What's the first online business model that comes to mind when you think of passive income?
For most people, it's either affiliate marketing or Google Adsense.
But while many top publishers are moving away from Adsense because of low payouts and the increased use of ad blockers, affiliate marketing is growing faster than ever before.
Google Trends shows that interest in affiliate marketing has more than doubled over the last 5 years.
Source: Google Trends
A Forrester study found that in the US alone, affiliate marketing will become an $8-10 billion by 2021.
Clearly, affiliate marketing is the most popular online monetization method that's becoming more popular with every passing day.
But what exactly is affiliate marketing and how can a complete newbie, who knows nothing about it, start making money from it?
In this detailed article, I'm going to tell you all the fundamental concepts of affiliate marketing and how you can use them to build a successful affiliate site.
Let this article be your reference point for everything related to affiliate marketing.
Let's dive in.
Before we dive in and look in-depth at everything you need to know about affiliate marketing he's a few frequently asked questions (FAQs) on affiliate marketing...
Quick Answers To Frequently Asked Questions (FAQs) About Affiliate Marketing
Short on time?
Here are quick answers to some of the most questions about affiliate marketing and how it works.
What is affiliate marketing?
Affiliate marketing is a business model in which a marketer promotes products owned by someone else and earns a commission (a percentage of the product price) on every sale.
What is an affiliate product?
A product that marketers can promote for a commission.
What is an affiliate site?
It's a website that earns primarily thorugh affiliate marketing and promotes affiliate products (using content, coupons, offers etc.).
What is an affiliate marketing platform?
A platform that connects affiliate marketers with product owners.
How do I become an affiliate marketer?
Anyone can become an affiliate marketer by signing up as an affiliate for a partiuclar brand or by joining an affiliate marketing platform.
Is affiliate marketing a pyramid scheme or fraud?
No, affiliate marketing is a transparent and legitimate business model where product owners pay commission to marketers for marketing and selling their products.
Can I become an affiliate marketer without any money?
Yes, you don't need any money to sign up as an affiliate. But you do need to invest in creating a website, publishing content, and growing your subscriber base.
How much money can I make from affiliate marketing?
If you adopt the right approach and follow proven strategies, there's no limit to how much you can earn with affiliate marketing. To give you an idea, there are numerous marketers who make 6-figures per month with affiliate marketing. But there are thousands who make nothing.
Like any other business model, your earnings depend on your strategy.
How much time does it take to make money from affiliate marketing?
Theoretically, as soon as you start making sales.
In reality, though, it takes newbies 3-6 months efore they can start seeing results.
Do I need a website to make money from affiliate marketing?
You can but it won't be long-term.
For a sustainable and long-term business, you need a website.
Do I need to learn black hat SEO to succeed at affiliate marketing?
No, you can stay completely white-hat and still make money with affiliate marketing.
Can I copy other people's content to create an affiliate site?
You can but it won't work because Google will find out and penalize you so hard that you won't be able to recover.
To build a real business, you need original content.
What kind of content do I need to publish as an affiliate marketer?
Content that answers the questions of your audience and positions the products you're promoting as the solution to your audience's problems.
And now let's take an in-depth look at affiliate marketing...
So "What is affiliate marketing?".
Let me start with a basic definition...
Affiliate marketing is a business model in which you get paid as an affiliate for promoting and selling someone else's products or services. It's a performance-based agreement in which you get paid only when you make a sale (or generate leads).
The concept of affiliate marketing, earning a commission on a sale, is nothing new and has been around for ages.
Look at this vintage advertisement in a British Newspaper that's offering 17.5% commission on selling Christmas hampers.
Source: British Nostalgia
With the advent of the internet, affiliate marketing has grown into a complete business model on its own that's generating millions of dollars for thousands of marketers every month.
Look at the findings of this recent survey of more than 1000 bloggers.
57% of bloggers who make $50K+/year from their blogs consider affiliate marketing the best way to make money online.
Because if your blog has a regular audience, affiliate marketing is the most convenient way to make money from it.
You just need to find and promote products that are in line with the interests and needs of your audience.
When people trust you, they buy from you.
This is the key difference in affiliate marketing and banner advertisements or Google Ads.
People don't trust banner ads anymore because they view them as promotional messages that have nothing to do with you or your blog.
They're just ads from some random company.
But when you vouch for an affiliate product, people buy it because of your credibility and your relationship with them. They know it's a good product because they trust you.
This is why popular bloggers are able to sell even high-ticket affiliate products so easily.
Are you surprised I haven't said anything about making a quick sale by setting up a one-page niche site that reviews random products that you've never even used?
Contrary to the popular belief, that's not affiliate marketing.
That's just a cheap and short-sighted way to make a few bucks.
Affiliate marketing is a proper long-term business that's built on relationships, value, and consistent quality.
Don't believe me?
Read this post where I've listed 19 affiliate sites in different niches that are making thousands every month.
In the next section, I'm going to describe exactly how the affiliate marketing business model works so that you know what you're getting into.
So how exactly does affiliate marketing work?
There are four main roles in the affiliate marketing business model
The infographic below explains the complete affiliate marketing cycle.
As the infographic shows, the product owners/sellers recruit affiliate marketers to promote their products and offer them a commission on every sale or (in some cases) lead generated.
Recruitment usually takes place through an affiliate marketing platform.
Here's what happens
Step 1 - You apply for registration to an affiliate marketing platform.
Step 2 - The platform reviews your application and approves if it meets the requirements.
Step 3 - You're given access to the marketplace from where you can choose affiliate offers.
Step 4 - When you choose a product, you're given a unique tracking link by the affiliate network that you need to use so that all the sales you refer are credited to your account.
Step 5 - You promote the products on your website, email list, or any other platform where you have an audience.
Step 6 - Someone from your audience clicks your link and buys the product.
Step 7 - The sale is credited to your account by the affiliate network and your commission is added to your digital wallet immediately or after a certain period (in some programs)
Step 8 - You get paid when the payment date arrives or when you choose to withdraw it (varies with platforms)
This is the typical cycle with most affiliate programs.
You can also directly sign up with a seller directly for their affiliate program (I'll explain later).
Once you sign up as an affiliate, you need to make sure that you comply with the seller's terms & conditions while promoting products.
For example, a seller might prohibit using email traffic or traffic from forums for driving sales. Some require that you don't directly quote product prices on your site.
Other than that, you only need to focus on driving traffic to the products you're promoting and ensuring that your referrals purchase the products.
You might be wondering, though, why sellers/product owners need affiliates when they can promote the products themselves? Why share a percentage of their profit with someone?
In the next section, I'll explain why sellers need affiliates
Without going into the details, I want to quickly tell you why affiliates are so valuable to product owners and sellers. Understanding this is important so that you understand the value you're adding to the overall sales cycle.
Sellers can market and promote products themselves.
In fact, most sellers do.
But they still recruit affiliates.
Here's what a survey by Forrester and Rakuten Marketing of 151 different companies with a minimum annual revenue of $200 million found.
Source: Rakuten Marketing
81% of the surveyed brands had active affiliate programs.
That's how important affiliates are.
Because they offer several benefits.
Affiliates have their own websites, email lists, and loyal audiences. By recruiting them, product owners enjoy broader market reach and get instant access to audiences that were previously unavailable to them.
When you promote a product as an affiliate, it works as an independent third party endorsement for the product owner. As compared to the seller praising their own products, neutral product reviews have a much greater impact on consumers.
Affiliate marketing is a zero-risk strategy for sellers because they only pay a commission when you sell their product. Compare this with Google Ads or Facebook Ads where sellers need to keep pumping in money to run ads with no guarantee of sales.
This is another major benefit of recruiting affiliates.
To promote products, drive sales, and earn commissions, affiliate marketers publish product reviews, blog posts, videos, online reviews, etc. This serves as free marketing for the brand and helps spread their message across the internet for free.
Google gives a lot of value to brand mentions on third party sites. If a product/brand keeps getting mentioned on different sites, it contributes positively to its search position.
Product owners achieve this by recruiting affiliates who constantly churn out content and build backlinks to products they're promoting.
These are just some of the benefits sellers get by recruiting affiliates.
But what's in it for the marketers?
I'll cover this in the next section.
For bloggers, influencers, and content creators, affiliate marketing is one of the best ways to monetize their audience and earn a consistent income without doing anything extra.
If you already have an audience (or plan to build one) you just need to position products within your content that are relevant and useful to your audience.
Here are some of the other major benefits of affiliate marketing because of which you should seriously consider adding it to your content monetization strategy.
There's literally no barrier to becoming an affiliate marketer.
You don't need to be an expert, you don't need to invest thousands of dollars, you don't need a degree, you don't need any endorsements.
For example, here's the signup page for the affiliate program of GetResponse, a leading email marketing tool.
To become an affiliate, you just need to tell them your website URL and the primary traffic source you plan to use for your marketing campaigns.
Most affiliate programs are like that.
They'll let you promote their products if you have a legitimate website that's relevant to their niche.
Many don't even require a website.
Contrary to popular belief, consumers actually prefer buying products through affiliates marketers.
Rakuten Marketing recently released its annual consumer insights report and here's what it found about consumer preferences when it comes to affiliate links.
As you can see, more than 60% of consumers said they'd happily click on a sponsored link by an influencer.
64% of women and 54% of men said they don't avoid clicking sponsored links from trusted influencers.
Why is that the case?
I've already told you.
When people trust you and have a relationship with you, they don't have any problems buying from you.
In fact, they prefer buying through your content because it gives them extra assurance about the utility of the product.
No matter what niche you're in, you can find affiliate products to promote.
Amazon, the world's largest eCommerce company that also runs the biggest affiliate program, has more than 100 million products listed across hundreds of categories.
As an Amazon Associate, you can promote and earn commissions on any of these 119,928,851 products.
And that's just Amazon.
There are dozens of other affiliate programs for digital and physical products plus several niche specific affiliate platforms where you can find relevant products to promote.
In short, irrespective of your audience's interests and the kind of content you publish, you can find relevant products to promote as an affiliate marketer.
Let's be honest.
There's no such thing as 100% passive income.
One way or the other you have to be involved in a business to make money from it.
However, affiliate marketing is certainly the closes thing to passive income.
There are several ways to do this but let me share a couple of examples.
After that, you only need to build backlinks to your content and keep driving traffic to your site to boost your search rankings and earn money on a consistent basis.
To make this work, you only need to keep driving traffic to your site so that visitors keep turning into email subscribers.
Affiliate marketing is a location independent business model that allows you to work from anywhere in the world.
All you need is an internet connection and a laptop (sometimes even a smartphone is enough)
Sean Ogle, for example, is a popular freelancer turned affiliate marketer who lives a location independent life and shares his strategies on his blog.
That's just one example.
Stuart himself keeps hopping around whenever he wants.
This independent lifestyle is one of the biggest reasons people are attracted to affiliate marketing.
A major advantage of promoting products as an affiliate marketer instead of a reseller or franchise owner is that you don't have to worry about after-sales support.
Once the sale is done, and you collect the commission, your job is done.
If the client has any problems with the product or needs support, the seller looks after it.
These were just some of the major benefits of affiliate marketing.
But what exactly are you supposed to do as an affiliate?
I'll explain that in the next section.
Many new or aspiring affiliate think in order to make money from affiliate marketing they need to be building "Affiliate Sites" that consist of writing product reviews on low quality websites with copied content that enjoys artificially inflated search rankings because of black hat SEO techniques.
Then they just hope to skim off affiliate commissions from naive searchers reading the fake product reviews and clicking their affiliate links.
If that's what you think about affiliate marketing, you need a system reboot (it worked years ago but is much less effective now).
Those are the things you should NOT do as an affiliate.
Your job as an affiliate marketer is to be a solid and reliable bridge between product sellers and consumers.
You need to be the first person your audience thinks of when it needs advice before buying a product.
You need to be the person whose recommended products solve problems, save money, and create better lives for your audience.
Look at the image below.
Does it tell you why people turn to affiliates instead of directly purchasing from sellers?
84% of millennials don't trust traditional advertising and can tell when promotions/reviews are sponsored by brands.
They turn to you for authentic and unbiased information that they can trust.
Similarly, why do sellers and product owners recruit affiliates?
Because they know independent product endorsements (that appear unbiased) are more effective than ads.
Both the sellers and the consumers want you to be the go-to person for everything related to your niche.
How do you become that person?
By NOT looking to sell at any cost.
By thinking about the needs of your audience and promoting products that'll help them.
There's a difference between a cheap car salesman and an affiliate marketer.
A legitimate affiliate marketer who's in business for the long-run focuses on building relationships first.
Because selling is all about trust.
When people trust you, they buy from you.
To build trust, you need to publish detailed, unbiased, and actionable content that aligns with the needs of your audience and pitches relevant products as solutions to their problems instead of directly selling them like a desperate salesman.
Instead of reading like a long advertisement, your content should list down the pros and cons of every product you promote and help readers make informed decisions.
I don't say this without proof.
A survey asked consumers in the USA and the UK a simple question "What makes a good product review?"
Have a look at the results and tell me what you think.
Among other factors, more than 60% of consumers in both countries feel it's necessary to list down both the pros and cons of a product for a high-quality and unbiased review.
In short, your job as an affiliate marketer is that of a facilitator, not a product advocate.
Create unbiased, useful, and actionable content that's based on factual information and experiences.
That's the only way to make money as an affiliate marketer in the long-run.
In the next section, I'll explain the main types of affiliate marketing and how you can make money from them.
The concept of affiliate marketing is simple.
You get paid for selling/promoting someone else's product/services.
However, there are different types of affiliate marketing based on what the seller wants from you.
Let me explain.
This is the most common affiliate marketing model in which affiliates are paid when their referrals buy the seller's product.
In this model, your job as an affiliate is to drive sales because no matter how much traffic you generate for the seller, if there's no sale, you don't get paid.
This is the model used by Amazon Associates, the biggest affiliate program in the world, and most other leading affiliate programs.
Within the Pay Per Sale model, there are two more categories - one-time commission and recurring commission
Amazon Associates offers the following one-time commission per sale for different product categories
Source: Amazon Associates
The other type, recurring commissions, is mostly found in SaaS products and online services. In this model, you keep earning a fixed commission every month as long as your referral keeps using the product/service.
ActiveCampaign, a leading email marketing automation software, offers up to 30% recurring commission to its affiliates.
The commission rate for Pay Per Sale programs is usually higher than other types of affiliate programs. But it's also a bit harder than the other types since you only get paid when your referrals purchase the products you're promoting.
In Pay Per Lead affiliate marketing (also called Cost Per Action or CPA), your job is to refer visitors to the seller's site who perform a specific action already defined by the seller.
Most sellers require actions like signing up to the seller's email list, downloading an eBook, installing a mobile app, filling a form, filling a survey, calling a number, etc.
Here's a screenshot from Offervault, a platform that lists CPA offers from different companies. Note that each offer also mentions the payout amount per lead.
The moment your referral performs the required action, you get the commission (even if it doesn't result in a sale)
In Pay Per Click affiliate marketing, your job is to simply refer traffic to the seller's site. Beyond that, it doesn't matter if your referrals immediately bounce back or don't purchase the seller's product.
These were the main types of affiliate marketing.
But within these types, there are different product types that you can promote.
I'll cover them in the next section.
There are 4 different main types of affiliate products to promote...
As I've already mentioned, affiliate marketing a vast field and companies from every industry are hiring affiliates to give more exposure to their products and services.
This is why there are several types of products you can promote as an affiliate.
Depending on your target audience, each product type has its advantages and disadvantages.
Let me describe them below.
Digital products are downloadable resources that customers can pay for and instantly access online.
For example, Amazon has the world's largest collection of eBooks that you can promote as an affiliate.
The main types of digital products include.
Online tools and products based on the Software as a Service (SaaS) model is another huge market for affiliates.
These typically include tools for email marketing, SEO, invoicing, graphic design, and web hosting companies.
Customers pay a monthly or annual subscription fee to use these products.
They're lucrative for affiliate marketers since many of them offer recurring commissions.
SaaS products are also popular among affiliate marketers because they're easy to sell since customers can start using them by paying a small monthly fee.
Thanks to Amazon, physical products are the most popular product type among affiliate marketers.
The majority of affiliate niche sites are built around different physical products available on Amazon (which isn't the best approach)
The global rise in eCommerce sales and the high prices of physical products make them ideal for affiliate marketers looking to earn a full-time income from their sites.
Online courses and video training programs have grown like mushrooms over the last few years. No matter what niche you're in, you can find relevant online video courses in it.
Many individual online course creators, as well as platforms, have affiliate programs where you're paid for bringing in students.
For example, Udemy, which is one of the largest platforms for online courses, invites affiliates to promote relevant courses to their audiences and get paid per sale.
Jeff Walker, a leading online course creator, regularly recruits affiliates for his programs. And he's not alone, countless other course creators use affiliates to spread their message and attract more customers.
Depending on your target audience, you can use any of the product types I've described as a part of your affiliate marketing strategy
But how do you find relevant affiliate products?
Don't worry, I'll explain everything in the next section.
Finding the right products to promote as an affiliate is crucial for your business because it not only has an impact on your earnings but also on your brand image.
If you promote low-quality products or products that are plain scams, your audience will stop trusting you.
This is why ideally you should only promote products that you've personally used.
Doing so is easier for digital products and online courses.
But if you plan to promote physical products, testing them yourself is harder because of the costs and logistics involved.
But you can minimize the risk of promoting cheap or low-quality products by choosing products from reliable sellers and eCommerce platforms.
There are a couple of ways you can find high-quality affiliate offers.
Affiliate platforms are sites that work as a bridge between sellers and affiliates. They invite sellers to list their products in different categories so that affiliates can evaluate them and promote the products that are relevant to their audiences.
I've done a detailed article that lists the most popular affiliate marketing programs and platforms you can use.
But I'll quickly list some of them here.
There are many other industry-specific affiliate platforms that you can find with a few Google Searches (if there's a need)
Bu the ones I've listed cover every industry imaginable and will not only help you find reliable products to promote as an affiliate but also help you manage payment and any disputes with sellers.
Many brands and companies advertise their affiliate programs on their websites instead of recruiting affiliates through networks.
For example, ClickFunnels is a leading marketing automation tool that offers a recurring commission program on its website.
Source: ClickFunnels Affiliate Program
How do you find such programs in your niche?
By using Google Search.
For example, here's what I found when I searched for weight loss affiliate programs
Most of the results are lists of different weight loss programs.
They're useful as well.
But I chose to click on a company website with its own affiliate program.
Source: Elite Weight Loss
You can reach out to companies, even if they don't have any public affiliate programs, to see if they're interested in hiring you as an affiliate.
You'll be surprised how many times you'll get a yes for an answer.
I've told you all the fundamental things you needed to know about affiliate marketing.
I believe I've clearly answered the question "What is affiliate marketing? in depth and beyond covering everything you need to know. Now it's time to decide...
If you think it's for you, I'd also recommend that you read the following articles in which I've described the different strategies you need to follow to become a successful affiliate marketer.
There's no doubt affiliate marketing is a potentially life-changing income stream that can help you earn millions in the long-run and make you completely location independent.
If you're willing to work hard in growing your knowledge and building a business that's based on the needs of your target audience, there's no reason why you cannot succeed as an affiliate marketer.
It's no rocket science and there are thousands of much lesser talented people than you making a full-time living from affiliate marketing.
It's all about taking action and improving with time.
So stop thinking and start making money from affiliate marketing today.
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