Affiliate marketing: what it is and how it works

by Marsh Maxwell Web Digital Group

Definition

The affiliate marketing process generally involves four elements: the affiliate website , the affiliate network , the advertiser and the buyer .

It is in fact the practice of recommending products or services of companies to potential customers, thus generating a sale and earning a commission in return.

Despite its complex definition, the practice is fairly simple. The affiliate simply looks for a product he personally enjoys, then promotes that product so that others can also benefit from it. In the meantime, the affiliate receives a portion of the profit from each sale resulting from their promotions.

Although the first affiliate program was developed in 1994, Amazon's Associates Program (launched in 1996) is often recognized as a model to follow.

As e-commerce has grown over the years, the space for affiliates has also grown. So much so that it is now incorporated into the marketing strategy of major international companies (such as Apple).

How does it work

The subjects involved in affiliate marketing are:

Sellers and product creators : The seller can be an independent contractor or a large company, a merchant, a product creator or a retailer with a product on the market. The product can be a physical object, such as household products or a service, as a makeup tutorial. If the brand is known, the seller will not need to be actively involved in marketing, but will be able to play the role of advertiser and profit from the revenue sharing associated with affiliate marketing.

Affiliate or advertiser : The affiliate can be an individual or a company that attractively markets the seller's product to potential consumers. In other words, the affiliate promotes the product to convince consumers that it is useful or beneficial for them and to convince them to purchase the product. If the consumer ends up buying the product, the affiliate receives a portion of the revenue made. Affiliates often have a very specific audience to which they market, generally adhering to the interests of that audience. This creates a defined niche or personal brand that helps the affiliate to attract consumers who are more likely to act on the promotion.

Consumer : Affiliates share products on social media, blogs and websites. When consumers buy the product, the seller and the affiliate share the profits. Sometimes the affiliate will choose to be honest with the consumer by revealing that he is receiving commissions for the sales he makes. At other times the consumer may be completely unaware of the affiliate marketing infrastructure behind their purchase. In both cases, they will rarely pay more for the product purchased through affiliate marketing; the share of the branch's profit is included in the sale price. The consumer will complete the purchase process and will receive the product normally, not influenced by the affiliate marketing system in which it is a significant part.

Payment methods

A quick and inexpensive method to make money without the hassle of selling a product: affiliate marketing has an undeniable appeal for those looking to increase their online income. But how is an affiliate paid after connecting the seller to the consumer? The answer is complicated. The consumer does not always need to buy the product for the affiliate to get a bribe. Depending on the program, the affiliate's contribution to the seller's sales will be measured differently. The affiliate can be paid in various ways:

Payment per sale : This is the standard structure of affiliate marketing. In this program, the merchant pays the affiliate a percentage of the product's selling price after the consumer purchases the product as a result of the affiliate's marketing strategies. In other words, the affiliate must actually convince the investor to invest in the product before being compensated.

Payment per lead : A more complex system, this program compensates the affiliate based on the conversion of the leads. The affiliate must persuade the consumer to visit the merchant's website and complete the desired action - whether you fill out a contact form, sign up for a trial of a product, sign up for a newsletter or download software or files.

Pay per click : This program focuses on incentives to redirect consumers from the affiliate's marketing platform to the merchant's website. This means that the affiliate must involve the consumer to the extent that he will move from the affiliate's site to the merchant's site. The affiliate is then paid based on the increase in web traffic.

Benefits for Affiliates

The benefits of the affiliate marketing business model for the affiliate are quite obvious to anyone. Having the opportunity to effectively sell products without having any of the costs or responsibilities of production, purchase or storage is very liberating. In addition to this, the profit potential is enormous when working with a highly profitable network.

If approached correctly, this can eventually turn into an almost passive income. Although it is likely that you will always need to keep an eye on the ball; if you can make the company earn substantial income, you may be able to outsource many of the routine activities to long-term freelancers.

Where many people stumble, however, is in believing that success in affiliate marketing is quick and easy. It is not. It takes many hours of learning, commitment and willingness to adapt to bring the best out of every changing situation.

Affiliates with a strong social following (also known as influencers) can expect to receive giveaways from advertisers who seek to increase awareness of their brand.

Benefits for sellers or advertisers

Many advertisers are unaware of the potential of the affiliate marketing business model for their businesses, in fact, most small businesses have never heard of it. But imagine marketing your products only to interested people with no upfront fees. Paying only when you get results is a risk-free way of advertising that doesn't require marketing budgets to get started. As you can imagine, this is great for any start-up company with little funds for marketing its new brand.

Not only that, but what could be better than having hundreds, if not thousands, of websites promoting your product? This is the perfect way to get people to talk about your products, buy your products and, in general, just get your brand out there.