19 min. reading

What is affiliate marketing?

Do you have an effective SEO strategy, email marketing in place, PPC campaigns running and your social networks well underway? Then, it's time to add affiliate marketing to your marketing mix. This Affiliate Marketing Guide will show you how.

What is affiliate marketing?
Source: Depositphotos

Affiliate marketing meaning

Affiliate marketing is a performance-based online marketing strategy where businesses reward affiliates for each customer brought by the affiliate’s own marketing efforts. It helps increase sales and gain advertising in places that can’t be reached otherwise. Our Affiliate Marketing Guide explains how it works and why it’s valuable.

Affiliate marketing is a collaboration between advertisers (e-shops) and publishers (affiliate partners). Publishers use their online platforms to promote the advertiser’s products or services, earning a commission for each resulting order. This guide will:

  • Explain how to earn income as an affiliate marketer by recommending products to others
  • Offer expert advice and showcase popular affiliate programs to help you get started
  • Serve as your comprehensive resource for understanding and implementing affiliate marketing strategies

How Does Affiliate Marketing Work?

To understand how affiliate marketing operates, let’s break down the key components and the process involved.

The Four Key Players

  1. Advertiser (Merchant): This is the online business that creates the product or service being marketed. Advertisers are always looking for ways to reach new customers and increase visibility.
  2. Affiliate (Publisher): This individual or organization promotes the advertiser’s products, often using a personal website, blog, or social media marketing platform to reach their audience. Affiliates develop content that engages potential customers and drives them to make a purchase.
  3. Consumer: The end-user who sees the affiliate’s promotion, clicks on a link, and potentially makes a purchase. Their buying decision is often influenced by the content and recommendations provided by the affiliate.
  4. Affiliate Network: While not all affiliate programs involve networks, many do. Affiliate networks act as intermediaries that connect advertisers with affiliates. They provide affiliates with tracking tools, reporting, and payment processing, making it easier for both parties to manage their relationships.

The Process

  1. Affiliate Joins a Program: Affiliates sign up for an affiliate program, which could be directly with the advertiser or through an affiliate network. Upon approval, they receive unique affiliate links to products that track their promotions and sales.
  2. Promotion: The affiliate begins to promote the products or services using various digital marketing strategies. This can include creating blog posts, social media marketing content, email newsletters, or even videos that feature the products. The goal is to generate interest and drive traffic to the advertiser’s website.
  3. Consumer Interaction: Interested consumers see the affiliate’s promotion and click on the affiliate link provided. This action takes them to the advertiser’s site, and a cookie is usually placed in their browser to track their engagement. Cookies are vital because they ensure that any purchases made within a specified time frame (cookie duration) are credited to the affiliate.
  4. Purchase: If the consumer decides to make a purchase, the affiliate network or the advertiser tracks this sale. The affiliate’s unique link allows for accurate attribution of the sale back to the affiliate.
  5. Commission Payment (monthly income): Once the sale is confirmed, the affiliate earns a commission based on the pre-agreed percentage or fixed amount

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Who are the affiliates?

Affiliates or Publisher are individuals or online businesses who promote affiliate products or services for other companies in exchange for commissions. They can be bloggers, social media marketing influencers, website owners, or content creators. These affiliates use their platforms to recommend links to products to their audience. They earn money when their followers make purchases or take specific actions through unique referral links. Successful affiliates typically have strong digital marketing skills and understand their audience well. They can create engaging and awesome content that drives sales.

What are merchants?

Merchants in affiliate marketing are the businesses or individuals who own the promoted products or services. They can range from e-commerce retailers and software companies to service providers and financial institutions. These merchants partner with affiliates to boost their sales. They provide unique referral links to products and commission structures. The merchants handle product delivery, customer support, and affiliate payments. They benefit from increased exposure and sales through their affiliate network.

What is an affiliate network?

Affiliate networks are intermediaries that connect merchants with affiliates. They provide platforms to manage affiliate programs, track sales and clicks, and handle payments. These networks offer tools for both parties. They simplify the process by aggregating various merchant offers. This allows affiliates to find and join multiple programs easily. They also provide reporting, analytics, and support services. Popular affiliate networks include CJ Affiliate, ShareASale, and Rakuten Marketing. These networks earn money by taking a cut of the commissions or charging fees to merchants and sometimes affiliates.

Who are the consumers?

Consumers in affiliate marketing are the end-users who purchase products or services through affiliate links. They’re typically individuals browsing content online, such as blog posts, social media marketing, or review sites. These consumers may be looking for product information, comparisons, or deals. They often value the opinions of content creators they trust. While consumers generally don’t pay extra for using affiliate links, their purchases generate commissions for the affiliates who referred them. The consumer’s buying journey is crucial to the success of affiliate marketing campaigns.

Types of Affiliate Marketing

Affiliate marketing is a dynamic, performance-based strategy where individuals or companies (affiliates) earn commissions by promoting products or services for other online business. This mutually beneficial arrangement allows businesses to expand their reach while providing passive income opportunities for affiliate marketers or marketers in general. The affiliate marketing landscape encompasses three primary types, each with its own unique approach and benefits. LetÂŽs break down different types of affiliate marketing below:

Involved Affiliate Marketing

Involved affiliate marketing is characterized by affiliates who create high-quality content that includes reviews or demonstrations of the products they promote. This type of affiliate marketing relies heavily on personal experience and genuine recommendations, which can build trust with the audience. Affiliates in this category often provide detailed insights into the product’s benefits, leading to higher conversion rates due to their established credibility.

Learn the ins and outs of affiliate marketing with our comprehensive guide. Discover how to start, optimize campaigns, and maximize profits in this lucrative online business model.

Source. Depositphotos

Key Characteristics

  • Personal Experience: Affiliates have firsthand knowledge of the products.
  • Trustworthy Source: Their recommendations are seen as reliable.
  • Active Engagement: Affiliates create awesome content like reviews, tutorials, or demonstrations.

Benefits

  • Higher Conversion Rates: Trust leads to more sales.
  • Long-Term Relationships: Affiliates build loyalty with their audience.
  • Enhanced Credibility: Personal endorsements strengthen authority.

Examples

  • A fitness blogger recommending supplements they use.
  • A tech reviewer showcasing gadgets they’ve tested.
  • A beauty influencer demonstrating skincare products they trust.

Related affiliate marketing

In this method, affiliates focus on products or services that resonate with their established audience. These affiliate marketers have typically invested time in building a following through various content platforms like blogs, video channels, or social media. Their status as trusted voices in their niche can make their recommendations particularly impactful.

Key Characteristics

  • Relevance: Products align with the affiliate’s awesome content (e.g., a fitness blogger promoting supplements).
  • Established Audience: Affiliates have built trust with their followers through blogs, YouTube, Instagram or other social media.
  • Credibility: Knowledge of the niche enhances their authority.

Benefits

  • Higher Conversion Rates: Trust leads to increased sales.
  • Easier Promotion: Familiarity with the affiliate’s expertise simplifies selling.
  • Collaboration Opportunities: Affiliates can form partnerships with brands for mutual benefit.
Discover how to start, optimize campaigns, and maximize profits in this lucrative online business model. Copy

Source. Depositphotos

Unattached affiliate marketing

This approach involves affiliates who act as general advertisers, not necessarily connected to specific brands or niches. They might promote a diverse range of products to various audiences. These marketers often utilize paid advertising on social platforms and search engines to reach potential customers.

Key Characteristics

  • No Personal Experience: Affiliates do not use or endorse the products.
  • PPC Focus: Traffic is generated through paid ads on platforms like Google and Facebook.
  • Low Commitment: Easy to start without needing to build a brand or audience.

Advantages

  • Accessibility: Anyone can participate without extensive knowledge.
  • Quick Setup: Fast to launch campaigns without content creation.

Disadvantages

  • Trust Issues: Lack of personal endorsement can lead to skepticism from consumers.
  • Higher Risk of Failure: Lower conversion rates in saturated markets due to minimal authority.

Each of these approaches has its own strengths and can be effective depending on the affiliate’s skills, resources, and target market.

Own affiliate programme vs. affiliate network campaign

The first affiliate programme was set up by the owner of a flower and gift shop. He paid a reward to affiliates who brought him traffic from their websites.

Today, e-shops have the option of setting up their own programme or using an alternative choice: opening an affiliate network campaign.

The advantages of an affiliate network are:

  • Ready-made technical solution.
  • Connection to an extensive database of publishers and professional support for both parties.
  • Since the networks manage a number of affiliate campaigns, they can use their experience to help the advertiser set the terms of their campaign in a way that benefits both the advertiser and the publisher.
  • A good affiliate network should also bring new ideas for strategic collaboration with individual partners and advice on optimising the campaign to its full potential.
Learn the ins and outs of affiliate marketing with our comprehensive guide. Discover how to start, optimize campaigns, and maximize profits in this lucrative online business model.

Source. Depositphotos

Benefits of Affiliate Marketing For Your Business

Affiliate marketing is not just a powerful tool for affiliates; it presents numerous advantages for businesses looking to expand their reach and improve their bottom line. Here’s a closer look at the benefits that affiliate marketing can bring to your business:

1. Cost-Effectiveness

2. Increased Reach and Exposure

3. Enhanced SEO Performance

5. Relationship Building

6. Diversification of Digital Marketing Channels

How does it work?

Each campaign and publisher is assigned an ID in the affiliate network, which creates unique affiliate links. The system can track which publisher the customer came from and the order value they placed using a tracking code on the advertiser’s website. It then allocates this to the customer along with the calculated reward.

In affiliate marketing, it’s very important to understand the revenue / conversion funnel. This funnel shows the customer’s path from first becoming aware of a product or service to making a buy. Affiliates try to move potential buyers through this funnel by using targeted content at each stage.

For example, informational articles are good for people who are just starting to learn about a product, while comparison reviews are better for people who are almost ready to buy, and special discount offers are best for people who are ready to buy. By looking at this funnel, affiliates can figure out where they can have the most impact on the customer’s trip and make their digital marketing more effective by doing their own conversion funnel analysis.

The conversion funnel is a crucial framework for understanding how potential customers interact with your affiliate marketing efforts. It helps you visualize the customer journey from the moment they first become aware of your content to the point where they make a purchase. Let’s break down the stages of the conversion funnel in more detail:

1. Awareness

2. Interest

3. Consideration

4. Conversion

5. Retention

A conversion funnel, also known as a sales funnel, is a model that illustrates the stages a potential customer goes through from first discovering a brand to making a purchase.

Source: Firstpagesage

Affiliate marketing compensation models

  1. CPS (cost per sale): Affiliates receive a percentage or fixed amount for each purchase their referrals make. This is widely used in e-commerce partnerships.
  2. Lead Generation Payouts (cost per lead): Compensation is provided when an affiliate brings in qualified potential customers, often through form submissions or sign-ups.
  3. Action-driven Rewards (per action): Affiliates earn when referred visitors complete specific tasks, such as requesting information or subscribing to newsletters.
  4. Click-through Payments (per click): Some programs, particularly those focused on increasing visibility, pay for each click on affiliate links.
  5. Installation Bonuses (per install): Popular with software and app companies, this model rewards affiliates for each successful download and installation.

Each model aligns with different business goals, from direct sales to brand awareness, offering various opportunities for affiliates to monetize their efforts.

Who is a publisher?

A publisher is a person or company that promotes the products/services of selected e-stores. They usually do this using their own website or social networks. However, they can also use publicly available space on the internet (e.g., Google Shopping, Facebook Ads, etc.) as long as the affiliate campaign allows it.

  • Review sites – provide customers with new product information and share their experiences through reviews or product comparisons. They answer customer’s questions, e.g. “What will be the best turntables in 2024?
  • Blogs and magazines or topical affiliate websites with a relevant group of readers who share the same interests. For example, interior design magazines, books or sports portals.
  • Product Catalogues – sites that collect products in a structured catalogue where customers can search, filter and compare products from different e-shops.
  • Cashback portals – motivate customers to buy by refunding the amount they spend on an order. The portals share their commission directly with the customer or with a charity of their choice.
  • Coupon sites – work with customers who are looking for bargains. They collect discounts and promotions to motivate customers to buy from you before competitors. They can persuade a customer to try a new e-shop, complete a purchase or increase the value of an order.
  • Social networks and influencers – content creators on social networks who are followed by people with similar interests. They can influence their followers’ opinions and purchasing decisions based on their relationship with them.
  • CSS Partners – advertise products on the Google Shopping platform to help advertisers rank higher in search results than their competitors. They can also be used alongside your own Google Shopping campaigns.
  • PPC partners – drive paid traffic to the advertiser through paid Google Ads, Facebook Ads, etc.

 

A publisher is a person or company that promotes the products/services of selected e-stores. They usually do this using their own website or social networks. However, they can also use publicly available space on the internet (e.g., Google Shopping, Facebook Ads, etc.) as long as the affiliate campaign allows it.

Source. Depositphotos

How to Start Affiliate Marketing

  1. Identify Your Niche : Begin by selecting a focus area that aligns with your interests or expertise. This could be a passion you’re knowledgeable about or a market segment you’ve identified as potentially profitable through audience analysis. Your chosen affiliate niche should allow you to create authentic, valuable content for your target audience.
  2. Select Your Platform and Channel: Choose a marketing channel where you feel comfortable engaging with your audience. This could be a blog, social media platform, or video sharing site. Then, decide on the type of content you’ll create, such as product reviews, comparison guides, or lifestyle content that incorporates product recommendations.
  3. Find the Best Affiliate Marketing Programs: Explore various affiliate networks and programs to find products or services that resonate with your niche and audience. Look into popular networks or directly approach brands you admire to inquire about partnership opportunities. Always review the terms of service for any program you’re considering.
  4. Curate Your Product Selection: When choosing products to promote, prioritize items that provide genuine value to your audience and align with your brand. Consider factors such as relevance to your niche, your personal experience with the product, and its suitability for your chosen digital marketing platform.
  5. Create Engaging Content: Develop high-quality, authentic content that showcases the products you’re promoting. Focus on providing honest insights and helpful information to your audience. Remember, building trust is crucial for successful affiliate marketing.

By following these steps, you can establish a solid foundation for your affiliate marketing efforts. Remember, success in this field often requires patience, consistency, and a genuine commitment to serving your audience’s needs.

Starting an Affiliate Campaign

What do I need to start an affiliate campaign?

As long as the advertiser meets the basic requirements, the affiliate network will help them to launch a campaign.

Each e-shop has only one affiliate campaign, meaning publishers can promote products/services from that e-shop. In the campaign, the conditions and permissions for affiliates are written down, such as:

  • Commission amount. It should be incentive-based for publishers but sustainable for the e-shop based on margin, overlap with other marketing channels and discounts
  • The length of the cookie during which the affiliate’s sales are recorded
  • The types of publishers the advertiser wishes to work with
  • The materials available in the campaign (product feed, banners, coupons, etc.)
  • The time it takes to evaluate or approve orders (when the e-shop is sure the order cannot be cancelled or returned)

To realise the true potential of your affiliate campaign as soon as possible, it is advisable to involve all types of partners and not underestimate the power of first impressions – offer a detailed campaign description and motivating conditions from the start.

 

Affiliate marketing has seen significant growth, with industry spending reaching impressive figures in recent years. It offers an accessible entry point for aspiring entrepreneurs with minimal upfront costs. However, before jumping in, it's important to weigh the pros and cons of affiliate marketing

Source: Depositphotos

Pros and cons of affiliate marketing

Affiliate marketing has seen significant growth, with industry spending reaching impressive figures in recent years. Affiliate offers an accessible entry point for aspiring entrepreneurs with minimal upfront costs. However, before jumping in, it’s important to weigh the pros and cons of affiliate marketing.

Pros:

  1. Streamlined Operations Affiliates can concentrate on marketing, while leaving complex tasks like product creation and shipping to the retailer.
  2. Low Initial Investment Most affiliate programs are free to join. Once you’ve built an audience, you can start earning without significant financial risk.
  3. Growth Potential Successful affiliates can increase earnings by expanding their product range, negotiating better terms, or reinvesting in audience growth.

Cons:

  1. Gradual Progress Building a substantial following and influence takes time and consistent effort. It often requires years of regular content creation before generating steady affiliate income.
  2. Restricted Autonomy Affiliates must adhere to program guidelines, which may limit promotional strategies. Additionally, the commission-based model means earnings are a fraction of each sale.
  3. Negotiation Skills Required While successful affiliates may be able to secure better terms, such as higher affiliate commissions or exclusive promotions, this requires effective negotiation with partner companies.

Affiliate marketing can be rewarding, but it demands patience, creativity, and strategic thinking to overcome its challenges and capitalize on its opportunities.

Affiliate marketing program examples

To better understand how affiliate marketing works in practice, let’s look at some prominent affiliate programs across various industries. These examples illustrate diverse opportunities available to both newcomers and seasoned marketers. Here are some typical affiliate programs:

1. Amazon Associates

One of the most well-known affiliate programs, Amazon Associates allows affiliates to promote millions of products sold on the Amazon.com platform. Affiliates earn a commission on every sale made through their referral links. The program is free to join and offers an extensive range of products, making it suitable for almost any niche. With Amazon’s trusted reputation, affiliates can leverage its brand to increase conversions.

2. ShareASale

ShareASale is an affiliate marketing network that connects affiliates with a wide variety of merchants, ranging from retail to services. With thousands of companies registered, it offers generous affiliate commission rates and an easy-to-use interface for tracking performance. Affiliates can promote products through text links, banner ads, or even brand-specific promotions, giving them flexibility in how they market.

3. ClickBank

One of the typical affiliate programs is also well known ClickBank specializes in digital products, such as eBooks, online courses, and software. It is known for its higher-than-average commission rates, which can reach up to 75% of each sale. This makes ClickBank an attractive option for affiliates looking to maximize their earnings potential. The platform features a wide array of products across numerous niches, allowing affiliates to find offerings that align with their interests and audience.

One of the key benefits of ClickBank is its user-friendly interface, which simplifies the process of finding products to promote. Affiliates can easily browse through categories, view sales statistics, and assess the performance of different products before deciding which ones to promote. Additionally, ClickBank provides comprehensive resources and support to help affiliates succeed, including training materials and marketing tools.

4. Rakuten 

Rakuten is another established affiliate network that offers a diverse range of products from both big-name brands and smaller companies. With a focus on eCommerce, affiliates can promote everything from fashion and beauty products to electronics and travel services.

One of the standout features of Rakuten Marketing is its advanced tracking and reporting tools.

5. Dognet

Dognet is a growing affiliate network that primarily focuses on Central and Eastern Europe. It offers a solid selection of eCommerce merchants across various industries, including fashion, health, and travel. What sets Dognet apart is its dedication to supporting affiliates with tailored resources and a personal touch, often assigning account managers to help navigate the landscape of affiliate marketing.

One of the typical affiliate programs, Dognet can access a range of promotional tools, including banners, text links, and product feeds. Moreover, Dognet’s user-friendly interface enables affiliates to easily monitor their performance and earnings. The network also emphasizes the importance of communication, keeping affiliates updated with the latest offers and promotions from advertisers.

6. Commission Junction

CJ Affiliate, formerly known as Commission Junction, is one of the industry’s pioneering affiliate networks, having been established in the late 1990s. This platform is characterized by its vast array of brands and merchants, offering a diverse selection of products and services for affiliates to promote. The extensive range of advertisers makes CJ a popular choice for affiliates from various niches.

One of the standout features of CJ is its sophisticated technology and reporting tools. Affiliates benefit from robust tracking capabilities that allow them to analyze performance metrics in real-time, enabling them to optimize their campaigns effectively. The user-friendly dashboard is designed to help affiliates easily navigate through available offers, track clicks, conversions, and commissions, and ultimately measure their ROI.

Conclusion

In conclusion, affiliate marketing is a powerful and flexible method for individuals and businesses alike to generate income through partnerships and performance-based promotions. Whether you are a content creator, a small business owner, or an established brand, understanding the dynamics of affiliate marketing can unlock new revenue streams and enhance your marketing strategy.

By carefully selecting affiliates, tracking performance, and optimizing your approach, you can harness the full potential of this thriving digital landscape. So, consider diving into the world of affiliate marketing and watch your efforts turn into profits!

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Source: Depositphotos

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