Affiliate marketing works through the involvement of merchants, affiliate networks, promoters, and consumers. They work together to form a system that is beneficial for all four.
Note: To understand how affiliate marketing works, you need to first know what it is.
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A merchant is someone with a product or a service to sell. It could be a big brand or a small startup. The goal of a merchant in affiliate marketing is:
- To increase the sales of the products,
- To increase brand awareness,
- To acquire new customers,
- To engage existing customers, or
- To grow a business
To use affiliate marketing, a merchant has to set up an affiliate program. You may need a web developer to set up an affiliate program for your business.
An affiliate program is a system that promoters can join and generate unique affiliate links for each product. An affiliate link is used to track visitors from an affiliate/promoter.
To become a merchant, firstly, you need a product/service that you can offer to your users. You might already have one or you can create a new one from scratch. Generally, there are two types of affiliate products: digital and physical. A physical product has a tangible form, while a digital product is intangible. Digital products have a lot of benefits over physical such as:
- You can get a higher number of promoters/affiliates,
- A higher number of target customers,
- Easy to sell throughout the world.
Some of the examples of digital products are eBooks, training, courses, software, tools, online services (such as web development, graphic designing, technical assistance, content writing, marketing, etc.). Later, you need to set up an affiliate program. You can get a web developer at freelancing sites or hire one for this.
An affiliate marketer will be then able to join your program and start promoting your products. The system will track the sales and other activities of affiliates and customers.
A merchant also has to set up a payment method for promoters. PayPal, Payoneer, and Direct Deposit are the most popular payment methods. It’s better if you provide all three options to your affiliates.
A promoter, also called publisher or affiliate, or affiliate marketer, is someone who promotes merchants’ products/services. Affiliate marketers don’t need to have their own products. They join the affiliate programs and promote the merchants’ products.
Usually, a promoter is a blogger or an influencer on the internet. Affiliate marketers promote affiliate products and send their audience (blog readers, subscribers, social media followers) to the product landing pages of a merchant. They use an affiliate link that looks like https://example.com/aff-id=abc123&product-id=zyx789/ to send visitors to the merchant.
If any of the visitors buy the product/service, the promoter will get a commission from the merchant. Therefore, the goal of an affiliate marketer is to send customers to the merchant and get a commission.
To become an affiliate marketer, you need to have an audience to whom you can promote affiliate products. The criteria to join most of the affiliate programs out there is minimal. Many merchants don’t even look at your audience size, they’ll pay you if someone buys their products through your affiliate links.
However, to be a professional affiliate marketer, you need a blog with active readers, or a social media account with a large number of followers.
Affiliate marketing can also be done through YouTube. In fact, YouTube is the second most popular platform after blogging for doing affiliate marketing
You can build an audience for affiliate marketing through blogging, creating videos on YouTube, or increasing social media followers. You can write affiliate marketing content on a blog, make it rank on Google, and get traffic to the site. Then, you can include affiliate links in the content. Similarly, you can use affiliate links on video descriptions or social media posts.
An affiliate network connects merchants and promoters. It is a platform where merchants can find affiliates and affiliates can find merchants.
After setting up an affiliate program, a merchant can join an affiliate network. An affiliate network provides tools to affiliate marketers to search & join an affiliate program and generate affiliate links.
An affiliate network helps to track sales, and manage payments. A merchant can get huge exposure to affiliate marketers from affiliate networks. In return, a merchant has to pay a small percentage of money to the network in every sale/transaction.
The most popular affiliate networks are Amazon, eBay, Clickbank, ShareASale, Awin, CJ Affiliates, etc.
If you’re an affiliate marketer, these platforms are the best places to find products to promote related to your industry.
In the case of affiliate marketing, a consumer is someone who buys a product/service using an affiliate link or discount coupon. Consumers use affiliate links placed in blogs and videos by affiliate marketers to reach merchants.
People read blogs and watch videos for a reason such as:
- To learn something,
- To compare products,
- To make a decision,
- To know the best products in the market,
- To decide which product to buy,
- To know how a product is,
- To solve a problem (such as a medical or a technical problem).
An affiliate marketer helps the consumers to accomplish the goals and in between tries to promote some affiliate products.
Why does this system work?
The affiliate marketing system works because it is a win-win for all four- merchant, promoter, consumer, and network. Everyone is getting some form of value.
Consumers are able to get the right product to solve their problem while the other three get the monetary value.
Affiliate networks and marketers help merchants to get customers, in return, they get paid. Moreover, affiliate marketers try to understand the consumers and provide solutions through the right guidance and products.
On the other hand, the internet is covered with ads. We see ads everywhere. It’s easy to get irritated by them. In fact, the majority of the users don’t like to see ads while browsing the internet. That’s why a lot of internet users use ad blockers to avoid ads. These blockers are getting popular every day.
The future of display ads is questionable. Affiliate marketing is the best alternative to promote a business. And, the best part is that a business doesn’t have to pay unless something gets sold. The consumers also don’t get irritated because affiliate marketers only promote products that are 100% relevant to them.
This is how affiliate marketing works and provides benefits to everyone.
How does an affiliate marketer get paid?
Affiliate marketers are paid by merchants on the basis of cost per sale or cost per action. The price is decided by the merchant.
When an affiliate marketer generates a sale for the merchant, s/he gets a small percentage of commission from the profit. This is known as cost per sale. Expensive products generally have higher commissions.
Sometimes, a promoter doesn’t have to sell but generate a lead for the merchant such as sign-ups, subscriptions, downloads, etc. In such a case, the affiliate marketer is paid a fixed amount of money per lead. This is known as cost per action.