Affiliate Marketing is everywhere. If you are in business in the online space, then you have probably heard the term ‘affiliate marketing’. But, what is affiliate marketing exactly? Read on to find out what affiliates are and how affiliate marketing works.
What is affiliate marketing?
At its core, the concept of affiliate marketing is very simple. It is an arrangement between an online retailer (the merchant) and another person or business (the publisher or affiliate). The merchant pays a commission to the publisher for referring customers to their site. Usually, this is based on sales from the merchant site, but can also be based on leads generated.
Publishers are usually granted a percentage of sales for their referral but it can also be a standard fee per sale or per lead. This fee is part of the merchant’s marketing budget and the consumer will not pay any more for the product or service.
It is common for a publisher to have a website (for example, a blog) where they refer customers from. But, there are other methods of reaching customers that are gaining popularity for example social media or email marketing. Another way some people use affiliate marketing is to pay for search engine ads, but this is more often referred to as search engine marketing or pay per click.
How long has affiliate marketing been around?
Affiliate marketing dates back to 1994 according to Wikipedia, which is a pretty long time in internet world. Affiliate marketing is not a pyramid scheme or multi-level marketing. If done properly, it can be beneficial to merchants, publishers and customers. As with all business models, some people have misused affiliate links and promoted in a spammy or dishonest manner. However, affiliate marketing is a valuable tool for both merchants and publishers when conducted in an ethical manner.
How does affiliate marketing work?
There are two main ways that a business can operate an affiliate program. Some will have individual, in house affiliate programs that they operate themselves and some will work through an affiliate network. Affiliate networks facilitate a connection between merchants and publishers. They also offer an extra layer of protection to make sure publishers get paid for their referrals.
Affiliate marketing is often referred to as a form of ‘passive income’. However, this does not mean that there is no work involved. Affiliate marketing does require set up, promotion and maintenance.
Each affiliate program will have different rules, commission rates and cookie length. Read the guidelines and check how the affiliate program has been performing for other publishers. If the merchant is with an affiliate network, there will be some data that will show you how the affiliate has performed in the past. Below is an example of affiliate program statistics from an affiliate network. Don’t worry if they look confusing at first glance. Affiliate networks explain the data pretty well as it’s in their best interest.
What types of companies have affiliate programs?
It’s surprising how many online retailers have an affiliate program. Affiliate programs are popular with businesses who sell online courses, programs or software. Many sellers of physical products will also have an affiliate program.
If you are looking to see if your favourite product or service has an affiliate program try looking in the footer of their website, search [brand name] affiliate program, or simply contact them and ask.
How do you do affiliate marketing?
Once you sign up for an affiliate program there should be an explanation of the individual rules for that program. Basically, when you are logged in you will have access to special links. Sometimes you also get access to exclusive promotional codes and pictures or graphics (called ‘banners’ you can use in your promotions.
The links you will have access to are customised specifically for you and your business. This way the company or affiliate network can track how many people are coming from your website or promotions.
Usually, a referral program will allow you to link to a specific product or page on a merchant’s site. This is referred to as deep linking. These links will also be customised and trackable.
For more information about how to get started in affiliate marketing check out our guide to Wealthy Affiliate for Aussies.
How you insert the affiliate links into your website is up to you, and the affiliate guidelines. Often it is done with hyperlinked text mentioning the product or by inserting a graphic (banner) that links to the merchant site. Below are how these two examples would look in a blog post – these examples will not actually link to the merchant website as they are just for demonstration purposes.
If you have anymore questions about how affiliate marketing works pop them in the comments below and I would be happy to help.