What Is Affiliate Marketing & How Does It Work?

“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: 

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.

Related Content: Looking for quality affiliate tracking software? Check out this useful guide from CLV Boost.

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?

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.