7 Solid Points About What Affiliate Marketing Is, And How It Works

This article has 7 solid points about what affiliate marketing is, and how it works. Learn about the general setup for the solid business model of affiliate marketing.

What if there was a restaurant that could seat a billion people while maintaining the same overhead as a neighborhood diner? Wouldn’t you do everything as the owner (or merchant) to put “butts in the seats,” as they say in the service industry?

That’s the meaning of affiliate marketing – a well-constructed sales funnel will generate profit for you without the prohibitive expenses of a brick-and-mortar outfit, no matter how many customers buy.

Affiliate marketing refers to the promoting of products and services by third parties, or affiliates, to help companies reach more consumers and increase sales.
So, keeping our billion-capacity restaurant metaphor alive, let’s say that you are friends with the owner of the restaurant (or merchant).

Since they have virtually unlimited seats, your owner friend asks you to help promote the restaurant to anybody and everybody you think may be interested. In exchange, they’ll give you a percentage of the profits for each sale you refer.Affiliate Marketing

To recap: The merchant, company, or online seller enters into an agreement with the affiliate. The affiliate promotes the merchant’s products, earning a commission for every sale they generate.
What’s in it for the affiliate? Semi-passive revenue streams, of course. Depending on how skilled, experienced, and risk-averse the affiliate is, these revenue streams may be fairly steady or highly inconsistent.

Inconsistent isn’t always bad, by the way. Some campaigns pay for themselves in one good day, and even if the rest of the campaign is mediocre, it’s all profit.
What’s in it for the merchant? Once again, revenue. It may seem like they are taking losses through commissions, but think about it: that’s a sale they would have never had otherwise.

Success isn’t just measured in sales, either. Ever hear of the network effect? Maybe your affiliate just happens to sell a product to a prominent YouTube influencer, who is so excited by it that they throw it up on their channel. The results will be a whole lot more fruitful than the original sale.

Finally, we can’t forget about the consumer. When an affiliate is forthcoming and professional, meaning they test the products themselves and provide valuable insights for consumers interested in that particular niche, they provide a beneficial buying experience. They demonstrate the product’s value upfront so that the consumer can buy in confidence and skip the remorse.

Alright, now that we’ve established the importance of the affiliate-vendor-consumer relationship, let’s get to the specifics. A quick disclaimer here: the layout of the process is simple, but affiliate marketing takes time and effort. You must be dedicated, patient, and ready to fail often if you want to learn and earn your way through affiliate marketing.

Here’s the general setup:

  • You decide to commit to affiliate marketing.
  • You determine your niche, which is ideally centered on products services and topics that have experience with and/or are passionate about. This niche is attached to a specialized marketplace of people interested in the subject matter. For example, there are “x thousand” people out there who would be interested in taking piano lessons, “x thousand” other people who want six-pack abs, and so forth.
  • You select a product within that niche – one that you would purchase for yourself. This is super important. Why would you promote something you wouldn’t buy for yourself?
  • You join the affiliate program, meaning that you sign up with the company to promote their products in exchange for commissions. Once your sales funnel is ready, you will direct traffic to it in the hopes that you will refer sales/leads for the merchant.
    • Traffic refers to a stream of site visitors that you direct to the sales funnel from ads, social media sites, blogs, or a variety of other methods.
    • A sales funnel is a series of web pages designed to gather consumer information and introduce the product.
  • As the affiliate, you then use an autoresponder to stay in touch with potential buyers who opted in to your email list. This will give consumers helpful information regarding the product and what it can do for them. An autoresponder a system that allow a series of planned emails to be sent after a prospect subscribes to an email list. It saves the affiliates time and hassle.
  • Then, because of your genuine, non-spammy content that provided upfront value, the consumer makes a purchase and you earn a commission.
  • The is the basic framework for affiliate marketing, but it can of course vary much more depending on your own skills and preferences, the niche you’re in, how your vendor wants things to be promoted, and several other factors.

Do you want to get started, or continue to grow in affiliate marketing?

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