What is Affiliate Marketing?
According to Pat Flynn, one of the famous affiliate marketers, “Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others, and earn a piece of the profit for each sale that you make”.
Yes, it is simple. You need to find a product then promote it to others via your blog, YouTube channel, or some media and earn a commission every time there is a sale. However, the company which produces the product pays the commission because you helped them make a sale. Although, the product may not always be a physical good. It can be software, in fact, it can also be a service.
So, if you like to have your own internet business then affiliate marketing can be the one. In affiliate marketing, the best part is that you don’t have to manufacture any product or service hence you don’t have to invest anything. Thus you can simply start selling the products or services and get the percentage (%) share in the profit. Though, one should follow the best practices in affiliate marketing.
The 3 components of Affiliate Marketing
Usually, there are 3 parties involved in affiliate marketing which are Merchant, Publisher, and Customer.
The company producing or promoting a particular product or service which are promoted.
The person who promotes the products and services to people who visit his website or channel i.e you.
The one who on the recommendation by the Publisher visits the Merchant’s site in order to buy the product / service. Hence the sale make the affiliate eligible for a commission.
But in today’s competitive world, typically there are 4 parties involved in the affiliate marketing activities.
The 4 components of Affiliate Marketing are explained as:
the promoters of the product also known as a publisher.
2. The product creators:
The creators of the product, also known as merchants.
3. The networks:
The networks managing the affiliates
4. The consumers:
The end-users of the product
Out of these, the network is optional. It is up to you whether you as the affiliate want to get associated with it.
For more clarity, let’s discuss in detail each of these parties.
Who are the affiliates?
A publisher is the other name of an affiliate. They can be an individual or a company. An affiliate can also be a company which is primarily into content creation. An individual can be a blogger or social media user that has quite a good number of followers.
Now, these individuals or companies place the product link on their digital content in a relevant manner. An Affiliate gets commissions when the visitors who are reading their blogs, watching their videos, or engaging with other media, click on the product link and create a transaction like purchasing of the product or filling the lead form on the company’s website. The amount of commission completely depends on the affiliate program that you have joined.
The affiliates attract people to their website or content by putting up ads, by attracting traffic from SEO, building an email list or social media promotions.
Who are the merchants?
A merchant, also known as the product creator or advertiser, is typically the creator/manufacturer/provider of the product or services. He shares the profit or commissions with affiliates on every sale or transaction that’s planned in the affiliate program. A company like HubSpot, which offers a commission to every affiliate who’s able to get their visitors to make a purchase can also act as a merchant. The merchant may not always be the producer of the product/service, it can be a platform like Amazon Associates Program.
Therefore, it can be concluded that the merchants can be anyone from a solopreneur to a big company, as long as they are willing to pay their affiliates to help them gain a transaction.
Who are the affiliate networks?
An affiliate network acts as a platform between the merchants and their affiliates.
Therefore, when you start affiliate marketing you will have to search for the merchants. So you can simply search for the affiliate network wherein you will find multiple merchants to work with.
An affiliate network is not necessary, but some affiliates and merchants choose to work with a network to add a layer of trust. The network manages the relationship and provides third-party checks and balances. The checks are important to bring down the fraud rates.
Some popular affiliate networks are ClickBank, VCommission, and ShareASale.
For merchants working with affiliate networks managing the time and resources to track, report, and manage payments to the affiliates becomes easy. The merchants or affiliates can choose to work with multiple affiliate networks.
Who are the consumers?
The consumers or the customers are the ones who on the recommendation of the affiliate visit the merchant site to make the transaction. The followers or primarily visitors of the affiliate’s website or channel are few of the examples. Hence, in conclusion we can say that the consumers are the ones who purchase the product or submit the lead form as a result of which the affiliate gains the commission.
I have just explained the parties involved in affiliate marketing. Let me put together.
How does affiliate marketing work?
The basics of affiliate marketing are very straightforward, easy and the steps below that appropriately explain the affiliate marketing mechanism are:
- Find and join an affiliate program that matches with the kind of content that you produce,
- Choose which offers or products that you want to promote to visitors of your site so that they can benefit you,
- Obtain an unique affiliate link for each offer, or product from the merchant’s site,
- Share the links on the relevant blog posts, social media platforms, or your content website,
- And, collect a commission every time when someone uses your links to make a purchase.
One thing that you need to remember is that if you want affiliate marketing to be your long term business model them you need to earn consumer’s trust and respect it.
I suggest you should focus on the consumer’s needs and his problems so that you can help them to solve through your recommendations of products and services. In this way he will trust you more and as a result will get you more transactions in the future.
I hope you understand affiliate marketing thoroughly. In case of any query or doubt, you can write to me at email@example.com
Check out our affiliate marketing course if you want to start your own business.