What if you could make money at any time, from anywhere — even while you sleep?
This is the concept behind affiliate marketing.
Affiliate marketing is the process by which an affiliate earns a commission for marketing another person’s or company’s products. The affiliate simply searches for a product they enjoy, then promotes that product and earns a piece of the profit from each sale they make. The sales are tracked via affiliate links from one website to another.
Affiliate marketing is a great way to drive sales and generate significant online revenue. Extremely beneficial to both brands and affiliate marketers, the new push toward less traditional marketing tactics has certainly paid off.
In 2023, affiliate marketing spending in the United States reached $9.56 billion, with projections estimating it will grow to $10.72 billion in 2024 and approximately $12 billion by 2025. — which means there’s plenty of room for those looking to get a piece of the pie.
This step-by-step beginner’s guide will walk you through how to launch your affiliating marketing business and what benefits you can expect.
How Does Affiliate Marketing Work?
Because affiliate marketing works by spreading the responsibilities of product marketing and creation across parties, it leverages the abilities of a variety of individuals for a more effective marketing strategy while providing contributors with a share of the profit. To make this work, three different parties must be involved:
- Seller and product creators.
- The affiliate or advertiser.
- The consumer.
Let’s delve into the complex relationship these three parties share to ensure affiliate marketing is a success:
Seller and product creators.
The seller, whether a solo entrepreneur or large enterprise, is a vendor, merchant, product creator or retailer with a product to market. The product can be a physical object, like household goods, or a service, like makeup tutorials.
Also known as the brand, the seller does not need to be actively involved in the marketing, but they may also be the advertiser and profit from the revenue sharing associated with affiliate marketing.
For example, the seller could be an ecommerce merchant that started a dropshipping business and wants to reach a new audience by paying affiliate sites to promote their products. Or the seller could be a SaaS company that leverages affiliates to help sell their marketing software.
The affiliate or publisher.
Also known as a publisher, the affiliate can be either an individual or a company that markets the seller’s product in an appealing way to potential consumers. In other words, the affiliate promotes the product to persuade consumers that it is valuable or beneficial to them and convince them to purchase the product. If the consumer does end up buying the product, the affiliate receives a portion of the revenue made.
Affiliates often have a very specific audience to whom they market, generally adhering to that audience’s interests. This creates a defined niche or personal brand that helps the affiliate attract consumers who will be most likely to act on the promotion.
The consumer.
Of course, for the affiliate system to work, there needs to be sales — and the consumer or customer is the one who makes them happen.
The affiliate will market the product/service to consumers through the necessary channel(s), whether it be social media, a blog or a YouTube video, and if the consumer deems the product as valuable or beneficial to them, then they can follow the affiliate link and checkout on the merchant’s website. If the customer does purchase the item, then the affiliate receives a portion of the revenue made.
However, keep in mind that the customer must be aware that you, the affiliate, are receiving a commission off the product.
According to the Federal Trade Commission, an affiliate marketer must clearly and conspicuously disclose their relationship to the retailer, thus allowing the consumer to decide how much weight to give your endorsement.
A disclaimer such as “The products I’m going to use in this video were given to me by Company X” gives your viewers the information they need and allows them to make an informed decision about whether or not to buy the affiliate product.
Types of Affiliate Marketing
It’s often unclear whether an affiliate marketer has actually used the product they’re promoting or if they’re simply in it for the money — sometimes it may not matter to the customer one way or the other.
But other times, such as with diet services or skincare products, the customer may not trust an affiliate unless they know that he/she has tested and approved the product themselves.
In 2009, renowned affiliate marketer Pat Flynn categorized affiliate marketing into three types — unattached, related and involved — to help differentiate between affiliate marketers who are closely tied to a product versus those who are not.
Here we’ll break down each category to help you decide which route to take.
Unattached.
In the unattached business model, the affiliate marketer has no connection to the product or service they are promoting. They have no expertise or authority in the niche of the product, nor can they make claims about its use.
Typically, an unattached affiliate will run PPC (pay-per-click) marketing campaigns, using an affiliate link in hopes that shoppers will click it and make a purchase on their own.
While unattached affiliate marketing may be attractive due to its lack of commitment, it’s generally for those who simply want to generate an income without investing in the product or customer relationship.