Affiliate Marketing Explained

If you are fairly new to the online business world, you may not be familiar with the term “affiliate marketing”. I’d wager to say, though, that if you spend ANY amount of time online you’ve been exposed to it.

In simple terms, affiliate marketing is a (primarily online) marketing approach that involves helping businesses sell their products/services and/or generate leads.

The 3 Key Participants are:

1) The business (could be any sort of organization, but we’ll use the term “business” just to keep things simple)
2) The prospects (potential customers/leads)
3) The affiliate marketers (“affiliates”)

When affiliates refer prospects to the website of the business and the prospect takes the required action (eg. purchases a product, submits contact information etc), the affiliate will (ideally) receive a commission. The amount paid out will depend on the terms of the business’ particular affiliate program.

Prospects are tracked via “cookies”, which are small bits of code added to their web browser (eg. Internet Explorer, Firefox, Safari etc) when they click through an “affiliate link”. The link itself is typically presented as a basic text link or in the form of a hyperlinked advertising banner.


Affiliate Networks

Some businesses have their own in-house affiliate programs, while others run their programs via one or more of the various “affiliate networks” (some businesses use both approaches). Aside from offering businesses a great way to set up their affiliate program, affiliate networks have the added advantage of helping them connect with potential affiliates as well. On the flip side, these networks can be an excellent place for affiliate marketers to find great offers to promote.

Here are some well-known affiliate networks:

Commission Junction
Clickbank
ShareaSale
LinkShare
Google Affiliate Network
Peerfly
Maxbounty
PepperJam Exchange

For all you “Eco-Geeks” (like me) reading this, here are some environmentally-themed networks:

Green Affiliate Programs
Eco-Affiliate

(Note: Some eco-product companies have their own affiliate programs – plus the selection of programs in the mainstream networks has improved by leaps and bounds as well).


Affiliate Marketing 101

Believe it or not, my first taste of “real” online success (I’ll explain why I used quotes in a minute) resulted from driving paid traffic (i.e. sending “prospects”) via Google Adwords directly to affiliate offers (using affiliate links of course). This was known as the “GoogleCash Method” (and it was in fact the “GoogleCash” eBook that got me headed in that direction). While certainly fun while the success lasted (I made far more than any “real world” job I’d ever had), this was not exactly what you’d call a reliable, sustainable long-term business model! Competition became much more fierce, and Google started clamping down on this approach, making it much more difficult to send traffic directly to affiliate offers.

Needless to say, this isn’t the sort of approach I would recommend these days – especially not as a core business strategy!

So how do you promote affiliate offers? Here are some suggestions in order of potential effectiveness (in my humble opinion).

  • Basic Banners – This is one of the easiest ways to get started. Simply find targeted affiliate programs (i.e. those relevant for your viewing audience), sign-up, get banner code and put it on your site (I realize “putting banner code on your site” will sound scary for some – I’ll aim to make a video about that at some point). If you get decent traffic and you are promoting good quality (and well targeted) offers, you could certainly earn some commissions.
  • Simple Endorsements – If you look at my “Stuff I Love” page you will see what I mean. The idea here is that you provide your readers with some information about the products you are recommending, and (ideally) why are recommending them. The best way to provide quality, reliable information about a given product is of course to own it and test it yourself.
  • In-Depth Reviews – When you really take the time to learn everything you can about a given product and then write an in-depth review about it, you are offering REAL value to all those wanting to learn more about it. Again, when you actually own and use it it’s going to make a BIG difference in terms of adding credibility to your review! On that note, I should also mention that offering both the “pros” and the “cons”, and perhaps even some alternative product choices, will also improve the quality of your review.
  • Demonstrations, Training etc – If you want to go all out, actually putting together some complimentary information resources (how-to guides etc) relating to the product can be a very effective approach. Perhaps it’s a piece of software that’s fairly complicated to use, and it doesn’t come with newbie-friendly help documents. If you take the time to master it yourself, and put together some training showing others how to use it, there are likely going to be a LOT of people who will appreciate the effort, and be more likely to purchase the product through your affiliate link.

The “bottom-line” here is that the best way to generate affiliate revenue is to “pre-sell” the product you are promoting, NOT to simply refer “cold” prospects to offers. Again, when you add a lot of VALUE, and provide a genuine assessment of the product (with your viewers best interests in mind as much as possible), you’ll end up with a lot more credibility and people will ultimately be more likely to make purchases based on your recommendations (via your affiliate links)!


The PROS and CONS of Affiliate Marketing

PROS

  • Very fast and easy to get started (especially if you already have a website up and running)
  • Very little overhead (really, just the expense of having websites online + your time)
  • Huge selection of high quality products available to promote (although this will depend on the niche you are in)
  • Many TESTED offers (i.e. they are known to convert well)
  • None of the time/risks associated with creating your own products
  • No inventory to warehouse/ship etc
  • No customer service headaches

CONS

Affiliate marketing isn’t an ideal stand-alone business model for most people. Here’s why:

  • You are basically helping others build THEIR customer base (and overall brand)
  • Tracking codes don’t always work so you may not receive commissions.
  • Not all businesses and/or affiliate networks treat their affiliates fairly
  • You will almost always need to wait awhile (months in some cases) for your affiliate checks
  • You can (potentially) make more money and build a customer base with your own products
  • Google has been known to punish websites that are solely focused on affiliate marketing (rather ironic given the fact that they have their own affiliate network)
  • People tend to mistrust affiliate marketers more than those who have their own e-commerce stores etc

In my humble opinion, affiliate marketing is a fantastic add-on strategy for anyone with an online business. It can offer web business newbies an “easy” way to get into the game before they start selling their own products. I don’t recommend putting ALL your focus on this approach, however, due to the reasons listed above. Creating and selling your own products, and growing a loyal customer base are likely going to offer most people the best chances of long-term success!

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