or blog. This means writing detailed reviews about these products, indicating the pros and cons of the products, the advantages of using them and why you recommend these products to your audience. This type of recommendation has incredible power with a strongly engaged audience.

  1. Ads must also be relevant
    Contrary to what many affiliates think, ads also need to be relevant to your target audience. There are a lot of affiliates that promote products through Facebook, Google AdWords and native ads, without worrying about the relevance of the product to the target audience. Many of them even use copywriting strategies in order to deceive this audience and get them to click on the ads.

While this may work in a short-term strategy, the reality is that in the long run it will be difficult to keep your business running, for the simple reason that this affiliate will need to constantly create new pages, new ad accounts and new ways to advertise these products . In the end, he will have absolutely nothing and will be dependent on these products. I do not recommend that you do this. Think of a long-term, sustainable strategy with simple, objective and relevant communication for your target audience.

  1. Test different offers and programs
    If a particular affiliate program is making good money, it doesn’t mean you can’t test other offers. In reality, testing is very important in everything that has to do with digital marketing; and affiliate marketing is no different. Try to choose between three and four affiliate programs to promote, always doing conversion tests with each one.

Not all affiliate programs are the same, and neither is their conversion level. Just a different product sales page is enough for the conversion volume to be much higher, or vice versa. There are also affiliate programs that pay commissions every week, others that only pay monthly, etc. There are also programs with commission attribution models on the first click, the last click, with a 30-day cookie, a seven-day cookie, a 24-hour cookie, and so on. All of these things make a tremendous difference in the results you will generate with your strategies, more than enough reason for you to test several and compare your results.

  1. Be patient
    When it comes to affiliate marketing, patience is an important term, especially if your strategy is to write relevant content and work with affiliate programs on your websites and blogs. When I started, I remember perfectly the first commission I generated in an affiliate program and the feeling was spectacular. However, it took me a few years to start making significant money from my websites and blogs.

The same happens when you start working with advertising, advertising the offers directly. You are likely to spend a lot of money initially until you find the right way to convert your ads into sales. This is perfectly normal and very common in this market, so consider learning as much about affiliate marketing, conversion, advertising, etc., and test as much as you can until you find the perfect formula for the type of product you are promoting.

  1. Use different sources of traffic to promote your products
    It is common for the vast majority of professional affiliates to be stuck with strategies that work. When a strategy is found that works, the tendency is to use only that strategy until exhaustion. However, keep in mind that there are different ways to promote affiliate programs, it is highly recommended that you diversify your traffic sources, and especially the way you promote affiliate programs.

As in other markets, in affiliate marketing diversification can be crucial to making your business survive and grow. Never make your strategy depend on a single source of traffic and / or a single advertising strategy, otherwise, it is very likely that you will end up failing in the future. Use different sources of traffic to promote your products and compare each of your strategies.

Types of Affiliate Marketing Approaches

Affiliate marketing has different ramifications, which means that there are professional affiliates, whether individuals or companies, working in totally different ways and generating excellent results. This market allows the creation of totally differentiated digital businesses and you should choose the ones you feel most comfortable with. Let’s look at the different existing approaches to affiliate marketing:

Organic traffic and content sites

There are many companies dedicated to creating content sites, which are monetized with affiliate programs. Imagine a large media company, with dozens of sites in several countries, all of them with millions of visits every month. There are also professional affiliates that do this on a smaller scale, but still extremely profitable. These sites are essentially fueled by organic traffic and traffic coming from social media.

Comparison sites and product reviews

This type of website is also extremely popular in the affiliate marketing market, especially the coupon sites, which compare the prices of thousands of products in dozens of different stores and lead the user to buy the product in a given store, through links to affiliate. Other examples would be sites that review mobile phones, notebooks, etc. The same applies to smaller sites and blogs, which compare different types of products.

Mobile app sites

Mobile has grown at a breakneck pace and, with it, different types of sites and blogs have started to emerge that compare mobile apps and review these apps. All of these sites are monetized with affiliate programs, which pay commission on installations or downloads of these applications.

Niche Sites

Small niche markets are also extremely interesting to monetize through affiliate marketing. Imagine a blog about travel, recipes, fashion, etc. All of these niche projects can and should be monetized with affiliate programs. There are a lot of professional affiliates using websites and blogs in very small niche markets, but making a lot of money in commissions.

Disclosure of infoproducts

So-called infoproducts, or digital products, are also an excellent way to work with affiliate marketing. There are several platforms that offer this type of products and also many affiliates working on the promotion, receiving extremely high commissions for the sales generated. This is a market that is growing immensely all over the globe.

Paid advertising

As we saw earlier, another way for you to work as an affiliate is to advertise directly through paid advertising, be it ads on Facebook, Google AdWords, Taboola, Outbrain or other ad platforms. Many professional affiliates around the world work only with paid advertising. They do not create anything at all, except the advertisements for advertising affiliate offers.

How to start working with Affiliate Marketing

If your goal is to start working with affiliate marketing, but you have no idea where to start, it is best to read the points I put below. However, don’t forget that in order to succeed as an affiliate, you will need a great deal of dedication and discipline. Good planning and a good strategy will do everything else.

  • Develop a solid strategy. Start by creating a question-based strategy. What problems do you intend to solve? What market niche do you intend to work in? What kind of approach do you intend to take to this target audience? Answer these questions and, with them, define your initial strategy. Start by planning your actions before performing any of them. This will make a big difference in the final result.
  • Look for affiliate offers. After choosing your niche market, you need to look for existing affiliate programs in that niche. Identify the most profitable products and sign up as an affiliate for those products. Do not forget to make an evaluation of the products first and understand if they have quality and meet the expectations of the public.
  • Define your performance model. Do you want to create a website, blog or work as an advertiser? Do you want to create a niche blog or a product comparison website? Depending on the strategy you define, your next steps will be totally different.
  • Build a brand. Regardless of whether you create a small blog in a specific niche or a large website to advertise thousands of offers, it is important that you build your brand. A strong, consistent and easily identifiable brand for your audience has a greater tendency to perpetuate over time, when compared to sites created solely for the purpose of generating clicks. Adding value to your target audience will make your conversions much better.
  • Study more about SEO and traffic. You will need to master the art of search engine optimization and traffic generation. By mastering organic traffic and paid traffic, you will have a very large competitive advantage over the vast majority of affiliates working in this market.
  • Learn more about paid advertising. Understanding how paid advertising works can be a big advantage in your affiliate marketing strategy. Mastering tools like the Facebook ad manager, the Google AdWords platform or the purchase of paid traffic will be a deciding factor the moment you decide to scale your business.
  • Be creative. Do your homework first. Analyzing your competitors and understanding how they work will make it easier for you to anticipate and get a good slice of these markets. Keep up with what others are doing and be creative when writing your content, recording your videos or creating your ads. Different approaches almost always generate better results.
  • Test, test and test. In marketing there are no absolute truths. What works for me may not work for you. Question everything you read and hear … and test. Always test. The more you test, the greater your chances of being successful as an affiliate. The best product is not necessarily the one that generates the most sales. The best affiliate platform is not necessarily the one everyone talks about. This market is very large and the opportunities are endless. Test everything!
  • Measure, measure and measure. There is no point in having a fantastic strategy and extremely solid planning, if you don’t measure your results. Looking at metrics is critical to understanding your audience’s behavior in relation to your marketing actions. Analyze each of your actions to the millimeter to understand what you can do to improve your conversions.
  • Climb, climb and climb. Once you find an effective model for advertising affiliate programs, which generates a positive ROI (return on investment) for your business, you should scale this model to the maximum. This may mean increasing traffic, the advertising budget or the internationalization of your model to other countries. It doesn’t matter how you do it, the important thing is to do it.

Ready to start?

Now that you understand how the affiliate marketing market works and what the real possibilities of that market are, it’s time to get your hands dirty and start your career as an affiliate.

Don’t overthink it. Just start today!

Read also: How to make money online.