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What is Affiliate Marketing? Everything You Need to Know

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You may have heard the term before – affiliate marketing. Whether you’re trying to generate a secondary income stream for yourself or your business, affiliate marketing may sound complicated and technical. We’re here to decode the jargon and explain affiliate marketing for beginners.

What is affiliate marketing?

Affiliate marketing is founded on the idea that you can make money from your affiliations, or official connections with, an organisation. For example, you would promote another brand’s products, and if customers buy the products due to your promotion, you can earn a commission on each sale.

Affiliate marketing is essentially a revenue sharing model, where both you and the brand are able to profit from the increased cash flow from your marketing activities. By promoting another brand’s product, you benefit from a share of their sales, and they benefit from accessing your audience – assuming you have an engaged one!

How does affiliate marketing work?

In addition to the brand and the affiliate partner, there are two other parties to be aware of to make the revenue sharing model work: the customer, and the network. Let’s look at each party involved in affiliate marketing and how they work together to create shared value:

The brand

The brand is the creator or merchant of the product itself. For example, a seller of kitchen appliances might look for a marketing partner who reaches audiences interested in cooking and kitchenware in order to expand their market and opportunities for sales.

The affiliate

The affiliate is the marketer, or the person who promotes the product on behalf of the brand. Affiliate marketing works best when the affiliate has an authentic connection to the brand’s product and holds the trust of their own audience. They might use marketing channels like YouTube or their blog to review the partner brand’s products, hopefully resulting in an increase in brand awareness and sales.

The customer

The customer is the person that actually buys the product. Increasingly, brands and affiliate marketers are transparent about their relationship so that the customer understands that the affiliate is getting benefits for selling them this product. As long as the price remains the same for the customer and they feel that the message is genuine, the customer should be relatively unaffected by the affiliate marketing model.

The network

An affiliate marketing network is a liaison between the brand and all the potential affiliates that can promote their product (that are signed up within the network). The affiliate network sets the terms and administers the commission and more for ease for both the brand and the affiliate.

How these roles work together

Here’s a step-by-step guide to the affiliate marketing process and how each party works together to share sales revenue:

  1. The affiliate can approach the brand to propose a partnership, or the brand can approach the affiliate to help sell their products. Alternatively, the brand and affiliate may use a network to find a number of products and affiliates best suited to them in order to diversify and scale their marketing.
  2. The brand gives the affiliate a unique URL so that they can track when the affiliate is responsible for a sale.
  3. The affiliate uses their channels to promote the product to potential customers.
  4. When a customer clicks the unique link, a cookie gets stored on their device that attributes the sale to the affiliate, even if they look at the product but buy it at a later time.
  5. The brand pays the affiliate for their sale. This is a commission of the sale price, typically ranging from 5-30%. If a network is used, a portion of the commission or a fee goes to the network.

How to get started with affiliate marketing

Ready to see if you can generate revenue by marketing a brand’s products? Here’s how to begin:

Identify your niche

Affiliate marketing and the digital marketplace is competitive and you need to be able to cut through as an authentic expert to sell your chosen product to a consumer. Also make sure you’re aware of your competitors – the other brands and affiliates selling the product – for the best chance your efforts will result in sales.

Decide on a platform

Which channels are best suited for you to grow an audience? Most affiliate marketers use YouTube or a blog. You’ll want to optimise your channels for product searches by implementing search engine optimisation, or SEO – using appropriate keywords and relevant topics in your content to ensure you rank highly in search results.

Find affiliate programs to join

The biggest affiliate program is run by Amazon, which has millions of products to promote, but it depends what kinds of products you are choosing to help sell, and their commission rate. If you’re targeting a consumer audience, you may go for a high volume, low commission program – like Amazon. Or, if you’re targeting a business audience, you may go for a lower volume, higher commission rate. You can also work directly with brands. For instance, Square’s affiliate marketing program pays dollar amounts per product successfully promoted.

Create great content

To drive traffic to your website and get clicks on your affiliate links, you need to create relevant content that resonates with your audience. The best way to create authentic content is to buy the product you are promoting, try it yourself and share your findings with your audience. You can create ‘how it works’ content or make product comparisons or reviews. For a makeup brand, this might be a makeup tutorial video, for example. Or for an outdoor gear brand, you might write a comparison blog on competitive brands’ sleeping bags.

Drive traffic to your platform

If you have an advertising budget, you can use Facebook ads or Google Adwords to help your potential audiences find your platform and build your audience database. Alternatively, collecting email addresses and sending email campaigns is a cheap way to keep your audience engaged with your content.

Ensure your affiliate links are easy to find in your content copy so they get clicked on! Use buttons, tables and other eye-catching tools to help make your affiliate link stand out. Avoid ‘salesy’ approaches like using too much repetition or placing your link in titles.

Convert your clicks to sales

After your link is clicked, the customer is taken to the brand’s webpage to purchase. Up until this point, you’ve had control over the customer journey. Now you are relying on the brand’s ability to convert their leads! Research the success of your brand’s affiliate marketing program (Google ‘income reports’ for your brand’s affiliate marketing programs, for example) to ensure your hard work is backed up by the brand you’re helping to market!

Affiliate marketing can help you share in the success of a good brand or product – especially if you find yourself constantly telling your friends about a certain brand or product and why it is so great! For fantastic examples and an in-depth guide to how to start affiliate marketing and succeed, check out Pat Flynn’s Affiliate Marketing Course on his Smart Passive Income blog (to be clear, no affiliation here!).