How Does Affiliate Marketing Work?

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Affiliate marketing happens to be the buzz word. For people who want to make money online, affiliate marketing happens to be the best option.

Here, we will give you an insight into what is affiliate marketing?

You will also know how affiliate marketing works?

Affiliate marketing is the process using which an affiliate earns a commission. Doing what???

Well, the affiliate needs to promote and sell products and services of merchants. These merchants in turn for every lead and sales pay a commission to the affiliate.

The question is why do merchants resort to affiliate marketing?

This is because affiliate marketing happens to be the leading method of generating online revenue.

There are thousands of affiliate programs that run on the internet. These are ideal for bloggers, information entrepreneurs and also for those who want to sell their own digital products.

Affiliate marketing as of date happens to be the best home based business model. This is because of the advantages it has to offer.

The pros of affiliate marketing include:

#1 Low overhead costs

Affiliate programs are free to join. You simply need to have access to the internet and a laptop for referring and promoting products.

This means you do not have to store products, indulge in logistics and maintenance. So, basically there are negligible overhead costs involved.

Affiliate marketing happens to be a win-win situation for you. You don’t invest a lot and also end up earning a decent income.

#2 No physical products involved

With affiliate marketing, you do not need to create, stock or ship physical products.

Since affiliate marketing deals with online or digital products, the need of physical products does not arise.

You simply need to choose a product or service that already exists and promote it.

#3 Flexible

Working with affiliate programs to make money online offers great flexibility.

You can work at anytime from anywhere if you have access to the internet. There is no need to attend long office hours.

#4 Source of passive income

The business model has great potential of generating passive income. In other words, it is a method of additional income.

If the affiliate program works well, you can make high earnings.

Now, coming to how affiliate marketing works?

For affiliate marketing to work, there are various different parties involved:

#1 Sellers/ Product Creators

The sellers or product creators are businessmen, entrepreneurs or merchants. They have a product they want to market.

The product can be anything- household good, makeup tutorials or a service. The sellers or product creators want to promote their products to increase their sales.

These merchants start affiliate programs looking for affiliates. These affiliates then share the products, write reviews to promote these.

When the products get sold, the affiliates earn a commission.

The sellers do not need to be actively involved in marketing.

#2 Affiliate/ Associate

Affiliates and associates are other important partners in affiliate marketing.

Affiliates can be individuals or companies. Their job is to promote or market the products and services in a compelling manner.

These associates persuade the customers to purchase the products or services. The associates focus on the features and benefits the products have for customers.

The affiliates need to make sure that they promote products that actually benefit the customers.

If writing reviews, the publishers need to make sure that they write the correct and honest reviews.

In other words, the associates must not provide any misleading information to the customers.

When the customers end up buying the products, the affiliates are paid a fixed amount of commission.

Affiliates also usually have a niche audience or targeted audience. This helps the affiliates to get fixed customer base for a specific product or service.

#3 Consumers

The most important party of affiliate marketing is the consumer. It is the consumer for whom the marketing efforts are made.

Affiliates share the products with consumers on blogs, social media posts, and websites. The consumers on reading the reviews or on finding the products beneficial decide to make the purchase.

Once the consumers purchase the products, the affiliates are paid a commission. So, for affiliates consumers are detrimental as to how much income they can make.

In most cases, the consumers are not aware of the fact that affiliate marketing has persuaded them to buy products and services.

#4 SaaS Platforms

SaaS or Software as a Service Platforms are essential for working of affiliate marketing.

These platforms provide companies with the required metrics but do not manage the affiliate process.

SaaS platforms act as technological partners for affiliate programs.

The working of affiliate marketing is mysterious as well as confusing. For most marketers, it may seem to be another advertising or marketing platform. But this is not the case.

Affiliate marketing is a strategically managed and well organised marketing method.

The following are the steps involved in working of affiliate marketing:

*Promotion of product or service

In the first step, the affiliates promote the product or service. This can be done using a website or blog.

The affiliates include an affiliate link in their blog or website to promote the product.

*Clicking of the affiliate link

When the consumers visit the blog or website, they see this affiliate link and click on the link. This in turn generates leads for the product or service.

When the consumers end up buying the product or service, the affiliate gets paid.

When the consumers click on the link, the cookie gets stored in the consumer browser. These cookies make it possible for SaaS to track the consumer progress.

In other words, this platform tracks as to whether the consumer has purchased the product or not.

*Redirection to merchant site

When the consumer clicks the link, he or she gets redirected to the merchant website. Here, the consumers check the details of products or services.

The consumers also decide as to whether the product or service has to be purchased or not.

If the consumer decides to purchase the product or service, the purchase process is undertaken. In this process, the consumer adds the product to the shopping cart.

On checkout, the consumer fills in all the essential delivery details and makes the payment via a secure card.

*Payment to affiliate

Once the consumer has completed the purchase process, the affiliate is paid a commission.

The SaaS platform automatically transfers this amount to the account of the affiliate.

The working of affiliate marketing also needs effective management.

Affiliate Program Management is essential to manage day to day operations and activities of affiliate program.

The following are the approaches used for managing affiliate marketing:

#In-house management

In-house management of affiliate programs is perfect for small and private companies.

An in-house affiliate manager can easily manage the small number of affiliates.

#Agency management

Growing companies that do not have enough in-house management resources opt for agency management.

In this case, the management entails offering operational and industry expertise to the affiliate firms.

#Hybrid management

Most affiliate marketing companies adopt the hybrid approach for managing their day to day operations.

This management makes available a trained and substantial team for managing affiliate programs. This approach is best suited for companies that want to expand their geographical footprint.

Affiliate marketing must be managed well with the right management program. This makes affiliate marketing the most cost-effective method of earning high revenue.

The affiliates who are associated with affiliate programs can be paid in the following ways:

#1 Pay per sale

This is the standard method in which affiliates are paid. The merchants pay the affiliates a fixed percentage of the sale amount.

The affiliates make use of promotional methods to affect the sales. When the sale is made, the merchant pays the affiliate. So, the affiliate gets paid for every sale made.

#2 Pay per lead

This is a complex method of paying the affiliates. The affiliates get paid for lead conversions.

When the customers visit the website of the merchant and perform a specific action, the affiliate is paid.

The action can be as simple as clicking a button or filling a form. Once the desired action is performed, the affiliate earns money.

This method though complex one enables the affiliate to make high income.

#3 Pay per click

This method allows the affiliate to earn money by directing the customer from the affiliate site to the merchant site.

The affiliate needs to engage the customers in such a manner that they are coerced into visiting the merchant site.

The affiliate basically gets paid for increasing traffic to the website of the merchant or the seller.

Now that you know how does affiliate marketing work, you need to know the channels that can be used for the same.

The channels that can be effectively used for affiliate marketing include:

#Influencers

An influencer can impact the purchasing decisions of a large population.

They have a large following on their blogs and social media posts. So they can earn well from affiliate marketing.

Influencers in turn receive a share in the profits from the sales generated by them.

#Bloggers

Bloggers can check the samples of products and services by using them. They then write reviews about these products and services.

In turn, these reviews compel the customers to buy the products and services.

The blogger helps the merchant site to get more traffic and get paid for the same.

#Paid search focused microsites

Affiliates can also develop and monetise micro-sites. These help the affiliates earn a decent income.

Such sites are advertises within the main site or on sponsored listings of search engines. It is essential for these micro-sites to offer relevant and specific content to the customers. This helps to generate leads as well as sales.

#Email lists

Affiliates can generate emails lists to target their niche audience. This is the most cost effective manner of reaching out to maximum target customers.

Affiliates gather email addresses using different methods. Promotional emails for products and services can be sent to all the email addresses by the affiliates.

#Websites

Websites can be used to create a very large customer base. The websites make use of banners and contextual affiliate links to promote products and services.

This channel helps to improve conversion rates and increase the revenue generated by the affiliates.

Knowing so much about affiliate marketing, you may think you can start right now to earn a decent income.

It is however not easy to earn from affiliate marketing. Here are a few tips to earn a steady income from successful affiliate marketing.

–Know your affiliate program

It is essential for you to conduct a thorough research into the available affiliate programs. You must know how much the affiliate program pays and how it works.

For you to start earning via affiliate marketing, you must have complete information related to the affiliate program you plan to join.

–Build trust

You as affiliates need to build trust. In other words, promote only products and services that you think are of benefit to the customers.

You must focus on the quality of the products and services. So, you must think above the earning potential. This is essential to build trust of the customers.

–Use variety

You can promote a variety of products and services. It is not essential to stick to only one product or brand.

Further, you can also use the method of free offers for luring customers to buy products and services.

–Know legal requirements

For you to earn a steady income, you must also know legal requirements of affiliate marketing.

You must disclose the correct information about products and services as it is required by law.

–Track traffic and earnings

To earn a steady income from affiliate marketing, you need to track traffic and earnings. You must know which programs are successful and which products resonate with the customers.

In addition, you need to know of the traffic generated. This lets you know the conversions, leads and sales you have made.

Success in affiliate marketing also depends on how much time and effort that is put in by you as an affiliate.