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 you may have come across in some shape or form but perhaps you quite get the meaning of it, or how it works as a business model.

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 anything — from courses that teach people how to become successful coaches (like this one created by Sam Ovens) to tennis coaching lessons, online subscriptions and even Amazon products.

Affiliate programs are everywhere!

The amount of commission can hugely vary depending on the affiliate program — ranging from sub 10% all the way up to 80%+ in some cases.

Affiliate programs aren’t created equal and some are definitely better than others.

Where did affiliate marketing come from?

The concept of paying commissions for referred business predates affiliate marketing and the internet.

Affiliate marketing was first discovered and first put into practice by William J. Tobin. The founder of a company called “PC Flowers and Gifts“.

The company was launched in 1989 and the company saw profits in excess of $6 million a year.

The birth of the internet sparked opportunities for businesses all over the world to advertise and sell their products to a global audience.

And unsurprisingly, e-commerce (drop shipping and private label products) have exploded in popularity with companies such as Amazon launching their affiliate associates program in July 1996.

Over the past fifteen years or so the internet has transformed the way businesses operate and expanded earning potential for all by increasing market reach.

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 among many others.
  • Loyalty websites. The sites that give you points or cash back for purchasing goods through them.
  • Personal websites and blogs. A site like this one!
  • Coupon websites that offer discounts on various products and services.
  • E-commerce and dropshipping sites (Amazon, Ebay, Alibaba).
  • Price comparison websites. The likes of Gocompare, Trivago and Skyscanner among many others.
  • Loyalty websites. The sites that give you points or cash back for purchasing goods through them.
  • Personal websites and blogs. A site like this one!
  • Coupon websites that offer discounts on various products and services.
  • E-commerce and dropshipping sites (Amazon, Ebay, Alibaba).

Almost aany type of site can use the business model of affiliate marketing.

Blogging and affiliate marketing are very popular today. This post shows some great examples on how to start affiliate marketing through your blog.

What sort of income can affiliates make?

Many people start affiliate marketing looking to make a quick buck, but this simply doesn’t work out.

Affiliate marketing is far from a get-rich-quick solution.

It’s 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.

How much you make is pretty closely linked to the value you produce for people and the amount of focused effort you put into your business.

Many people will take up affiliate marketing, try a few little things here and there, but give up when the going gets tough.

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 lucrative. Many digital marketers have built seven-figure businesses by promoting other people’s products alone.

What is an affiliate network?

affiliate network

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

The product owners are called “merchants” and affiliates are called “publishers”.

Affiliate networks make life easier for businesses by handling affiliate tracking, payments, analytics and more.

Some examples of popular affiliate networks include Commission Junction, AWIN or Sovrn.

However, affiliate networks aren’t all made the same. Some networks (such as Clickbank) primarily consist of low-quality products in their marketplace, so there are some you need to avoid.

The same goes for affiliate programs — many previously popular options (such as eBay affiliate) are no longer worth your time.

Advantages for businesses

Businesses 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 a business only pays out commissions when they’re making product sales. It’s a win-win situation for merchants and affiliate marketers alike.

Why most struggle with affiliate marketing

Most people that attempt an online venture do it on their own. You can’t expect to watch a few Youtube videos and build a thriving business.

You need a system. A system that other people have used to successfully launch and grow affiliate marketing websites.

Learning affiliate marketing and starting a profitable business requires more than just the marketing know-how — you need discipline, consistency and perseverance to succeed in this space. As you do with any business.

Keys to finding success as an affiliate

Achieving success as an affiliate marketer is no lucky feat. It takes a combination of smart work, discipline and high-quality training to make it to the big leagues.

Here are some tips for winning as a digital marketer:

Find a mentor

When you get started with affiliate marketing, you need guidance. You’ll have a million questions to ask and having a mentor will help you get off on the right foot, provide accountability and take massive action.

Find the best products to promote

If you’re promoting crappy 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!

Join a community

Some programs have private communities of like-minded people (The Six Figure Mentors being one example). 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 when things get tough.

Zero entitlement

Entitlement has been the death of many potentially successful marketers on the web.

Affiliate marketing is no get rich quick scheme — 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 some online guide, you will be (figuratively) killed!

Failure is just a lesson learnt and a step closer to success.

Build your email list

Building a list of subscribers is one of the most important things you must do to monetise your business.

The fundamentals of list building are:

Gaining subscribers that are interested in the products you promote. Then provide value and build a relationship with your prospects.

Once your subscribers get to know, like and trust you — you can recommend quality offers to them.

Makes perfect sense, right? It’s the way marketing should be done!

Self Betterment

Your mindset is single-handedly the most important factor in your success (and the enjoyment of your life, really). Embarking on an internet business venture will test you in many ways and teach you valuable life lessons. Entrepreneurship requires the learning of self-accountability, self-reliance and self-determination.

Rounding things off

You should now understand the basic mechanics of affiliate marketing and no longer be asking the question “what is affiliate marketing”.

You’ll probably agree that it has sensational earning potential.

By |2019-11-22T12:24:34+00:00March 3rd, 2017|

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Ahmad BenguesmiaBongda668My NamesingnmketerIrene Magnus Eweka Lawani Recent comment authors
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Rohme Williams
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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.

Ahmad Ben
Guest

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

Dolly Watson
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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
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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.

Ahmad Ben
Guest

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
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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
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Ines

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

Ahmad Ben
Guest

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

Easton Meyer
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Easton Meyer

Thank you for this informative article!! much needed!

Ahmad Ben
Guest

No problem at all, glad you enjoyed it 🙂

i Digital Academy
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i Digital Academy

I read the post and I have really enjoyed your blogs posts. Looking for the next post.
Digital Marketing Institute In Bangalore.

Day Rain
Guest

Great post Ahmad! Affiliate marketing has come a long way from the black hat days. I see further integration into other channels with more marketing channels integrating a pay for performance model. Influencer marketing is leading the way but others will follow.
I have also built a site that specializes in digital product reviews, but I’m not happy with it, can you take a look and give me some advice, this is my site jack-review

Day Rain
Guest

Great post Ahmad! Affiliate marketing has come a long way from the black hat days. I see further integration into other channels with more marketing channels integrating a pay for performance model. Influencer marketing is leading the way but others will follow.
I have also built a site that specializes in digital product reviews, but I’m not happy with it, can you take a look and give me some advice, this is my site jack-review

Ahmad Ben
Guest

Hey there, Yeah for sure, the days of thin affiliate sites ranking in Google are long gone. And besides, it’s way better to build something that actually provides value and is sustainable over the long-term. I’ve had a quick look at your site and the first thing I noticed is that it’s not sexy. Site design is so important. Anytime I come across an ugly website I hit the back button faster than you can say call-to-action. I also see that you only have two pages, there’s no identity or branding behind the site. You’ve also got a generic header… Read more »

Day Rain
Guest

oh, thanks a lot for your advice Ahmad, it really helped my website, now i’m redesigning logo for website 🙂

Harish Kumar
Guest

Thanks for the useful information,As I am looking forward to start my affiliate marketing business,so I started google to get some knowledge and finally I reached your site,
I got some idea and knowledge about the business,keep doing this great work.

Irene Magnus Eweka Lawani
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Irene Magnus Eweka Lawani

Thank you for the info, I am really interested in this online business.

singnmketer
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singnmketer

JUST FOUND THIS SITE. ARE YOU STILL HELPING NEW PEOPLE. Been trying for years made a little.but no real success.. Thank You Byron Jones

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My Name
Guest

This is Good

Bongda668
Guest

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. Many thanks for great jobs been done here.