The world of affiliate marketing can seem rather mysterious to the uninitiated.
There are widespread reports of people making “six figure” incomes from running blogs and websites. On the face of it, it all sounds very simple. But then, once you begin to research, you can quickly find yourself drowning in jargon and acronyms.
This article sets out to demystify affiliate marketing, It starts with the real basics, before providing some general advice on how YOU could get started.
What is Affiliate Marketing?
Affiliate marketing is where you earn money for promoting other peoples’ products and services.
For example, you could set up a website reviewing and rating DIY equipment. Each time somebody buys a product on your recommendation, and clicks through using one of your links, you receive a commission.
This is obviously a very simplified example. You can be an affiliate for every imaginable type of product and service – from baby clothes to private jet charters. You can also use many different ways to promote affiliate products, from blogs to podcasts to social media channels.
Why get into Affiliate Marketing?
Affiliate marketing gives you an opportunity to build a sustainable online business around any niche that interests you.
For example, if you’re passionate about car customisation, you could start a website about all kinds of related products. Or, if you’re about to have your first child, you could start a blog and a podcast discussing your experiences, and go on to recommend products that help you along the way.
Another powerful reason to get into affiliate marketing is that you have the potential to establish a stream of passive income. In theory (and in reality), when you run an affiliate business you can make money while you sleep and while you’re on holiday.
It’s important, however, to emphasise that there is plenty of up-front work involved in establishing passive income. Affiliate marketing isn’t a “get rich quick” scheme. It most rewards those who put in the groundwork and aim to be the best in their niche.
Finally, an aspect of affiliate marketing that not everybody thinks about is that you are, over the long term, building up an asset. A website that consistently makes money has considerable value, and can be sold on like any other successful business. Valuations of between 25 and 50 times monthly net profit are common.
How does Affiliate Marketing Work?
The basic steps involved in making money from affiliate marketing are as follows:
- Create content that’s relevant to the product(s) you wish to promote. This could include reviews, product roundups, YouTube videos and any other ideas you may have.
- Sign up to relevant affiliate schemes. Some companies work with affiliate networks, whereas others operate their own internal affiliate schemes (more on this below).
- Include affiliate links in your content. These links show that people have clicked through from your content specifically.
- Make sales and get paid. When customers who click through from your links go on to make a purchase, that purchase is logged against your affiliate account, and you earn your commission.
A Word on Cookies
For example, if you send traffic to Amazon via the Amazon Associates scheme, the Amazon cookie lasts for 24 hours. That means that if a customer you sent their way makes a purchase within 24 hours, you are in line for the commission.
Different affiliate schemes have different cookie durations. In some cases, you can still earn commission if a customer goes back and buys something 30 or even 60 days later.
The exception to this is if that same customer subsequently clicks through to the same merchant site via a different affiliate partner. It’s the most recent cookie that “wins.” So, if a customer does further research and clicks through from a competitor’s affiliate site, it’s that affiliate that will earn the commission.
How do Affiliate Marketers get Paid?
There are three key payment models for affiliate marketers:
Per Sale: This is the simplest model. You get paid when somebody clicks through from your site (or social media account, or YouTube channel etc.), and completes a purchase.
Per Lead: Sometimes known as CPA (Cost Per Action), per lead affiliate marketing means you get paid when a customer completes a specific step. This could mean signing up for a free trial, or something as simple as providing their email address.
Per Click: Less common in affiliate marketing is being paid for every click through to a merchant’s website.
The per click model is more commonly seen with display and banner advertising, using networks such as Google AdSense. Online businesses often use a combination of display advertising and affiliate marketing in order to establish multiple streams of income.
Above, we’ve discussed the different ways you can earn money as an affiliate marketer, but you may also be wondering how the money actually reaches you.
Usually, all of your sales and commissions are logged on an affiliate dashboard. Here you can see various statistics related to your clicks and conversions.
There’s typically some time delay between you earning a commission and receiving the money, to allow for processing time and potential refunds. For example, you may find that commissions you earn in January are paid in mid-February.
Payment methods vary. PayPal is widely used, but bank transfers are often an option, as well as payment via other networks such as Stripe and Payoneer.
Affiliate Marketing Example Websites
Here are a few examples of affiliate websites achieving success in the UK:
MoneySavingExpert is well-known across the UK, but it may not instantly occur to people that it’s fundamentally an affiliate website.
As well as providing lots of great advice to readers, it also promotes a huge selection of products. These range from credit cards and other financial products to promotions from online retailers.
A great example of a niche affiliate site, UK Web Host Review makes its money from reviewing and rating web hosting packages.
This is a hugely competitive affiliate niche because it’s very lucrative. As people setting up websites typically stay with their web hosts for many years, the hosts pay considerable commissions to their affiliates.
Online marketing is a niche in itself. Matthew Woodward is a true authority in the world of marketing and SEO.
As well as acting as a shop-front for Woodward’s own products and services, this site reviews and promotes numerous affiliate offerings.
What are the Best Affiliate Networks?
As discussed above, some companies run their own affiliate schemes. Others use an affiliate network as a “middle-man.”
This has various benefits, both for companies and for affiliate partners. As an affiliate, you only need to sign up to the network(s). You can then apply to any of thousands of different programs after browsing for products and services relevant to your niche.
Networks also make dealing with payments more straightforward. You may end up promoting several different offerings, with the financial transactions all handled by the same network.
In this section we look at some of the best affiliate networks. You’re sure to see more reference to them very early on in your affiliate marketing journey.
Amazon Associates is often the first affiliate network that marketers sign up to. It’s slightly different to the other networks mentioned here because it exclusively offers Amazon products. However, as you no doubt know, that means pretty much any physical product you can imagine!
It’s relatively easy to be accepted for Amazon Associates, although you do have to show that you have an established site of suitable quality. Commission rates range from 5-10%, so they’re far from the highest in the industry. However, the sheer range of products compensates for this.
Many affiliates start with Amazon Associates. Plenty go on to build entire online businesses around it.
Awin (Affiliate Window)
Awin is another industry leader, and a place to find lots of affiliate schemes run by blue-chip companies. You only need look at their advertiser directory for some examples, which include O2, Aviva and John Lewis.
Being accepted for Awin itself is quite straightforward, but you must then apply for individual affiliate programs. Some are easier to join than others. Often, the affiliate managers will want to have a good look at your site and gain an understanding of exactly how you will promote their products.
ShareASale is a part of Awin and actually holds over 50% of market share in the affiliate world.
ShareASale is an accessible network, and used by plenty of big names. However, compared to AWin itself, there’s more of a focus on software and services.
Plenty of big companies run their affiliate programs via Impact Radius. These include the likes of Microsoft and Sage.
You usually encounter Impact when you first come to sign up with a specific scheme. Once you’re accepted for one, it’s easier to apply for subsequent programs via a simplified process.
Part of the Japanese tech giant, Rakuten Marketing is another place to find thousands of affiliate programs. They span a vast range of categories, from travel to clothing and accessories.
As with Awin and ShareASale, you first apply to join the network itself. Then, after providing a basic profile for your site(s) you can browse all of the affiliate programs and apply to those you wish to promote.
There are plenty of other affiliate networks. Other well-known players include Commission Junction (CJ), TradeDoubler and MaxBounty. If you get into affiliate marketing, you will usually find that, over time, you end up joining several in order to promote all the products you wish to.
How to Succeed with Affiliate Marketing
Affiliate marketing is both lucrative and competitive. Certain niches (such as web hosting, mentioned above) are arguably best left to the professionals. Some of the long-term players in these niches have huge budgets, making it hard for newcomers to make an impact.
However, there are still plenty of niches to go around. The best thing to do is find a niche you are genuinely interested in. Testing and reviewing lots of different golf equipment, for example, would be a labour of love for a passionate golfer, but a total bore for somebody else!
As such, try to find a subject where genuine interest and the potential to make money collide. Not only does this mean that you will be working on a project that’s enjoyable, you’ll also produce much better output. Genuine passion DOES matter.
A Few Tips:
- Look at the Competition: To truly succeed in affiliate marketing, you need to aim to be better than whoever’s currently the best. There may once have been a time where it was possible to make money from half-hearted affiliate websites, but that’s long gone.
- Think about How to Build Traffic: The best content in the world won’t make you any money if nobody reads it. There are numerous ways to build traffic, from climbing up Google’s rankings using SEO, to attracting people via social media, YouTube videos and podcasts.
- Be Ready to Play the Long Game: Affiliate marketers don’t make money overnight. You need to be ready to put the hours in, learn the landscape and pay your dues before the commissions start rolling in.
Affiliate marketing has tremendous potential as a money-maker.
With new products and trends constantly emerging, the affiliate world will never become too saturated for new players to give things a go.
There is significant work involved, and the most successful affiliate marketers are definitely those who build businesses – and not just websites.
If that sounds like something you’d like to do, don’t hesitate. It can take some time, but once the passive income begins, it’s incredibly fun to start each day looking at what money you brought in overnight!