What is Affiliate Marketing and How To Start it?

Affiliate Marketing is a term that's synonymous with giving individuals a secure method to earn money online. And although its 'ease' is debatable, they're not half-wrong. Once appropriately understood, affiliate marketing can be easy. We've all heard about how it's useful for individuals, but did you know that it can be helpful for organizations as well? 

  • Affiliate Marketing Stats in 2020
  • What is Affiliate Marketing?
  • What is the Process of Affiliate Marketing?
  • How to Succeed in Affiliate Marketing (Merchant)
  • Benefits of Affiliate Marketing for a Merchant
  • How to Become an Affiliate Marketer?
  • How is an Affiliate Marketer Paid?
  • Benefits of Becoming an Affiliate Marketer

Affiliate Marketing Stats in 2020

Affiliate marketing is a domain within marketing that's seen significant growth in the last few years. And if you're on the fence about getting into it, here are a few stats that are sure to push you over to its side: 

sm-today

  • The annual affiliate marketing spend is estimated to be 12 billion US dollars (SoftwareFindr)
  • It accounts for 15 percent of the entire digital marketing revenue (SoftwareFindr)
  • More than 80 percent of advertisers and 84 percent of publishers capitalize on an affiliate marketing program (Rakuten Marketing)
  • It is possible to make over $1000 in a single sale. Some affiliate programs even offer their affiliates with more than 8000 dollars per conversion.

Quite powerful numbers! Next: let’s get a deeper understanding of what exactly affiliate marketing is. 

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What is Affiliate Marketing? 

Affiliate Marketing is a form of digital marketing in which merchants pay commissions to a particular website or other third parties to advertise their products. These are advertised in the form of referrals. There are four major components involved in affiliate marketing. These are the same, regardless of whether you look at it from the affiliate or merchant's perspective. 

Merchant

The merchant refers to the component of affiliate marketing that creates the product. It's the merchant's product that the affiliates need to advertise. The term 'merchant' can refer to anyone, from startups to large multinational corporations. They can also be referred to as the brand, the seller, the creator, etc.

Affiliate

The affiliate is the third party website or entity, which advertises the merchant's products. The affiliate's objective is to show his audience the value of the product or service the merchant is offering, and then convince them to buy it. Some of the ways that affiliates are incentivized are based on:

  • Registrations
  • Email sign-ups
  • Sales and
  • Subscriptions

There are various components that make the relationship between an affiliate and the merchant possible: the affiliate network. 

The Affiliate Network

The affiliate network acts as the middle-man between the merchants and the affiliates. It allows merchants to find an affiliate they want to collaborate with (who are in-sync with the merchant's brand values) and, likewise, enables affiliates to find merchants they want to work with. 

The affiliate network provides merchants with tools to track and process payments for affiliates.

Consumer

Consumer: the most crucial component of affiliate marketing. The merchant would not get any revenue without customers to buy these products, and the affiliates wouldn't get any commission either. 

What is the Process of Affiliate Marketing?

Step 1

Use a tool or platform to look up affiliates who might be interested in advertising your products or services. Initially, it might be difficult to decide which affiliate network to choose from. Here are some tips to help you with that.

  • Targeting the Right Affiliates

You need to understand what kinds of affiliates you want to advertise your brand. If your brand belongs to a particular niche, it's highly likely that an affiliate network that caters to your specific needs already exists. You just need to find it.

  • Competitive Analysis

Find out which affiliate networks your competitors are using. Analyze out how successful these networks are for them, and how large their affiliate programs are. 

  • Tracking Solutions

You need to determine what kind of tracking solutions you require. Although most merchants are okay with basic tracking abilities, some others may require advanced tracking, which could be a deciding factor.

  • Affordability

Some networks might require a monthly membership, and some others take a cut from your profits.

Some of the most popular affiliate networks in the market right now are: 

popular-aff

Fig: Popular Affiliate Networks - Affiliate Marketing

Step 2

Set up rules, guidelines, image specifications, commission values, etc. that need to be adhered to by the affiliates. Some of the specifications can be: 

  • The types of creatives (images) that can be used
  • The kind of text that's present in the advertisement
  • Image specifications
  • Referral links
  • Commission percentage, and so on

The commissions that the affiliate is entitled to be mentioned. Let's look at an example of when an affiliate gets a 15% commission for each time the referral code is used. 

affiliate-comm

Fig: An Affiliate's Commission 

Step 3

The affiliates apply to advertise on behalf of your brand/ organization. Affiliates can get in touch with you through the affiliate network, or through a link on your website, set up for this specific purpose. 

Did you know that Amazon gives you the option to become their affiliate? 

amazon-aff.

Fig: Amazon's Affiliate Program

Step 4

You need to select an affiliate that's best suited for your brand. This can be done by choosing applicants for your affiliate program (on your website or the affiliate network). Affiliates can be selected based on: 

  • The amount of traffic the affiliate's website receives
  • The success of their previous affiliate campaigns
  • Their acceptance of the commission that you are offering

Step 5

The affiliate advertises the merchant's product in his blog, website, YouTube channel, etc. Most of these have a referral link or an advertisement incorporated into them. The customer clicks on this and is transferred to the merchant's website. 

Now, let's take a look at some of the marketing channels used by affiliates. 

  • Influencers

This is an individual with a sizable audience in social media. With social media posts, blogs, and other forms of interaction, the influencer can guide his/ her audience to the merchant's website. 

  • Bloggers

Most bloggers can rank in search engine queries organically. Taking advantage of this, bloggers sample your products/ services and then review them comprehensively, which compels the audience to go to the merchant's website. 

  • Paid Search Focused Micro-sites 

These are sites that are websites, different from the merchant's main site that focuses on content tailored to a particular type of audience. They are usually successful thanks to their straightforward and simple call-to-action. 

  • Email Lists

Some affiliates still use email marketing with the help of email lists they have built over a while. Others also take advantage of email newsletters that hyperlink to the merchant's product

  • Large Media Websites

These are websites that advertise to millions of people. With this comes great exposure and similarly huge conversion rates, providing sizable revenues to the merchant and the affiliate. 

Step 6

The customer purchases on the merchant's website, and the affiliate network takes note of the transaction details.

Step 7

The validity of the transaction is verified, and the amount is credited to the affiliate.

Step 8

The affiliate network may take a cut of the profit, and then pay the affiliate his/ her commission, and the process repeats itself. 

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How to Succeed in Affiliate Marketing (Merchant)?

  • Attract successful and profitable affiliates by offering competitive rates.
  • Gamify your compensations into different tiers. Rewards are given to the affiliates that are performing well.
  • Ensure you communicate regularly, and a good relationship is maintained with your affiliates.
  • Set up strong guidelines and focus on the liberties that can be taken by the affiliates. 
  • Be flexible with your budget, as long it is bringing in profits.
  • Nurture new affiliates by providing them with appropriate talking points and promotional ideas.
  • Create a buzz around your product by having affiliates promote your products along with additional details about them.

Below listed are some of the benefits a merchant has in affiliate marketing. 

Benefits of Affiliate Marketing for a Merchant

  • You get to choose an affiliate that represents your brand and products the best
  • You're only paying the affiliates their commission if conversions take place
  • The affiliate's audience would be highly likely to be interested in your product
  • The process works in a semi-automatic fashion

How to Become an Affiliate Marketer?

1. Choose a Niche

The first thing you need to figure out is the niche you want to cater to. To decide on a particular niche, you need to ask yourself questions like: 

  • What are some topics I'm passionate about?
  • Are people interested in my niche?
  • Will there be constant demand? 
  • What's the competition like?
  • What are the other affiliate programs that work within my niche?

Tools like Google Trends, Ubersuggest, and Clickbank would determine how successful your chosen niche is. 

2. Research Programs

The next step is to find an affiliate marketing program that's suitable for you. You can make an informed decision by keeping in mind the following questions:

  • Which merchants are working with the program of your choice?
  • How much commission will you make?
  • Are you ready to commit to the program and the brands that work with it?
  • What support does the program provide you?

3. Build Your Platform

Next, you need to build a platform that can make your content work. You have two options to choose from: 

  • Make a website (a blog or a marketplace)
  • Run paid ads

 It's on these platforms that you can present your content for the audience to see.

4. Create and Publish Quality Content

One of the most important steps here is to create content that helps you stand out as a valuable, bankable, and trustworthy affiliate marketer. Some types of content you can start with are: 

  • Product Reviews

You can write reviews of products and services within your niche. 

  • Blog Posts

With a consistent post schedule, and by posting unique, high-quality content relating to your niche, you will be able to establish yourself as a leader in that niche. Your audience will significantly value your recommendations, and by extension, help you in your efforts.

  • Guides

You can create informational content that can get people interested in what you have to say. In time, you can develop your audience's interest in the product you're trying to sell.

5. Create an Ad Account

Although creating a website is a great option to become an affiliate marketer, advertising is also a great way to perform affiliate marketing. With the latter method, you don't even need a website! Some of the most popular advertising platforms on the internet are:

You can choose an appropriate platform depending on your requirements. 

Next up, let's have a look at how affiliates can make money off affiliate programs. 

How is an Affiliate Marketer Paid?

There are three different methods based on which an affiliate can be paid. Let's have a look at each of them:

b/payper

1. Pay Per Sale

In this program, the affiliate is paid a percentage of the sale by the merchant, after the purchase of the product by a customer. 

2. Pay Per Lead

In this case, the affiliate is provided compensation based on the number of leads that have been converted. The affiliate's objective is to drive his/ her audience to the merchant's website and have them perform a particular action like - sign up for a trial, subscribing to a newsletter, etc.

3. Pay Per Click

In this case, the affiliate needs to redirect customers to the merchant's website. The affiliate is paid depending on the increase in web traffic that they bring to the site. 

Now, let's take a look at the benefits of becoming an affiliate marketer. 

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Benefits of Becoming an Affiliate Marketer

  • A Constant Flow of Income

Once you've invested time and resources into your campaign, you can relax as your audience purchases your products in the following days. This flow of income could likely continue for a long time. And even if you're not in front of your computer, the pay remains continuous.

  • No Customer Support

Once your customers have bought your product, you won't have to worry about customer support or satisfaction. Those become issues that the merchant needs to handle. 

  • Work from Home

You'll be able to receive revenue for campaigns created by the merchants from the comfort of your home. You could do this work in your pajamas.

  • Cost-effective

You can get started quickly and with ease and low cost. You don't have to worry about any affiliate program fees, and neither do you need to create a product.

  • Convenient and Flexible

You have the freedom to set your own goals, determine your hours, not get bogged down by restriction or regulations.

  • Performance-Based Rewards 

Affiliate marketing is entirely based on your performance. The more effort you put into it, the better outcome you get. 

Conclusion

In this article, we talked about several different topics. First, we talked about the current state of affiliate marketing in 2020, what exactly it is, the process behind it, how you can succeed as a merchant, it's benefits, how you can become an affiliate, how affiliates are paid, and the benefits of becoming an affiliate. You could also check out Simplilearn’s Digital Marketing Associate Master’s Program and make a splash in the field of Digital Marketing.

Do you have questions about Affiliate marketing? Let us know in the comment section, and our experts will get back to you as soon as possible! 

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Simplilearn is one of the world’s leading providers of online training for Digital Marketing, Cloud Computing, Project Management, Data Science, IT, Software Development, and many other emerging technologies.

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