Affiliate Marketing Explained
A Beginners Guide

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What is Affiliate MarketingAffiliate marketing is an excellent business model that allows anyone with basic computer skills a chance to start their own online business.

Even better, this monetization method requires little financial investment, just time and perseverance.

If you want to learn affiliate marketing and you are looking for a beginners guide then this article is for you.

The purpose of this guide is to help newcomers start an affiliate marketing business and provide them with all of the necessary resources and information to be successful.

I have been generating an income from affiliate marketing for over a decade but I could have made so much more if I had a better plan and the systems I have in place today.

Let’s make sure you can optimize your affiliate income without the trial and error I have had to endure.

In this article, we are going to cover

What is affiliate marketing?

Let’s start by talking about what affiliate marketing involves.

Affiliate marketing is when you promote another companies products in return for a commission.

The actual transaction is handled by the vendor, so you don’t have to handle the checkout process or deliver the goods.

This is different to dropshipping because with dropshipping while you also don’t handle the goods, you do process the payment yourself and then pay the merchant.

With affiliate marketing, the merchant takes the payment and then pays you your commission.

The person promoting the product is the affiliate, and the person selling the product is the merchant or vendor.

Sometimes you will sign up for an affiliate program directly with the merchant or vendor responsible for fulfilling the sales but in many cases, you will connect through a third party known as an affiliate network.

It’s highly likely you have purchased something via an affiliate yourself in the past and not even realized.

These kinds of transactions are usually frictionless because an affiliate may earn a commission when you click a link on a website or blog and buy something.

You wouldn’t notice anything different or unusual and you pay the same price you usually would.

The only difference is that the vendor of the product takes a percentage of the amount earned and pays the affiliate for referring you.

Affiliate marketing is not new, Amazon Associates, which is the name given to Amazon’s affiliate program was launched in 1996 and that was 7 years after the first online affiliate program which was invented by William J Tobin.

How Does Affiliate Marketing Work?

It’s helpful to properly understand how the affiliate marketing business model works.

Affiliate sales are usually tracked in one of two ways, either by using cookies or a referral code.

Cookies

Most affiliate programs use something called Cookies. Cookies are a piece of code that is placed on your computer and records information about the person who referred you and the time stamp.

If you click on an affiliate link on a blog while looking at a product review, you will then be taken to another website to actually purchase the item.

At the same time, a cookie is placed on your computer to leave a breadcrumb trail for the vendor so they know where you came from.

These cookies can last for different time periods. Cookies from Amazon Associates only last 24 hours however a typical cookie length is usually 30 days some affiliate programs offer an even longer timeframe.

The longer the cookie period the better, because it means you can still earn a commission if the customer returns 29 days later to place their order.

Referral Code

Another way to attribute sales to a specific marketer or affiliate is by using a referral code.

You will have heard these used on podcasts and in YouTube videos to promote sponsored products as this is an effective way to promote an offer verbally and in video format and still be able to track your referred sales.

You may have also seen them used as promo codes in print advertising as they also provide a way to track how effective offline marketing campaigns are performing.

See the below diagram for a more visual explanation.

How Affiliate Marketing Works

What is an Affiliate Network?

Affiliate networks like ShareASale or WebGains are services that connect you with large databases of affiliate programs.

This means you can sign up with one service and have access to tens of thousands of different products.

The benefit here is the convenience factor, it’s much easier to log in to one website to get affiliate links and to report on your sales than it is to log in to hundreds.

It’s also a lot easier to hit your minimum payout limit if you have several affiliate programs under one account.

Be aware that not all affiliate networks are as good as each other and some aren’t to be trusted. Only work with recommended affiliate networks and you will avoid any dirty tactics like ad fraud and non-payment.

Advantages and Disadvantages

Let’s take a look at the advantages and disadvantages of this business model and how it stacks up as a way of making money online from the perspective of the affiliate.

Personally, I think it’s one of the best monetization methods for any type of online business whether it’s a blog, niche website or YouTube channel.

Advantages

Let’s start with the positives.

  • Low or Zero capital investment required
  • Anyone with basic computer skills can start
  • No need to create your own products
  • No products to handle
  • Test a new niche or topic for validation
  • Sales are taken care of for you
  • Customer service is done for you
  • Best way to make money from low amounts of traffic
  • Works with any type of website
  • Works even if you don’t have a website

A pretty impressive list of reasons to want to get involved.

Being able to start a new business without investing in products is a serious plus, especially because if you start to generate sales you can then invest in launching your own product later on having already validated your idea and found your customers.

This way affiliate marketing provides the perfect opportunity to test new niches and product ideas out without much risk before you then consider transitioning to a dropshipping model or fulfilling your own orders to maximize your profit margins.

The versatility of affiliate marketing makes it my number 1 choice for monetizing an audience.

The advantages of affiliate marketing for businesses looking to sell more products or services is that they are only paying a commission when they make a sale, and they can increase sales very quickly with the right incentives and commission structure.

Disadvantages

Now the drawbacks of affiliate marketing.

  • Lack of control – Affiliate vendors can close their program, or change the commission % at will.
  • No customer data – You are only paid for the initial sale in a lot of cases, so you often don’t get the lifetime value of the customer.
  • Can be difficult to scale – Depending on the niche, some websites that rely solely on affiliate marketing can hit an income ceiling.

When you are promoting other companies products you the biggest disadvantage is not being able to build a customer list to remarket to because it’s much easier to convert existing customers than keep finding new ones.

Another concern for affiliates is when you get an email from your partners to let you know they are lowering the commission rate or worse, they have decided to close down the program.

Ultimately I think the pros outweigh the cons when it comes to deciding if affiliate marketing is a good option to make money online from your website, blog or social accounts.

Types of Website Using Affiliate Marketing

There are lots of different types of websites that utilize affiliate marketing in one way or another to generate revenue.

If you are interested in different ways you can use affiliate marketing, here are some of the best examples:

  • Review Sites – When you next go to a review site take a look at their links. Most of the products listed will be connected to an affiliate program of some sort. Examples include BestProducts, TheWireCutter etc. Look for URLs with ref=? and aff=? as telltale signs that it’s an affiliate link. Different programs use different extensions but it’s often quite easy to tell.
  • Blogs – Goes without saying, affiliate marketing is one of the best ways to monetize blogs by placing affiliate links in relevant articles.
  • Niche Sites & Authority Sites – Websites that are usually informational and more professional than your average blog. DrAxe is a good example.
  • Price Comparison Websites – Price comparison sites usually generate all of their revenue from referring leads to different companies. If you need proof that affiliate marketing is lucrative just look at the number of Price Comparison websites out there. Examples would be Trivago, GoCompare, MoneySupermarket etc.
  • Loyalty/Cashback sites – Websites that offer you points or cashback for purchasing through their platform are usually making their money by earning commissions on the other end. Think Ebates and other similar sites.
  • eCommerce stores – On the other side, eCommerce stores use affiliate marketing from the merchant/vendor angle as they generate traffic to their online stores from bloggers, influencers and other types of websites. Amazon Associates and eBay Partner network are the best examples of this but there are many much smaller independent online stores with their own affiliate programs.

As you can see there are lots of types of website that use affiliate marketing but the truth is, most of the time you don’t actually need a website at all.

Many affiliate programs will accept you regardless of if you have a website or not so you can promote links on social media and to your friends and family.

Some people call this a referral program however the term is mostly interchangeable with affiliate marketing these days.

You can also promote affiliate programs with just a simple landing page using tools like ClickFunnels if you don’t want to build out a full website but still want to create sales pages to promote your offers.

What are the Best Affiliate Products?

When looking for affiliate products, services and offers to promote there are certain criteria you should consider to make sure you are picking the best products.

  • High-ticket items – Ideally you want to focus on prioritizing high-ticket items that sell for over $1000. This means you can make more money from fewer conversions. It’s hard to find products that sell for this much consistently but know to prioritize a $50 or $100 product over a $10 product.
  • Digital / Non-Tangible – If you can promote digital products that don’t have any production costs you have more chance of earning a higher commission %.
  • Cookie length – The longer the cookie period the better. Amazon offers 24 hours but the average affiliate program is 30 days. If you are lucky you might find programs that offer a cookie length of up to 3 months.
  • Not over-saturated – You want to spend a fair amount of time doing keyword research before you promote a new product to ensure there’s enough interest in the product but at the same time that you have a chance of ranking. Some products are over-saturated and the competition will be too tough if you are just starting out.
  • Recurring income – Some products and services are billed on a monthly or yearly cycle, like hosting and SaaS cloud-based web services. In many cases, you get paid a commission every month the person you referred remains a customer. This can help you quickly scale your affiliate income.
  • Quality – It should go without saying but you want to only promote quality products. If you sell a product and it’s returned within the return period, you can say bye-bye to your commissions.

This should give you a good idea of what to look for when doing your affiliate product selection.

How much money can you make with affiliate marketing?

Don’t confuse affiliate marketing with a way to get rich quick, it’s simply not the case, it is, however, one of the best ways to make an extra few hundred or thousand dollars each month without having to work full-time.

It’s definitely not passive. It requires work and regular upkeep but in my opinion, it’s worth it and a great way to increase your income.

In 2017 the affiliate marketing industry was estimated to be worth £12billion with no sign of slowing down, so it should come as no surprise that there are entrepreneurs making 5 and 6 figures a year with this method.

This means there’s still plenty to go around.

There are examples of websites making hundreds of thousands a month from affiliate commissions though they are definitely not typical results, making a few thousand per month, on the other hand, is totally achievable provided you are dedicated and willing to put in the time.

The most profitable affiliate campaigns usually involve high ticket items, these are items worth over $1000, because it’s usually a lot easier to sell 10 $1000 products than it is to sell 1000 $10 products.

It’s no wonder there are so many mattress blogs competing to appear on page one of Google.

Digital info products have a particular advantage in that there are no production costs and as a result, you can expect as much as 50% commission levels.

This makes a big difference when you consider the average commission on a sale through Amazon Associates is more like 6%.

How to Start Affiliate Marketing

If you want to get started with affiliate marketing then you need to have patience, discipline and be self-motivating.

You are unlikely to make a substantial amount of money overnight but in the space of a few months, it’s totally possible to start seeing your first $100 or $1000 online.

To get started you need to:

  1. Decide what platform you are going to use. A website, Blog, Social Platform etc.
  2. Find the niches and topics and products you plan to promote.
  3. Sign up with the main affiliate networks and find direct affiliate programs. Some networks and programs may expect to see a website, traffic figures or your social following for approval.
  4. Create promotional content and use the affiliate links provided.
  5. Market your content through the available channels. SEO, Social media, outreach, video etc.
  6. Start generating sales.
  7. Rinse and repeat.

Admittedly the above is a simplification of what’s involved to build an affiliate marketing income stream but it gives you a brief overview.

It will also require a certain amount of head scratching, sweat, and tears as you experience the ups and downs of being an affiliate marketer and trust me you will experience both.

One of the best pieces of advice I can give is to build systems and document your processes to ensure you can maintain a good win rate when it comes to promoting products and producing content.

The art is in finding the best opportunities within your niche and then exploiting them.

Learning how to do keyword research and competitor analysis as these are two of the most useful skills for any affiliate marketer and it will help you quickly uncover money keywords and new opportunities to go after.

It helps to remove as much friction as possible and having checklists of what to do will expedite your progress.

How to Promote Affiliate Offers

There are lots of ways to promote your affiliate offers online once you have your links and some content or assets to use.

Let’s imagine you set up a blog or website so you can create a piece of content like a product review.

When promoting affiliate offers you can use:

  • Content Marketing – Pretty much all of your marketing efforts will begin with creating a unique piece of high-quality content. It might be a blog post, a video or just a sales page but you want to start producing an asset that you can share and promote.
  • Search Engine Optimization – Create content that ranks on Google for relevant search queries with buyer intent. This will generate highly targetted traffic you can convert into sales.
  • Social Media Marketing – Grow your social presence and share your content, offers and affiliate links with your audience either directly on social networks or by bringing them to your website first. Pinterest, Facebook, Twitter etc are examples where you can do this.
  • Email list – You should be building an email list as this is one of the best ways to promote your latest content and offers. Your email subscribers are also your warmest leads.
  • Paid Ads / PPC – If you have the profit margins, like on higher ticket items you can consider using paid ads services like Google Ads to drive targetted traffic to your offers instantly.

There’s an art to each of these promotional methods and it takes time to learn how to use them effectively. I advise starting with organic search and social marketing before experimenting with paid ads as it can quickly get out of control if you don’t know what you’re doing.

It’s rare that you will find affiliate products that pay a high enough margin for you to justify spending money on pay-per-click ads though they do exist.

Affiliate Marketing Tips

If you want to be successful at affiliate marketing then read these power-tips I have learned over the years.

  • Longtail Keywords – Longtail keywords are keywords that receive low to medium search volume but with low competition. The easiest way to make your first sales online is to focus on low hanging fruit. It’s better to have a bigger piece of a smaller pie than crumbs from a larger one.
  • Buyer Intent – One of the best ways to increase your chance of generating sales is to focus your efforts on keywords and search queries with strong buyer intent. This means add modifiers like “best”, “buy”, and “compared” to the keywords you are trying to rank for. People searching for these terms have likely already decided they want the product and just need some final advice on which one to buy. So combine longtail keywords with buyer intent and you will increase your chances of generating sales.
  • Build an email list – The best way to keep your visitors coming back for more is to entice them to join your email list. This way when you have something new to publish or an offer to promote, you already have a list of warm leads to send to. Email is far more powerful than social media when it comes to building real relationships and you also own your email list, you are only borrowing your social media accounts.
  • Quality first – Only promote high-quality products that you have tried and or trust.  Just like any business, to grow you need to keep people coming back and encourage people to talk about you. You won’t do well if you are promoting crappy products and not providing value.
  • Know your products – If you write content or produce videos talking about products you have never used or have little knowledge of, it will show! If you want good conversion rates you need to build trust.
  • Affiliate Managers – When you sign up for an affiliate program you are usually given an affiliate manager. They often contact you to introduce themselves but if not their details will be available somewhere in your account. You want to make sure to build a relationship with your affiliate manager. They can help you out in lots of ways including special referral codes, discounts you can offer your audience and letting you know which products are best sellers etc.
  • Negotiate – One of the best ways to increase your affiliate commissions once you have established yourself and made a few sales is to negotiate with your affiliate manager. The worst they can do is say no, but you might find some affiliate managers are willing to help you out to keep you bringing them business.
  • High-ticket Items – If you want to increase your earning potential you should prioritize high-ticket items. It’s an added bonus if you can find something non-tangible that offers a high commission percentage also.
  • Mentors – Having someone who can guide you through the process and review your progress at set intervals is extremely valuable. I recommend all entrepreneurs find a mentor.
  • Educate – The best way to create persuasive content and convert visitors into conversions is to focus on creating educational content that delivers value. Help your visitors with buying decisions.
  • Mindset – Possibly the least talked about but one of the most essential areas to work on if you are going to be successful in building online businesses or any business for that matter and affiliate marketing is no exception. You need to be self-motivating, patient and disciplined. Don’t expect overnight results.
  • Competitor Research – If you are struggling for product ideas and ways to diversify, do some competitor research by searching for your primary keywords on Google and then analyzing the top 10 results. Disregarding anything that’s irrelevant like Wikipedia and YouTube results for example.
  • Networking – One of the best ways to speed up your development is to network and learn from others. Join communities in your niche and that are related to affiliate marketing on Facebook, Slack, Reddit, and Pinterest.
  • Build Systems – I have said it already but I had to mention it again. Putting business systems in place is one of the best ways to save time, be more productive and avoid procrastination.

That’s my list of affiliate marketing tips, you also want to make sure to disclose you are using affiliate links to stay on the right side of the FTC. Add a simple disclaimer like I have at the top of this page.

Affiliate Marketing – Final Thought

You should now have a firm understanding of affiliate marketing, how it works and why it’s so powerful.

If you are interested in starting a business online, maybe a blog or a niche website then affiliate marketing could be for you, the easiest way to try it out is by starting a blog.

To be successful in affiliate marketing make sure to follow the advice mentioned in this article and don’t forget to build a system for every process involved.

Affiliate marketing has the potential to bring you relatively passive income that you can use to invest in creating your own products or launching more websites and blogs.

Affiliate Marketing for Beginners

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David

Web Designer, Digital Marketer & Entrepreneur with over a decades worth of experience helping small and medium sized businesses evolve and adapt to the modern digital marketplace.