What Is Affiliate Marketing & How Does It Work?

  • what is affiliate marketing

“What is affiliate marketing?” is probably a question you’re asking yourself (while scratching your head) if you’ve landed on this page. Affiliate marketing is something many of us have come across in some shape or form but a lot of us just don’t understand the meaning of it or how it works as a business model.

Many of us are completely oblivious to the whole affiliate marketing industry in general. So I thought I would write this article to help enlighten those of you who are interested in finding out more about this new age business model that thousands of companies and individuals are profiting from.

What is affiliate marketing and how does it work?

An affiliate can be described as someone who earns a commission from a sale promoting someone else’s product.

You’ve most likely bought something online through an affiliate without actually knowing!

This could be the sale of literally anything from courses that teach people how to date the woman of their dreams, to tennis coaching lessons, online subscriptions and Amazon products. Affiliate programs are everywhere!

The amount of commission can also hugely vary depending on the affiliate program, they range from a few percent all the way up to ninety percent, in some cases. Affiliate programs aren’t created equal, some are definitely better than others.

Where did affiliate marketing come from?

Affiliate marketing originated before the inception of the internet. The concept of paying commissions for referred business predates affiliate marketing and the internet.

The concept of affiliate marketing was discovered and first put into place by William J. Tobin. The founder of PC Flowers and Gifts. It was launched in 1989 and the company saw profits in excess of $6 million a year.

The creation of the internet spawned opportunities for companies all over the world to advertise and sell their products to a global audience. Unsurprisingly, e-commerce exploded in popularity with companies such as Amazon launching their affiliate associates program in July 1996.

As a result of this e-commerce popularity surge, the affiliate marketing business model became extremely popular and still is to this day.

Over the past fifteen years or so the internet has now completely transformed the way businesses operate and has expanded earning potential for every business by increasing market reach, exponentially. The world is your oyster!

This infographic breaks down how affiliate marketing works nicely: 

what is affiliate marketing?

Types of websites that use affiliate marketing: 

You may be wondering what types of websites are based on the affiliate marketing business model. Here’s a bulleted list that breaks it all down for you:

  • Price comparison websites. The likes of Gocompare, Trivago and Skyscanner and millions of other ones.
  • Loyalty websites. These are the sites that give you points or cash back for purchasing stuff through them.
  • Personal websites and blogs.
  • Coupon websites that offer discounts on various products and services.
  • Websites that use Adsense or any other display advertising.
  • E-commerce sites (Amazon, Ebay)
  • Niche websites including product review sites.

Pretty much any type of website! Affiliate marketing is staring at us in the face and many of us don’t even know it!

What sort of income can affiliate marketers make?

Many people start affiliate marketing looking to make a quick buck, but this simply doesn’t work out. Affiliate marketing is not a get rich quick, push button solution. It is a genuine business model that requires effort, dedication and perseverance, just like any other business does.

The affiliate marketing industry is set to grow to a $6.8 billion entity over the next five years. Plenty of dollar pie to go around!

How much you make is directly related to the value you produce for people and the amount of work you put into your business. It’s impossible to put an exact figure on how much you will make at any point in time as there are too many variables involved.

Many people will take up affiliate marketing, try a few little things here and there, then give up at the first sign of hardship.

Other people will persevere, fail forward and effectively implement the training they’ve received. These are the types of people that will succeed in the online arena.

Affiliate marketing is one of the most lucrative business models on the internet today. Many internet marketers have built seven-figure businesses through promoting other people’s products alone.

What is an affiliate program?

An affiliate program is essentially a company that specifically provides various products for you to promote. These companies do not own the products themselves but are a sort of intermediary between the product owners and the affiliate marketers.

Many affiliate programs also include training and tutorials on how to set yourself up as an affiliate, how to build your own website, SEO…etc. This allows a complete newbie to get started with their own online business from scratch. They are provided with all the tools and training required for them to understand the business model and start generating sales in a short space of time.

The technology we have available today allows us to massively automate many tasks that had to be manually done only a few years ago. This has reduced the level of technical ability required for people do things like build their own websites, set up landing pages and build lists of subscribers. You can literally build a website within minutes today, even if you have zero technical computer skills.

Advantages for merchants

Merchants love affiliate marketing because it makes them more money. It really is as simple as that. Affiliates only get paid on a “per sale” basis, so they are only paying out commissions when they’re making product sales. It’s a win-win situation for the affiliate merchant and for the affiliate marketers.

  • You can get started literally within hours, you only require a working computer and a decent internet connection.
  • You don’t need to rent out any physical space, unlike a classic “brick and mortar” business – you can start affiliate marketing in your underpants, from the comfort of your own home.
  • You don’t need to ship out any products. What you are doing is making a referral for products or services. Once you’ve made your referral, you’re done. Not having to handle the logistics of shipping makes affiliate marketing even more attractive.
  • It can run on auto-pilot, allowing you to spend your time doing things you actually want to do. You won’t be tied down to an office desk all day. For example, if you have a blog that is ranking organically for some articles that you have promoted, your site will be getting a certain amount of traffic and (if done properly) generating leads and sales for you throughout the day!  – what is affiliate marketing?

So why isn’t everyone doing this affiliate marketing thing if it’s so great?

That’s a very good question.

Most people that attempt an online venture do it on their own. They lack a system they can plug into, therefore making it a lot harder for them to get setup with everything they require.

Learning affiliate marketing and starting a profitable business requires discipline, consistency and perseverance.

This is why accountability is so important, especially when first getting started. An online training platform that provides this accountability, coupled with excellent training, is what you need to fast-track your success and significantly shorten your learning curve.

The bottom line:

Most people end up spreading themselves way too thin, trying to master too many things at the same time. They get stuck in education mode thinking they need to learn every technique out there and never actually get down to business! Overwhelm slowly sets in and they end up putting their online business venture on the back-burner or just giving up altogether!

Starting a profitable business as an affiliate relies on a few key factors…

1. Finding a mentor – When you first get started with affiliate marketing, you need guidance. You will have a million questions to ask and having a mentor really does make a significant difference in terms of starting you off in the best possible way and giving you the correct advice you need to start taking action and build your internet business.

2. Finding the correct products to promote – If you’re promoting crap products, no one is going to buy them. No matter how good you are at marketing. Finding the correct merchant is one of the most important steps on your affiliate journey, you need to be promoting attractive products that people want to buy. That way, half the work is already done for you!

3. Joining a communitySome programs house an exclusive private community of like-minded people. A community where you can share ideas, collaborate and empower each other on your collective online journey. This alone is worth its weight in gold. Help is always just around the corner and you will be motivated by fellow members to persevere and keep going no matter how you feel!

4. Zero Entitlement – This has been the death of many potentially successful marketers on the internet. Affiliate marketing is not a get rich quick scheme, as mentioned above, it’s a business that requires dedication, effort and hard work. If you feel entitled to earn money because you placed a few ads or you followed a guide and are expecting instant or guaranteed returns, you will be killed! Failure is just a lesson learnt and a step closer to success. This is the attitude you need to adopt if you want to be a winner! 🙂

5. Build Your List – Building a list of subscribers has single-handedly been the most profitable element of many businesses.

The fundamentals of list building are gaining subscribers that are interested in the products you are promoting, then instead of spamming them with offers, (that everybody hates) you provide value and build a relationship with your prospects. You build what I like to call KLT factor. (Know, Like and Trust).

Once you’ve built a relationship and gained a prospect’s trust, you can then recommend a quality offer. Makes perfect sense, right? It’s the way marketing should be done!

6. Personal Development – Your mindset is single-handedly the most important factor to your success. Embarking on an internet business venture will test you in many ways and teach you valuable life lessons. Online entrepreneurship requires the learning of self-accountability, self-reliance and self-determination.

Laying the proper foundation is essential. Consistent action and failing forward are also very important factors. Failure needs to be viewed as a stepping stone to success. All of these mindset changes allow you to grow as a person and work towards becoming the best version of yourself.

In Summary:  what is affiliate marketing?

You should now understand the basic mechanics of affiliate marketing and should no longer be asking the question “what is affiliate marketing”. You’ll probably agree that it has sensational earning potential.

The secret to building a successful online business is having a business platform that you can plug into. A platform that provides all of the above-mentioned points required for starting a profitable online business.

Other related resources

Hope you enjoyed my “what is affiliate marketing” post. Feel free to drop me a comment below 🙂

By | 2017-08-15T14:51:20+00:00 March 3rd, 2017|
  • Rohme Williams

    This is extremely informative and very easy to understand. I have been looking into affiliate marketing and nothing I have read so far has been this “nuts and bolts” about how affiliate marketing really works. Great post.

    • Hey Rohme! Thank you for taking the time to comment! I’m glad you found the post useful.

    • Dolly Watson

      Hi Rohme, I recently went through MOBE’s 21-step program which has a lot of great content about business training and affiliate marketing. Even if you choose not to become an affiliate with them, it’s great content for just $49. If you’re interested in learning more, just message me and I’ll give you my direct link.

  • Peter

    This would have to be the best post I’ve ever seen on affiliate marketing. The graphic you use to explain it does a great job as well.

    I have several blogs promoting all different products. The hardest thing I find about affiliate marketing is that once you’ve sold someone something you need to find a new product to sell them. I’ve found that promoting a subscription service where you sign up a customer is a great way to go. This way every time they renew or buy something you get paid. You only have to sell them this once.

    • Thanks for your awesome feedback Peter, it really means a lot to me!

      A subscription service is definitely a good idea, what’s even better is high-ticket products. I’d rather sell 5 products a month that are worth $2000 a piece rather than having to sell two million ebooks that go for $20 each!

  • Obinna Ede

    I have been researching Affiliate Marketing for a while now, but I got confused each time I read new article on the subject. I was hoping to get more confused when I started reading this write up, but instead it explained to me in clear terms, the meaning of Affiliate Marketing. I can say that the foundation for leaning the subject has just been laid in my mind.
    Keep it up!

  • Ines

    I agree, Ben! Consistency and perseverance are the most crucial skill in learning affiliate marketing and starting a profitable business. Great post!

    • Thank you for your kind words Ines! They really are the foundations to any successful venture.

  • Easton Meyer

    Thank you for this informative article!! much needed!

    • No problem at all, glad you enjoyed it 🙂