What is Affiliate Marketing I hear you ask. Well, if you’ve ever looked into making money online for anymore than 2 minutes you will come across the term. It’s used by people just getting started as much is it is by multi national mega corporations making zillions every week. Affiliate marketing is where you (the publisher or the affiliate) sell a product from a merchant or retailer and you then receive a commission from that transaction.
So you don’t actually hold, send or even touch the product, you’re just the middleman connecting the merchant and the buyer. It’s a concept that has been around much longer than the Internet: paying commissions for business referred. The Internet just makes the whole revenue sharing thing much easier for all parties involved.
An Example of Affiliate Marketing
Let’s say you’re really interested in luxury mens watches and you decide to start your own watch review blog. You do a very detailed review on the new Rolex Submariner Blue Dial 18kt Yellow Gold Oyster Bracelet Mens Watch which is selling for about $28,000 USD. It’s such a glowing review that your readers have decided to buy one!
Well, luckily for them you can help them out with a link to Amazon.com where this exact model is selling for $27,908.95 with free shipping!
Your viewer clicks on the Amazon link, exactly like the link above which is an actual affiliate link that I’ll receive compensation from if you buy it, and they purchase the gold Rolex Submariner watch. There’s a tracking number in the address which tells Amazon that you sent the customer to them and they have purchased the Rolex. Amazon collects the money from the customer and sends the watch to them, taking care of postage and any questions or complaints regarding the item.
So all you have done is linked to the product which has been sold and you’ll now receive a percentage of the sale price. It varies with different categories on Amazon but from what I can see right now they’re paying 7% commissions on watches and jewelry. If my math is correct, and it could easily be wrong as I hate math, that’s close to a $2,000 commission you’ll receive.
Obviously that’s an extreme example as you’re not going to have too many people buying $28,000 gold Rolex watches through your referral links but it’s a real world example of how affiliate marketing works for beginners. A more realistic example would be reviewing more affordable watches from Casio and Seiko worth maybe $100 or $200 and then you receive $7 or $14 from each sale. Ideally you would cover a few different price points but that’s a story for another day.
Different Types of Affiliate Marketing
There’s a number of different compensation methods with Affiliate marketing.
- PPS or Pay Per Sale is the most popular method used online. This is the method described above with the gold Rolex watch being sold using the Amazon affiliate program. You get paid a percentage of every product or service you sell. If you send a million visitors to a product and nobody buys it then you get paid nothing.
- CPA or Cost Per Acquisition is the next most popular method where you send a customer to sign up for a newsletter, register interest in a service, or give their phone number to a merchant. You’ll be paid per action and not how much money the merchant makes from the customer. For example they might pay $5 for every person you refer to them who signs up to their Luxury Watches newsletter. That person who signs up may never spend a dollar with that merchant but they could also spend $100,000 with them and you don’t profit from it. Your compensation is the $5 and it stays the $5 forever.
- CPC or Cost Per Click is where you send traffic to a merchant and are paid per visitor. So regardless whether they buy or not you are paid a small fee for sending the visitor to the merchant’s website. The affiliate is less concerned about converting traffic as they don’t get paid any extra if the visitor buys something.
- CPM or Cost Per Mille is where you the publisher shows an advertisement or banner ad on your website and you’re compensated per 1,000 views. So the visitor doesn’t have to even click on the advertisement (which would link to the merchant’s website or offer) and you’re paid an agreed upon fee.
There’s also a few other variations worth taking note of. For example, if you’re selling a service you’ll usually just receive the one fee for the new customer sign up and that’s where your compensation ends. That customer could be paying a monthly fee to the merchant for the next 10 years and you’ll receive nothing from it.
But a few merchants will pay you a monthly commission for as long as the customer you send continues to pay. So if the service you referred the customer to is $100 per month and you receive 20 percent of it, you receive $20 every month for as long as that customer remains subscribed.
Two awesome companies that do this are ClickFunnels (for sales funnels) and Aweber (for newsletters). Publishers love these types of offers as it’s a more reliable source of future income that you can predict.
Show me the Affiliate Programs!
Large merchants like Amazon.com will have their own inhouse affiliate programs. So if you’re into luxury watches you could find some of the large online retailers of watches and see if they have their own affiliate program. You would then sign up with them and start selling their products.
Most merchants will outsource their affiliate programs to big affiliate networks that work with hundreds of merchants. You could sign up to the affiliate network and choose from a whole bunch of watch retailers and brands to work with.
Some affiliate networks include CJ Affiliate by Conversant (Commission Junction), ClickBank, and Share-a-Sale.
How do I get Started with Affiliate Marketing?
I’ll look at this more in depth in future posts as there’s a million different ways to get started with affiliate marketing. So I’ll keep this short and sweet but still useful for beginners looking to make money online.
Start with a blog. I posted a How to Start a Blog post just recently so you can check that out here. It’s really quite easy.
But first, choose your topic. I would definitely suggest a topic that you are passionate about or at least something that you’re interested in and would like to learn more about. Make sure the topic isn’t too obscure or bizarre as you may find it difficult to find an affiliate program to promote.
Once you have your blog figured out and you’re publishing content regularly, make sure you start collecting emails for your newsletter. This will become one of your greatest assets. I recommend using Aweber.
Then get your social media mojo on. Look to Facebook, Twitter, Pinterest, and Instagram. Your niche may have smaller social media networks that are also worth signing up to.
But wait, there’s more to do yet. Next you’ll have to start your own Youtube channel and publish videos regularly. Good luck if you’re camera shy as all the cool kids will tell you this is not an option, it’s mandatory!
You don’t have to start everything at once though. Just start a blog today and you can ease your way into this thing called affiliate marketing. Just talk about your interest, post reviews, give value to the people in your tribe. Experiment, learn, take action and repeat a thousand times.