E-Commerce

Affiliate Marketing Made Simple: A Step-by-Step Introduction

Affiliate Marketing

Introduction

By offering the proportion of the margin of your product or service to a large number of affiliates, you can dramatically boost sales albeit at a lower overall margin rate. By sharing the profits of a sale with other websites, it is possible for webmasters to generate higher sales volumes. By devising an attractive affiliate scheme and promoting and implementing that scheme in a professional manner, it is possible to generate thousands of website visitors using an affiliate of channel online. Search engines become less relevant if affiliates are sending your website the bulk of its traffic. Amazon.com is one of the pioneers of this business model selling millions of books via tens of thousands of Amazon affiliates. Today, affiliate marketing is a very well established method of selling online. The main advantage of affiliate marketing is high sales volume with nominal sales effort at an extremely low cost. The main disadvantage is much lower margins, (as affiliates need paying commission to remain motivated).

What is an Affiliate Program?

An affiliate program is a contractual arrangement between the owner of a product or service (the Merchant) and a separate ‘Affiliate’ organization, to pay a commission, in exchange for promotion of its goods and services. Typically, this entails an affiliate website adding advertisements (in the form of banners, buttons links and other textual material) promoting the Merchants offering. There are literally thousands of different affiliate programs in existence on the Internet today. It is usually the responsibility of the affiliate to redirect visitors to their website to the merchant’s website. At that point any customer service issues (such as ordering a product, dealing with customers on telephone delivering issues) are dealt with by the Merchant.

Affiliate schemes are normally automated and structured. Affiliates must pre-agree to abide by the merchant’s terms and conditions when signing up before entitled to promote anything. For instance, Merchants make it a condition that affiliates do not alter the Merchant sales copy to avoid any potential accidental or deliberate misrepresentation (and ultimately customer dissatisfaction). Affiliates usually have a unique tracking ID associated to their registration or website. By adding this html code to their site, Merchants can track where each individual sale came from. The tracking html is usually combined with a cookie or CGI script to allow the Merchants Affiliate Tracking system to collate a database of visitors and sales. It is normal that affiliates get paid one month in arrears and have an access to a monthly report outlining leads, sales and conversions. Affiliates are primarily motivated by money and so they are usually very interested in knowing the conversion rate of the Merchant.

Merchants benefit hugely from an affiliate marketing model as there is a virtual unlimited supply of keen entrepreneurs seeking out business opportunities to make money (in exchange for promoting an online business idea). Most affiliate schemes operate in a commission scheme based on payments monthly in arrears, payable from the merchant to the affiliate of either via PayPal or an alternative independent escrow service, or check in the post. Some merchants exclude or reject applications from prospective affiliates who do not meet their guidelines for type of website, physical location or regulatory approvals (particularly in Financial Services). The main benefit of an electronic affiliate business model is that it is completely scalable – it is possible to recruit an unlimited number of affiliates to promote your product and the cost of doing so can be negligible…

Types of Commission Schemes – there are various types of affiliate models in use today. Historically, affiliate models existed based on banner advertising which were rewarded on a per impression basis. However, click through ratios were extremely poor and banner exchange schemes gave the sector a bad name. In addition, fraud impacted confidence in this method of marketing. The last nail in the coffin for banner advertising was that ‘in your face’ flashy moving images also tended to annoy users. Today, textual ads are the primary form of affiliate marketing. These are highly customized to the user’s needs using contextual advertising (based on the user’s individual search profile and IP geographic location) are the preferred means of advertisers to reach their target markets.

Pay per sale

The merchant pays the affiliate an agreed sum of money each time a user visits the affiliate’s website, clicking through to the merchant website, and buys something. Most merchants affiliate programs tend to have a fixed commission schemes on a pay per sale basis. This could mean either a commission value for sale or a commission based on a percentage of the sale. These tend to have certain restrictions or caveats such as a minimum order a sale value, whether the client is a new business customer or existing customer. In addition, there may be bonuses based on volume of sales over a given period – all these types factors are used as carrots and sticks to motivate affiliates to behave in a certain way.

Pay-per-click

This affiliate commission scheme is based on the number of unique visitor clicks from an affiliate website through to the merchant’s website. Unique clicks are identified using IP tracking to prevent click fraud. The user clicks on a text link with an embedded affiliate code or perhaps clicks on a search result or advert. The commission per click is obviously a lot lower than on a pay per sale basis. The affiliate benefits from of an instant and reliable source of commission. If the number of click thorough from an affiliate’s site is high and conversion rates of the merchant low, a pay per click model is ideal to maximize commission.

Pay per lead

A pay per lead of commission based model is typically used by merchants in situations where the product or service cannot be easily downloaded or purchased using your credit card, or where the sale requires human call-back and has a long sales cycle. For instance, where the merchant is a mortgage broker and requires the user to fill in a call back form with their contact details on. Each completed contact form would count as a ‘lead’ and will be paid to the affiliates on a qualified ‘per lead’ basis.

Two Tier Affiliate Schemes – a two tier affiliate scheme is a multi-tiered program where affiliates in the first level can also earn commission from the sale generated from affiliates that they recruit who sit in the second level or ‘tier’. Typically the first tier would earn 10% commission on sales indirectly generates from Merchant sales. In addition, the affiliate may earn a much smaller percentage e.g. 2% from sales from 2nd tier affiliates they recruited to the Merchant. A two tier scheme is aimed to motivate affiliates to recruit like-minded people to also become affiliates. It requires additional sales copy marketing material and a good quality affiliate manager software tool. This tool links affiliates together and details of any sales, in order to calculate potentially vast commission sums. Key to success is a higher margin product, where margin can be allocated two separate levels to the point where affiliates remain motivated and enthusiastic.

Affiliate Networks

An affiliate network website is an independently run collection of affiliate schemes which allow members of the network to join either one, some or all of the affiliate schemes registered with the affiliate network. It is a club making recruit of affiliates a straight forward process. This is ideal for portal websites where a range of different topics and schemes that can be advertised across a large number of different pages. Affiliate networks charge the Merchant to be part of the network and may even take a large slice of affiliate’s commission. In exchange, the affiliate network provides the merchant with an instant access to hundreds or even thousands of potential affiliates who have already joined the network in the past. In addition, it provides a central management console for affiliate’s to track sales and leads. It is quite simply a middleman for a large and complex number of affiliate schemes all promoting themselves alongside their competitors. An example of an affiliate network is Commission Junction.

Critical success factors

There are usually a range of factors that are critical to the success of your affiliate marketing strategy:

High Commissions

Affiliates marketing efforts are directly proportional to the commission they receive (relative to your competitors affiliate commission levels). A successful affiliate business model relies on a sensible amount of available margin to be divided between the website owner and its affiliate on each sale.

Offer a Differentiated or Unique Product or Service

Prospective affiliates will be attracted to have something a bit different with professional online marketing literature. If your web site is very similar to dozens of other websites, all promoting their own affiliate scheme, why should a prospective affiliate sign up to your affiliate scheme as opposed to your competitors? Therefore, you must really try and sell to the prospective affiliate (via your website affiliate signup page), in order to recruit them as an affiliate. It is critical to summarize your unique selling points so they can clearly see there is an opportunity to make money together.

Quality Feedback & Reporting

Constant reassurance through online reporting and real time statistics help motivate affiliates. The more management information you can provide to an affiliate, the more confidence they will have in your ability have to close the sale. As an affiliate, it is a real confidence boost to see an email confirmation every time a lead is generated or sale made that has come from the affiliate’s website. Consequently, the more motivated they will be to send additional leads in the future.

Great Merchant Customer Service

By providing professional and service to your prospects, your sales conversion ratio obviously improves. Prospective affiliates will be looking for affiliate schemes that provide good quality conversion ratios and have a good market reputation. Affiliates need to know that that every single visitor they send to your site has the greatest possible chance of making the money via your selling effort. There is nothing more de-motivating for an affiliate than a lead that does not get followed up quickly enough or is accidentally deleted or ignored by the merchant.

Merchant Affiliate Recruitment Efforts

Patience/ time to recruit the desired number of motivated affiliates are very important. Ask yourself basic questions. If it takes 6 months to recruit 100 affiliates who generate 200 sales equivalent to $100,000 profit in that time, could you have generated more than 200 sales in that time (and at what profit) if you had concentrated on direct selling only.

Affiliate Management & Tracking Systems

As the merchant you must have a thorough understanding of online affiliate tracking software and services to ensure affiliates are paid on time, sales are allocated fairly and automated new affiliate recruitment can be initiated. If you have no systems in place there are many commercial affiliate services available or software packages to provide an end to end service to manage and track affiliate’s leads and sales. This is equally important for accounting purposes as the bigger your affiliate program becomes, the more important it is to justify outgoing costs (affiliate commission payments).

What Affiliate Marketing is NOT

If you get an unsolicited email inviting you to join an affiliate network and it’s asking for an upfront payment, then you definitely have to scrutinize them and find out whether or not they’re scam or legit. Go to the Better Business Bureau (BBB) and find out about the company, if you can’t find any, then go to affiliate marketing forums and discussion boards. They would know a lot about these scam sites as news spreads fast in social media and forums. Another thing to look for is if these people are selling you unrelated products or something that you will never be able to use, like the $3550 “Secrets to Affiliate Marketing Success” book or some other catchy titles; although a few are genuine but they don’t charge you that high.

The truth is you can learn basic affiliate marketing from top ranking websites and blogs. In fact, they can teach you more useful information than all those specialized books and DVDs that other people are selling. Becoming an affiliate is free when you sign up to affiliate marketing programs and the only thing that will really cost you money is web hosting, which is around $70 – $100 a year for your affiliate marketing blog. A few other expenses may include a unique website/blog logo (optional), your electric bill; hire a blog writer (optional because you can write the blogs yourself) and probably paid advertising to promote your website or blog (optional).

Types of Affiliate Marketing

What’s interesting about affiliate marketing is that you can earn commissions in more ways than most people think. Allow me to explain the 3 different types of affiliate marketing and how you can earn through them.

1. Unattached Affiliate Marketing – This type of affiliate marketing will not require too much work from you, you don’t even have to setup an affiliate marketing blog like those for Amazon Affiliate Programs. This is more like a PPC marketing (pay-per-click) where you just show affiliate ads on sites that allow this kind of marketing and then get a commission for each click through that web users make on the ads.

2. Related Affiliate Marketing – This type of marketing is where you are required to have some level of involvement and this is where you create an affiliate marketing blog or website and always show affiliate links on almost all of your website/blog pages. You also earn a commission for each time a web user clicks through the affiliate links.

3. Involved Affiliate Marketing – This kind of marketing may require you to actually use the products/services before you write a review about them and you should be able to write a more comprehensive and honest reviews.

You can choose from these 3 types of affiliate marketing methods, but most affiliate marketing programs uses the Type 2 affiliate marketing, which has some level of involvement and online presence from your end.

Putting the Cogs and Wheels Together

Now that you have an idea of what affiliate marketing is all about and what its common pitfalls are, you are ready to start your journey to financial freedom and a wealthy lifestyle! Affiliate marketing is just like any other type of business and you’ll have to plan a strategy months or even years ahead before you begin, so I will give you the basic strategy of how to become an affiliate marketer, signing up for affiliate programs, setting up your affiliate marketing blog and all the other important details about it.

Steps to become an affiliate marketer:

1. Decide what niche topic you want to use for your blog or website. It’s better to write reviews or general information about products/services that you’re passionate about, because you will write better articles for them compared to those that you don’t like. For instance, if you’re mad about crochet or kid’s bicycles, then that is the niche you should pick for your blog! Affiliate programs have a huge inventory of items for sale and they do include crochets and bicycles for a fact. If you’re more of the business-minded individual and you think you can write just about on anything, then by all means pick the niche that’s most profitable among the lot.

2. Create your website and purchase a cheap but reliable web hosting. You don’t need a web designer to build a website or a blog. You can use WordPress, Weebly, Web.com, Blogger, eHost and others to do that. Using their user-friendly “click & drag” features you can create your blog/website in 5 – 10 minutes!

3. Learn basic SEO and use it on your blog or website. Search engine optimization or SEO is a very good marketing strategy to allow your website to be known throughout the entire internet or at least the majority of it. If your website is easier to find in search engines, then it is more convenient for people to visit it, and more visitors’ means more money for you.

4. Learn social media marketing to extend your presence online. In reality social media marketing or SMM is also a part of the grand scheme of SEO and without it, your SEO campaign would not be as successful as you’d expect it to be. There are literally billions of people hanging around the web on a daily basis and much of them are in social media sites. It would be a logical choice to get visitors there for your website and increase your income potential.

5. Learn about paid advertising and consider it deeply on whether you need to use it or not. Paid ads help because they target the right kind of people who are already looking for products that you promote. Meaning there is a good chance that they will buy. Wouldn’t you want them to buy products through your affiliate links? I would!

6. Start filling up your website with content. In case you plan to write boring and unimpressive blogs and articles, then I’d advise you to no longer continue in your pursuit of creating an affiliate marketing blog, because I promise you people will not want to read your blogs or visit your site. Write articles that will impress you first. This will let you know whether or not people will want to read about what you have to say. If you can find an extremely critical person to judge your writing, then that would be better as it will help you greatly improve on your writing style. Reader engagement is absolute in affiliate marketing. It will determine your income capacity, so do your best in writing content for your site above all else.

How you earn in affiliate marketing:

• The manufacturer/seller signs a partnership deal with the affiliate network or program and in turn, when you sign up with the affiliate network as an affiliate, the partner affiliate network will give you a small percentage share on every item you helped sold.

• You’ll need to embed or display affiliate links on your website or affiliate marketing blog about the products you’re promoting. The purpose of these links is to guide your blog readers to the seller’s webpage (which is usually in the affiliate network’s site) so that they can make purchases of the items they like.

• The percentage commission on each sale range from 1% – 10% (some give more than 10% but rarely) and this is how you generate income. For example, a web user happens by your blog about coffee machines and he/she read your blog review or informative article. The reader was impressed by your blog and decided to click on the affiliate link, and then make a purchase of 1 coffee machine worth $350. If the affiliate network allowed 7% of that amount to be your commission, therefore your income for that sale alone will be $24.50.

• You may notice that $24.50 is a small amount and not enough to convince you to become an affiliate; however, if you were able to bring 10,000 visitors to your blog in the span of 30 days and about 4,382 people bought coffee machines for themselves, then your income for that particular month should be $107,359! If you’re able to bring as much visitors to your website on a regular basis, then you can bet that your monthly income should be around these numbers. Now you can appreciate the value that SEO and SMM can do for your affiliate marketing business.

Key Benefits of Affiliate Marketing

It is without doubt something that all people who are interested in starting an online business or those who already have an online business, should investigate and take up.

If you are undecided or have little knowledge about affiliate marketing then I hope that you find the below information helpful and that it will clear up any doubts that you have over what the key benefits of affiliate marketing are.

1. Commission basis

For the affiliate marketer this is a key advantage as every time that somebody makes a purchase, the affiliate receives a set commission of the profit.

For the affiliate merchant this is an advantage as they only pay the marketer when they make a sale, so no money is wasted on marketing spend.

2. Huge audience

For the affiliate marketer – having built up various marketing lists or websites, they can make use of their huge audience base and ensure that the traffic they send over to the merchant is qualified and that sales are made, making the affiliate more money.

For the affiliate merchant – they receive access to a wider audience base than they may have had before, creating more interest in their products, resulting in more sales and all without investing any more money or time.

3. Ease

For the affiliate marketer – once they have set up their additional sites and links across to the merchant, it is very simple to manage and often affiliates will continue to make money from sales without having done anything for months.

For the affiliate merchant – they do not have to invest time and money writing content or creating expensive images in order to promote their services/ products. Instead affiliates will apply to be a part of their program and all the merchant need do is have many affiliates all working towards promoting their products/ services and wait for the sales to flood in.

4. Steady cost

For the affiliate marketer – building on the last point, an affiliate can keep receiving commission from sales of a product or service for years, despite not doing a lot of work to promote it. You do need to invest time at the start but then you have a regular source of income coming in for the market life of the service/ product.

For the affiliate merchant – they set up all the costs so the chance to make a huge profit on sales without having spent much on marketing, is very likely. They do not have to pay their affiliates much per sale to make the business relationship worthwhile, as it tends to work best on a quantity basis so everyone is happy with the set amounts.

5. Brand Visibility

For the affiliate – there is a lot to be gained reputation wise from working with a range of brands and you will find that you get a lot more work should you be able to prove that you have succeeded with others in the past.

For the affiliate merchant – they receive free brand exposure on a continual basis, which is never a bad thing. If you have many affiliates working on promoting your brand, you’ll soon see a boost in search engine rankings and online sales; Amazon.com is an excellent example of where this has worked in the past.

6. Outsourced expertise

For the affiliate marketer – they get the continued experience to improve and work on their methods of online marketing, investing only their time, not money.

For the affiliate merchant – they will be able to utilize all kinds of affiliates who are experts in SEM (search engine marketing) and SEO (search engine optimization) without investing a lot of money, yet still manage to get to the top of Google rankings.

7. Transparency

For the affiliate marketer – through the various affiliate programs, it is possible to see exactly when sales are made and payment is automatic, so you do not have to worry about chasing merchants for payments.

For the affiliate merchant – they can see and manage their R.O.I (return on investment) extremely easily and do not have to worry about tracking the origin of each sale.

8. Online market

For the affiliate marketer – there are an endless number of affiliate programs out there and the demand for online shopping is not going to decrease, so the earning potential for affiliates is huge. You can access any number of markets with your affiliate work, whether you choose jewelry, hygiene, pet insurance or food.

Use long tail pro to find targeted long tail keywords with low competition, ensuring maximum affiliate sale for you.

For the affiliate merchant – as previously mentioned, online demand is not going away any time soon, therefore merchants are able to continue to expand product ranges to meet a range of online markets with the knowledge that they have a number of affiliates on hand to promote quickly and at a low cost.

9. Home-based work (aimed at affiliate marketer)

If you become successful in the world of affiliate marketing then it is entirely possible to create a long term Passive Income from it and a huge bonus to this is that you can work cheaply from home and be your own boss. You don’t have to pay to sign up to affiliate programs and there are a huge number to choose from, all from the comfort of your own home.

10. Overcoming tradition (aimed at affiliate merchant)

Using affiliates to promote your products and services will guarantee that you receive a lot more exposure than you would by using more pricey traditional marketing methods. Having a number of affiliates promoting what you are selling and only being paid when a sale is made, is one of the most cost effective marketing methods ever as well as being incredibly successful.

Resources for Getting Product Information

Whether you are researching a product to buy or write about, and possibly promote as an affiliate, it helps a great deal to know where to look for accurate and up-to-date info. If you are writing reviews, knowing as many resources as possible to gather information will really boost the quality of the content in your articles.

Below I list 5 of my favorite resources for finding product information, reviews and content for an article also.

1. The best place to get the most accurate information, specs and features on a product is the official website. A simple Google search for the product should reveal the official site. You can also enter into the search bar: product manufacturer, or product supplier

2. One of the best resources to check out for product information is YouTube. There will usually be a video on YouTube or within the search engine results if the product is popular. Obviously, you can see and hear about the product by watching the video but you can also write down the info word for word without being penalized for duplicate content, in a product review or article of your own.

I always watch at least a few videos from different sources and take notes as I go through them. You can also embed one (or part of one) of the videos into the article.

3. Another potentially great source of information that can and should be used is the Amazon Customer Reviews. The comments that are listed for each product give a great review which we can use in our article or review.

4. Quora, with close to 200 million monthly unique visitors is a platform where people ask questions and connect with others that give quality answers and insight on just about any topic or product.

5. Yahoo Answers is a great source also, a community-driven website or knowledge market. They are much larger than Quora and have been active since 2005. Yahoo Answers is also a platform where many people ask questions and many answer them.

Here are some keyword searches that you can do to find information on a potential product to promote on your website. Search with these, and similar type keywords in the Google Search Bar to gather product information, which can be used as content for a product review or write-up:

(Replace product with product name)

  • Is product a scam
  • Does product work
  • Product reviews
  • How much does product cost
  • Is product any good
  • Product complaints

We can also use the alphabet soup technique on the product and you will come up with a lot of ideas as you research your product related keywords.

Example: let’s say that we’re researching “headphone” products. Into the search browser Enter:

  • Headphone
  • Headphones
  • Headphone a
  • Headphone b
  • Headphones a
  • Headphones b
  • C, d, e, f, g, etc.

Notice the keywords that are revealed in the browser drop down as you type. These are the most popular search terms used by those using that search engine to find a headphone product. You can see just what people are searching for and get some great ideas for products as well as sources and targeted audiences to promote the product to.

How Does Affiliate Marketing Work?

Affiliate marketing is one branch of the internet profit tree. It works when you generate targeted traffic to a particular website selling a product for which you get commission on each and every sale. You don’t own the product and your job is to come up with creative ways to connect a prospective customer to the product landing page.

Here’s an example of how affiliate marketing works:

An online entrepreneur decides to sell a popular “How Lose Weight after Pregnancy” information product. She goes onto the internet, and visits the ClickBank Marketplace and looks up the weight loss products. There, she is presented with a choice of maybe a dozen different products to sell and decides on one whose sales page and statistics prove it converts well.

She clicks “get hop link,” which incorporates her own unique ClickBank ID into the URL. She can then take the new URL and includes it somewhere in her sales funnel. When someone reads her sales material (an article, social media post, a pay per click ad, a YouTube video, etc. which pre-sells the product), and they click through to the sales page and buy it, she gets the affiliate.

Of course, she wasn’t limited to selling products from ClickBank. There are other top paying affiliate programs out there. Large websites like Amazon.com and Wal-Mart and others have affiliate programs, too.

Low Startup Cost

If you want to start affiliate marketing you don’t have to spend loads of money to get started. The basics include a website domain, hosting, and some advertising (if you want to). But it’s not a necessity to get the ball rolling. The investment you’ll be making will be effort, not cash.

No Product Creation

When you start affiliate marketing, you don’t have to create any products. You’re the middleman. That means you go into a niche to bring together buyers and sellers. You’re the liaison between the two.

Become the Go-To Person

The key to becoming a successful affiliate is to build a list of email subscribers and become their go-to person whenever they need advice. Someone they can trust. Building a stronger rapport with your readers will increase conversions. If you take the time to review and maybe even put into practice some of the products and share your results that will help you convert more sales.

Affiliate marketing is right for just about everybody. Even product creators adopt an affiliate strategy to complement the product development branch of their business. You don’t even need sales experience to become a great affiliate. Your job isn’t to sell the customer, but to connect them to the solution that they’re seeking.

Companies are happy to pay commissions to people just like you, in return for selling their products and services. You have the potential to make a great income when you choose the right niche, stay committed, and understand your audience.

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