This is a common question so I figured it would be best to give you an overview of what affiliate marketing is and how it works, and of course, how you can make money doing it! This will be a pretty large post so it may be split across two posts. To make things easier for you, I have also included a Table Of Contents for you to quickly skip to certain topics.
What is Affiliate Marketing?
If we take a look at the definition of Affiliate Marketing which can be found here at WikiPedia:
Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network (that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as ‘the affiliate’), and the customer.
As you can see above, essentially you are a “middle man (or woman)”, connecting buyers with sellers. Each time someone purchases a product through you (or your website), you get a commission.
This does not increase the amount of the product on the buyer’s end, the company pays you, the affiliate out of its own pocket.
How Does Affiliate Marketing Work?
Let’s for example, assume you have a website that is promoting “Bedazzled Cat Collars”, and you are going to be using your website and organic traffic (SEO) as your primary method of promotion.
You would have articles on your website talking about different topics related to “Bedazzled Cat Collars“. You could be writing product reviews or your own opinions or recommendations on the best bedazzled cat collars in 2017.
Throughout your content, you will highlight certain text (kind of like how I just did above), and turn it into an affiliate link that contains your affiliate ID.
What is an Affiliate Marketing Program?
An affiliate program is essentially a system created by Merchant (brand or retailer), which allows the publisher to promote products and receive a commission for the sale. Some merchants work through Affiliate Networks as mentioned here.
These are generally used by smaller merchants who don’t have the infrastructure or requirements to build their own specific Affiliate network.
Amazon Affiliate Program
This is one of the most common affiliate programs around. They do not work through a network which means they handle all of their affiliate programs in-house. This includes tracking and payments.
Amazon gives you a special affiliate ID that tracks all the clicks that direct people from your website to Amazon.com. This is how they know when someone makes a purchase through one of your links.
Does Affiliate Marketing Really Work?
Yes, it does work in theory but much like running a business, a lot of it comes down to how you execute it. You have plenty of options when it comes to affiliate programs and methods of promotion.
Common promotional methods are:
- Social Media (Facebook, Instagram etc)
Each method has pros and cons. If you are promoting using a website/blog and you are relying on organic traffic, this can take a longer time but the costs are significantly lower with the only real expenses being a domain and hosting.
Another pro is that you own your website! You could incorporate PPC or paid ads (Facebook, Adwords) to drive more traffic to your site, however, this will increase the cost.
You could choose to avoid a website and only promote on Facebook. This will cost you more upfront because you will have to use PPC to increase the amount of people who see your ad.
You also have to be careful because Facebook doesn’t really like affiliate promotion (you have to be crafty), and some affiliate programs don’t like it either. A major con here is that if you are using Facebook, you don’t own your page/group.
At any moment, Facebook can shut you down.
Which method you use really depends on a couple things:
- Where does your target market hang out
- What kind of promotion does your affiliate program allow
- What are you willing to invest
Is Affiliate Marketing Profitable?
Of course! I mean if you invest $100 and make $101, isn’t that profitable? Ideally, you would want more than 101% return on your investment (much, much more!). So really the question is “How profitable is affiliate marketing?“.
This is a difficult question because there are so many variables to consider. Are you using PPC or any other form of paid advertising? These will increase your costs which in turn increases the amount you need to make to break even.
The cheapest way to get started is to create a website and write content.
If you have money to invest and want to make money faster, using PPC is the best option. If you don’t have much money but have plenty of time, then creating a website and focusing on organic traffic may be the best option.
Below is a screenshot from one of my Amazon affiliate sites:
Total Cost: $65 and 10 hours of my own time
So if I were to consider my own time to be worth $20 per hour (purely an example, my times actually worth much more!), the total cost of the site would be $265.
This means that in December alone my site has paid me for my time and expenses, leaving a profit of $26.17.
I believe I can grow this site in excess of $500 per month. The future months will have a higher profit margin with the only expenses being hosting and perhaps if I need it, a content writer.
Even with using a content writer I believe that I can still maintain a $300 profit margin.
That is by no means quit your job, move to Vegas and make it rain money, but it’s a move in the right direction. The site is only young and has plenty of growth potential.
There are many more search terms I can rank for, increasing my traffic and the amount of people who see my site.
How to Start Affiliate Marketing?
Starting can be as easy as buying a domain + hosting package, some hosting plans like BlueHost include a free domain when you purchase a hosting package, find a product and start promoting it.
If you have never built a website before, there are plenty of tutorials online that can show you how. I personally use WordPress because it’s just so easy to build a professional looking site, quickly.
If you want to know more about how I learned everything I know about building websites, finding affiliate products and promoting them to make money, subscribe to my email list.
I will be adding a lot of content designed to help you go make money online with affiliate marketing.
In my next post I will be covering the following topics:
- What does an Affiliate Website Look Like?
- Can You Make Money With Affiliate Marketing?
- Can You Make a Living With Affiliate Marketing?
- Can I do Affiliate Marketing on Facebook?
- Do You Need A Website For Affiliate Marketing?
- Best Affiliate Marketing Programs?