how affiliate marketing works

How Affiliate Marketing Works

Affiliate marketing is a type of performance-based marketing where companies pay affiliates to promote their products or services.

In this article, we will show you ways that anyone can profit from affiliate marketing to generate a mix of active and passive income through this business model.

Basic Affiliate Marketing Model

At the core of affiliate marketing is the desire for companies to acquire more customers. The goal of these companies is to get more customers, and they are willing to pay affiliates to help them achieve this. In another word, affiliates do free or paid marketing for these companies with affiliate programs.

This is different than spending advertising money to get leads, where affiliates only get paid when the product is purchased. Please learn more in the "how affiliate get paid" section of the article.

While most affiliate marketing funnels drive traffic from organic search engine traffic, paid ads can still work for affiliate marketing as supplemental revenue if done right.

Pick A Niche (Not A Market)

Picking a niche is the most important step in affiliate marketing. A niche is a very specific market that people are spending money on. 

For example: 

"Pellet Grill BBQ" is a market. It can be anything. 

"Pellet grill slow cooking" is a niche, because it's very specific and it's not going to be as competitive as "pellet grill BBQ".

Another example:

"Making money online" is a market

"Search marketing arbitrage" is a niche, because the keyword itself is a very specific part of the online marketing world that focus on converting search leads to customers. Ultimately, it's the same thing as making money online.

The most successful affiliate marketers focus on one or two things in their market, and they build their content eco system to attract customers who have very targeted intent.

Join An Affiliate Network

The first part of affiliate marketing is joining an affiliate network. This is where you'll find products you can sell or link to and make commissions from.

There are many affiliate networks out there, such as Clickbank, JVZoo, GiddyUp, ShareASale, or Van Gate, to name a few. But how do you decide which one to join? 

Two great affiliate networks to start with are Amazon and Clickbank.

Top tier affiliate networks require the business to show traffic and value before accepting the applications.

Realistic Expectation In Affiliate Marketing

Affiliate marketing isn't 100% passive. While most affiliate marketing businesses are blog websites that drive search engine and social media traffic. Affiliate marketing is more like a content business that requires these skills:

  • Content creation
  • Copywriting
  • Basic CMS tasks (WordPress)
  • SEO

The webmaster has to invest time and energy weekly or monthly to generate content now to match the current market trend, or to stack content for the future.

As time goes one, an successful affiliate marketing business should have the following system built:

  • Email marketing leads
  • Strong organic search traffic ranking
  • Industry connections
  • Social media presence

Affiliates are in the market of connecting leads with content, and content can be the most effort intensive activities inside an affiliate business to get passive income.

Once the content idea is tested and proven to get traffic that lead to sales, the business can sometimes feel like a bit passive. However, it's not passive when tons of up front work needs to be invested.

How Affiliate Get Paid

In exchange for driving traffic and getting customers to take a specific action, affiliates get paid. There are several different ways that affiliates can get paid, including:

  • Pay per sale: The affiliate gets paid a commission when a customer makes a purchase through their unique affiliate link.
  • Pay per lead: The affiliate gets paid when a customer fills out a form or provides their contact information through their unique affiliate link.
  • Pay per download: The affiliate gets paid when a customer downloads a resource or a action (also known as CPA affiliate marketing), such as an ebook or whitepaper, through their unique affiliate link.
  • Pay per click: The affiliate gets paid when a customer clicks on a link through their unique affiliate link.

The exact payment structure may vary depending on the company and the affiliate program. The most common one is pay per sale.

The key to profit from affiliate marketing is leveraging content to drive sales.

Cookies Track Everything

To track and attribute sales to affiliates, companies use cookies. A cookie is a small piece of code that is placed on a customer's device when they click on an affiliate link.

This cookie tracks the customer's activity on the company's website and ensures that the affiliate gets credit for any resulting sales. Cookie period can last as long as 90 days or more depend on the affiliate program.

This means the if a custom converts after 90 days from the time of the click, then affiliate commission is earned.

However, if the user deletes browser cookie, then all affiliate opportunities are lost. In many ways, it's a numbers game.

Learn to Drive Traffic

The key to being a successful affiliate is to learn how to drive traffic. This can be done through a variety of methods, such as SEO, social media marketing, email marketing, or paid advertising. 

It sounds simply, but it's not easy.

Unique Content Angle

The most difficult part of driving traffic is content creation. The idea is that companies leverage independent contractors, aka affiliates to generate unique content angle that drive sales to their businesses.

This can be indirectly mention a product, an alternative use of a product, product used by a celebrity and more.

There are many people on this planet, and everyone see the use of a particular product or service differently, and companies cannot have one fits all marketing message for everyone. Therefore affiliate content can hit every topic angle either directly or indirectly to drive leads.

Search Arbitrage

Search arbitrage is basically targeting a low competition keyword with content, then flip the customer to something else that makes money.

Often times, low competition keywords are very easy and cheap to target, and if done right, the content can do the work to lead the visitor to something that profits.

For example: "Carpet cleaning" is an very expensive keyword and it's competitive. People who are searching for it is needing carpet cleaning service.

But the keyword: "Get gum out of carpet" is very inexpensive, and it's not super competitive. People who are searching for it basically want the same thing as carpet cleaning.

Typically the content will show steps to remove gum out of carpet, then include a call to action with something like "call this number to get your carpet cleaned today"