What is Affiliate Marketing? | How it works?

What is Affiliate Marketing

The simple answer: Affiliate Marketing is getting people to complete actions online, such as turn into a lead by submitting a web form or calling a phone number, all the way to buying products and services.

This all happens through your personal “affiliate link” or coupon code.

As you send traffic to your affiliate link, some of those people (hopefully) will convert into a sale or lead.

Depending on the action that the advertiser wants to be performed you will get paid a commission.

Affiliate marketing is a powerful internet marketing tool that offers partners or affiliates a commission on any customers they bring to your site. This is normally done on a cost-per-click basis, as paying pennies per click can be cheap.

With the introduction of the internet, advertisers realised that they could increase their revenue by rewarding websites who refer customers to your site that go on to buy something from you. In essence, this is affiliate marketing or performance-based marketing. An advertiser rewards a website a set amount of commission for each customer that the site refers who goes on to make a purchase.

Affiliate marketing can be a powerful way of:

  • boosting your web sales
  • improving your online brand reach
  • finding customers in a new country, as visitors who arrive from a similar site are much more likely to be interested in your productsWhat-is-Affiliate-Marketing

Affiliate Marketing | How does it work?

The Advertiser

This is the company that owns the offer. Every company has a marketing team, but affiliate marketing is a way for them to get more sales with low risk.The advertiser only pays when the affiliate sends a conversion.I know some companies who don’t have a marketing department and rely 100% on affiliate marketers for sales.They focus on their strengths, and they outsource the marketing to guys like us.

The Publisher

The Publisher is the website who advertises a product or service and earns a commission when their visitor goes on to the site and makes a purchase. There are so many different types of affiliates including influencers, bloggers, or loyalty websites and more non-traditional affiliates too, including paid search, on-site tech solutions and remarketing to name a few.

The Consumer

The consumer is the person who buys something from the advertiser by clicking on an affiliate link or banner, depending on the website that they have visited.

How to set up an affiliate marketing program

Building links is also important. You can do this by putting a link to someone else’s site on yours and them doing the same, or by posting to other sites with useful information, as either a guest content provider or a blog commenter. The challenge is to post links to affiliates who offer a product connected to your site.

You also need to create a call to action – content on your site that gets your visitors to do what you want, ie click on your advertiser’s links. Examples of calls to action include:

  • clicking on a banner ad
  • ordering a project
  • filling out a lead generation form to get information

There are several benefits to affiliate marketing, for example:

  • Its cost-effectiveness
  • It can be a long-term investment
  • It is less risky, as there are no up-front costs for advertising on your affiliate websites
  • Don’t need extra marketing staff
  • Never lose money – you only pay when an advertisement succeeds
  • Track where your customers come from and how much they spend
  • Determine the most successful locations for your advertising

Affiliate marketing terms

Here are some of the common terms associated with affiliate marketing:

Advertiser: The person selling the goods or service; also knows as the merchant. The advertiser or merchant pays affiliates for sending traffic to the merchant’s web site after a product or service is purchased.

Affiliates: A Web site owner that earns a commission or finders-fee for referring clicks, leads, or sales to a merchant.

Affiliate marketplace: There are many marketplaces like Shareasale, CJ, and Clickbank. These work as central databases for affiliate programs in different niches.

Affiliate software: Software used by companies to create an affiliate program for their product.
Example: iDevaffiliate.

Affiliate link: A URL tracking link that identifies the affiliate and sends traffic to the merchant’s web site.

Affiliate Solution Provider: 3rd party company that provides an affiliate tracking solution on a hosted basis. Typically an affiliate software solution is hosted by you with your web site. With an affiliate solution provider, they provide the hosting for you.

Affiliate ID: Similar to the affiliate link, but many affiliate programs offer a unique ID which you can add to any page of the product site.

Affiliate Manager: The person responsible for running the merchant’s affiliate program. This includes recruiting affiliates, establishing incentive programs, creating media for the affiliates, reporting on sales and paying affiliates.

Affiliate Agreement: terms between a merchant and an affiliate that govern the relationship. This includes the terms on which the affiliate will be rewarded for the traffic sent to the merchant’s web site.

Commission percentage/amount: The amount or percentage you will be receiving in affiliate income from every sale.

2-tier affiliate marketing: This is a great way of making money from an affiliate program. With this method, you recommend that others join affiliate programs, and you receive a commission when a sub-affiliate makes a sale (similar to MLM or multi-level marketing).

Banner Ad: An electronic advertisement or billboard such as an animated GIF, Flash Movie, JPEG that advertisers a product, service, or web site.

Click-through: The action when a user clicks on a link and follows through to the merchant’s web site.

Click-Through Ratio (CTR): percentage of visitors who click-through on a link to visit the merchant’s web site.

HTML code: Refers to the lines of code that an affiliate places on their web page(s) for linking to the merchant’s site. This HTML code contains the unique identifier that identifies the traffic as coming from the Affiliate’s web site.

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