What Is An Affiliate Program And How They Work For You

Affiliate marketing is a method of promoting products of other businesses and can be an effective method of monetizing traffic. Amazon popularized affiliate programs through the introduction of its Amazon Associates Program in the 1990s. Clickbank and eBay offered similar schemes and, today, there is a huge selection of affiliate marketing companies to choose from. Whether you have a blog, business website, or you publish a regular newsletter, you can convert readers into cash. Some schemes pay a portion of purchases while others pay per lead, per click, or for some other desirable action.

Affiliate marketing programs might offer two-tier payments so that you receive payments for purchases made by your referral’s referrals. We look at affiliate programs, how you can benefit from them, and how to integrate affiliate links into your site.

How Do Affiliate Programs Work?

Vendors offer affiliate programs as a way of getting others to sell their products. Typically, you receive payment when one of your referrals makes a purchase and you receive a set portion of that value. Some schemes differ slightly but the premise remains the same. Using Amazon as an example, if you had a fitness website you could include links to trainers on the Amazon website. As long as you have signed up for the Associates Program, you would receive a payment every time somebody clicked on your link and bought those trainers.

An affiliate marketing program consists of the following parties:

The Consumer

The consumer is the end customer. They are the people that click your affiliate links and buy the products. They can be website visitors, blog subscribers, or email readers. The customer is the most important party in the process because, without their purchase, there would be no spoils for the affiliate and the merchant to share.

The consumer benefits from affiliate marketing because they gain access to relevant products on their favorite websites. Some publishers are up-front about the arrangement but, in other cases, the consumer does not know that they are dealing with an affiliate.

The Affiliate

The affiliate, also referred to as the publisher, is the individual or company that markets the product. In this instance, you are the affiliate. You would provide links to the merchant’s products and share the profit with the merchant. Publishers usually make sales through a website or blog, email newsletter or social media post. It may also be possible to use video and other techniques to help make sales.

The affiliate benefits from this arrangement because they can monetize any traffic source, from social media to site visitors. Publishers also benefit from the use of creative ads and other media that has been produced by the merchant. They don’t have to deal with shipping or order fulfillment.

The Merchant

The merchant, or vendor, is the company that manufactures or supplies the end product. This can be a physical product, like a pair of trainers. It could be a service, such as web design. Or, it could be a digital product like an ebook on affiliate marketing. The merchant sets the price for the product, deals with the purchase and ships the item. They also pay the affiliate for their part in the equation.

The merchant gains exposure to a crowd of potential buyers that they would have missed out on if not for the affiliate. The company can concentrate on product development and manufacturing, rather than sales.

The Network

Big enterprises like Amazon have the resources and money to maintain their own affiliate program, but not all businesses do. Affiliate networks exist to connect affiliates with merchants. The merchant uses their software to upload products, links, and creative ads. The merchant and affiliate use the network’s cookies and tracking code, and the network is responsible for affiliate payments. The network typically takes a share of the payments, or a set fee, from the merchant.

The Benefits Of Affiliate Marketing Programs

Affiliate marketing offers a beneficial way of monetizing your website, email list, or even your social media contact lists. It is an alternative to selling your own products or services, and offers the following benefits to users:

Affiliate marketing is performance based. The better your own website results, the more visitors click on your affiliate links. Ultimately, this means that you will make more sales. There are affiliate programs for every conceivable product and service. Amazon alone covers the vast majority of product types, while Clickbank provides access to digital goods. Affiliate networks, which can include hundreds of programs, fill any gap left.

You can monetize almost any source of traffic. Whether you have a burgeoning email list, a popular social media presence, or a website with thousands of visitors a day, you can embed affiliate ads and make money. In fact, the most effective affiliate earners are those that combine multiple traffic sources. Most programs offer their own advertising creatives. You don’t need to know how to use Photoshop or how to create hero images on Canva. The merchant has already done the work for you.

Payment Models

Different affiliate marketing programs have different payment models, but most fall into the following categories:

Pay-per-sale

Pay-per-sale is the archetypal affiliate payment model. The merchant pays you an amount for every sale. A company that only sells a single product might offer a flat rate. For example, an ebook merchant might offer $1 for every sale of their ebook. More commonly, schemes offer a percentage of the sale value. For example, a merchant might offer 5% per sale, so if a customer clicks your link and purchases a $100 item, you receive 5%, or $5, of that sale. More complex schemes might offer increased revenue when you reach a certain milestone. For example, you might receive 5% on the first $500 of sales but 7% for anything above this amount.

Pay-per-click

With a pay-per-click scheme, you receive a predetermined amount of money for every visitor that clicks your link and visits the merchant’s site. The merchant pays you, regardless of whether visitors make a purchase or not.

Pay-per-lead

Some merchants are looking to increase their marketing list or grow their email subscriber list. In this case, the merchant offers an amount of money whenever a visitor clicks a link on your site and completes a capture form or subscription form. There is no need for the customer to make a purchase.

Pay-per-action

Other merchants are looking for customers to download a free ebook, install their mobile app, or take some other desired action. They will pay you for every customer you send that completes this action. Like pay-per-lead affiliate programs, there is no need for the customer to make a purchase. The merchant pays you for every download or every installation.

Residual payments

Some merchants offer residual payments. For example, a company that offers a gift box subscription might offer 5% residual payments for the life of the subscription. If a customer clicks your link, signs up for a subscription, and pays $100 a month for the next six months, you will receive $5 a month for a single referral. This type of scheme is also available with some product merchants and means that you receive affiliate payments for future purchases as well as the initial product.

Two-tier-programs

Two-tier programs not only pay you for the purchases made by your referrals but if your referrals make affiliate sales you receive a payment for this, too. You can consider this a form of pay-per-action payment, where the action is signing up other affiliates. Be careful not to fall into the multi-level marketing trap, however.

What Is The Best Affiliate Program?

There are many thousands of affiliate marketing companies offering a variety of affiliate programs, so how do you know what is the best affiliate program? Consider these factors when evaluating a program:

Commissions

The first thing that most affiliates look at when assessing a program is the commission level. After all, you want to ensure that you’re making as much money as possible. When checking commissions, don’t just look at the percentage value. Consider the frequency of payments, the time between sale and payment, and whether there are any recurring payments. Also remember that if you struggle to sell a product, it doesn’t matter how high the commission is, you will still earn nothing.

Cookies

All affiliate programs use cookies to track visitors. This is how they determine who should receive commission payments. But, they also serve another purpose. If an affiliate program says that they track referral cookies for seven days, this means that you will receive your affiliate check if a referral makes a purchase within seven days of clicking through your link. If they complete the purchase after the seven days has elapsed, you get nothing. The longer the cookie, the better.

Marketing Materials

Unless you want to spend your time creating banner ads and other creative visuals, or you intend to only use text ads, you need good quality marketing materials. Some merchants provide a host of different advertising options and if you’re really lucky, they will even include conversion rate details. The higher a conversion rate, the more effective that particular ad.

Reputation

As the publisher, it is your reputation on the line when you direct customers to a merchant website. As such, you should be careful to ensure that you only direct visitors to merchants with a good reputation of their own. Do your own research, check Google reviews, and have a look at customer’s experiences on Facebook and other social media sites. All other things equal, you should choose the merchant with the best reputation. You should also look at the reputation they have as an affiliate program – if they routinely fail to make affiliate payments, dispute sales with their affiliates, or have negative reviews across the board, look elsewhere.

Competition

Some markets are overflowing with different merchants offering their products and services. This isn’t necessarily a bad thing. After all, this level of competition usually indicates a popular market. However, if you are looking to sell trainers, and you opt against promoting one of the big brands, remember that you are likely to be competing with the likes of Adidas and Nike. Do you really have the visitor numbers and the reputation to beat that level of competition?

Choosing Types Of Affiliate Ad

Once you have found an affiliate program you want to promote, you need to implement their creative ads. Different programs offer different types of ad. Some might offer nothing more than text ads, while others will have an extensive range of video ads, emails, banner ads, and more. You should match the ad to your content, bearing in mind that some products benefit from visual marketing more than others. Video ads have proven successful on social media, text ads are useful for email lists, banner ads are great for blog sidebars, and embedded product details are highly effective in dedicated affiliate content pages.

Making Money From Affiliate Programs

There is a massive selection of affiliate programs, including some from the biggest companies in the world. Jeff Bezos built Amazon on the affiliate merchant program, and they continue to offer one of the most popular programs, but there are many others.

Choose a program, or programs, that best suit you and your traffic source. Ensure that they have the level of creative ads that you require, and optimize landing pages to pre-sell customers on the benefits of the products. There are businesses that make millions a year from affiliate checks and you could generate a sizable income using the same techniques and the same programs as them.

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