Understanding Affiliate Marketing

Understanding affiliate marketing is key to achieving success with it. Affiliate marketing is a business model in which an affiliate recommends products and services online. When someone makes a purchase through an affiliate link, the affiliate makes a commission based on the sale. Affiliate marketing is therefore a referral based business model in which third party referrers are rewarded for generating sales online.

understanding affiliate marketing

A good analogy is that of recommending a restaurant to a friend. Only with affiliate marketing, when your friend goes to that restaurant, you get paid a commission for the referral. Referrals are tracked through affiliate links which are coded to the individual affiliate who referred the sale. When a sale is made, the vendor (product owner) knows who to pay because of the link it came from.

Understanding Affiliate Marketing – Products

There’s thousands of affiliate programs available for affiliate marketers to join online. One of the most popular is Amazon.com. Anyone can join Amazon’s affiliate program once they have met the partner program criteria. More details of Amazon’s affiliate program here.

Once you have become a partner or affiliate for Amazon, you can promote any product from the site and earn commissions from sales you generate. Amazon pays between 1% and 11% commissions which is one of the lowest rates in the affiliate industry. See affiliate marketing commission rates. But Amazon can work well for affiliates from all walks of life because of the huge range of products they can promote.

understanding affiliate marketing

Amazon is a trusted website too and most online shoppers are comfortable using it.

Digital Products

Another type of product affiliate marketers use is digital products. With digital products there’s no postage or delivery costs and this means savings can be passed on to the affiliate. With an affiliate doing the selling, it can mean sellers can pay less in advertising fees.

Affiliates can also earn much larger commissions selling digital products online. Most digital products pay much more than physical products in commissions. Typically digital products will pay from 20% to 40% commissions, some even more.

digital products

One of the most popular places new affiliates get started is on Clickbank.com. Clickbank has a huge selection of digital products in most topic areas. This can be useful if you already have a website in a certain topic area, or niche. For example if you have a sports related website, you can join a program which offers a related product and sell it from your website.

High Ticket Products

The best paying products are high ticket products. High ticket affiliate marketing products are those which carry a price tag larger than around $500. With a high ticket item, you can make a much larger commission than with a standard product, especially if it’s a digital product.

high ticket products

High ticket items also let you learn paid marketing much more efficiently. With a low value item, you’ll need to sell many more items in order to break even on advertising costs, or make a profit. A high ticket item gives you more room for testing and measuring your advertising campaigns.

If you have a marketing budget of $1000, for example, you’ll need to sell 100 low value products at $10 commission to break even. With a high ticket product, you may only need to sell 10. See also what is high ticket affiliate marketing.

Subscription Affiliate Products

A subscription affiliate product can pay an affiliate over and over again, potentially for life. These are a great idea to use, especially if you’re new to affiliate marketing. Subscription products are membership and software type products which offer ongoing value for the customer. Selling a subscription product for an affiliate is far better than selling a product which only offers a one-off commission.

understanding affiliate marketing

A good subscription product can also overtake the profit earned from a high ticket commission over time. If a customer maintains their subscription for decades it will mean an ongoing income for the person who referred it. With each sale, an affiliate can earn a passive income from subscriptions. See subscription affiliate programs.

Understanding Affiliate Marketing – Promoting Affiliate Products

Affiliate products can be promoted in a number of different ways although the fastest way to scale up your sales is through using paid marketing. Some affiliates create content (like this blog), and others run paid marketing to a large audience using paid platforms like Facebook, YouTube, Adwords etc.

One of the best ways to build an affiliate business is through using email marketing. Email marketing is a cost effective way for affiliate marketers to build a relationship with many subscribers over time.

niche blogging for profit

By getting website visitors to opt in to an email list, an affiliate can automate email messages over a long period of time. Some subscribers will buy an affiliate product years after joining an email list, some will purchase straight away. But as your list of subscribers grows, you’ll find you make more and more sales. See also the power of email marketing.

How an affiliate promotes a product will depend on their own unique strategy. The main ways are through:

  • Content creation – blogging, or video blogging
  • Social media – either paid or free strategies
  • Paid marketing – Using social media or advertising platforms (YouTube, Google, Facebook, etc.)
  • List building – email list building is definitely recommended for anyone starting out

See also 22 ways to promote affiliate products.

Why New Affiliates Struggle

Affiliate marketing is a business and like any other it takes time to generate an income from. Many affiliates will quit within their first few months or years because they haven’t gained any traction. This in part is because of high expectations of earnings or lack of understanding of how affiliate marketing works. See affiliate marketing failure rate.

Depending on how you go about your affiliate marketing business, it can take months or even years to see any sales coming in. With paid marketing methods, things can happen considerably quicker than with content marketing strategies such as blogging. As a performance based business, everyone will experience a different outcome according to the training, products and strategies they use.

There’s many different affiliate marketing business models affiliates can use, and each offers a different earning potential. To use paid marketing and build a business model quickly, it’s recommended to use a high ticket sales funnel which offers more earning power. See also the fastest legit way to earn money online.

Most new affiliates will struggle if they expect too much from affiliate marketing too soon. If you have a good strategy, and get help and support it can considerably shorten the journey and give you more confidence in your chosen route.

Before you get an results with affiliate marketing it can be easy to think that it doesn’t work. In the beginning this is a tough period because your belief is low and your expectation is high. When nothing shows, it can be easy to throw out your expectations and lose the faith!

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understanding affiliate marketing