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What is Affiliate Marketing & How Does It Work?

What is Affiliate Marketing & How Does It Work?

Affiliate marketing helps you earn money by promoting others' products and services on your website.


You may have heard the term 'Affiliate Marketing' quite often while talking with a blogger or an internet marketer. For people, who are actively involved in blogging and online marketing for years to earn passive income, it is not something entirely new. Affiliate marketing is, in fact, the most lucrative and easy way to earn money online.

In this article, I will try to cover the basics of affiliate marketing as well as all the details you need to know, in order to understand how affiliate marketing works and how you can easily get started with it.

 Affiliate marketing is one of the oldest forms of earning a commission by promoting other people's (or company's) products or services on your blog or website. You find a product or service you like, recommend it to others, and when someone buys the product or service based on your recommendation, you get a slice of the profit.

The amount of commission, you can earn while promoting others' products and services, varies from $1 to $10,000+ depending on what products and services you are promoting. Many companies have no upper bound on the amount of commission you can earn by promoting their services and products. 

How Does Affiliate Marketing Works?

The affiliate marketing process is very simple to understand and it can be explained in just four basic steps:

  • 1. The buyer is looking for something to buy from a particular person or a company.
  • 2. You are an affiliate of that particular company or person and are promoting their products and services on your website. The buyer lands at your website in search of product (through any mean like Google search, user recommendation or cold email marketing).
  • 3. The buyer clicks on any affiliate link or banner, you put on your website for promotion after reading the product or service discount offer or review and is redirected to merchant website. 
  • 4. The buyer orders that particular product or service and the merchant rewards the affiliate for his marketing efforts. 

The basic idea behind affiliate marketing is that you promote the products or services of others on your website or blog by putting their products banners, writing honest reviews about their products and services, comparing their products and services with their competitors and more. In return, when someone buys any product or services by reading your review or comparison, you earn a commission. 

The affiliate marketing model is based on revenue sharing  one of the most oldest forms of marketing. If you have a product and want to bring more customers to sell it, you can offer affiliate a financial incentive in form of a percentage in revenue. Similarly, if you don't have any product and want to monetize your website or blog, you opt to promote others' products and services that you think are worth promoting. 

There are three main parties involved in affiliate marketing process: the advertiser, the publisher and the customer. Some people also consider the affiliate networks as part of affiliate marketing, but it is optional. At its very core, affiliate marketing is all about relationships between these parties. 

Courtesy: Commission Junction (CJ)

It is obvious from above image, affiliate marketing is not merely the promotion or just the product creation. It is a process of extending the product or service creation and adding product or service marketing across different parties, where easy party receives a chunk of the revenue, based on their contribution. 

Following are the main components of a successful affiliate marketing process:

1. The Advertiser

In the world of affiliate marketing, an advertiser can be a company or an individual offering a product or service like web design, web development, electronics gadgets, airline tickets, clothing, shoes, or it could be an insurance company selling policies. The advertiser sometimes also refers as the merchant, the creator, the seller, the brand, the retailer or the vendor. 

In simple words, an advertiser is one who is willing to pay other people or a company to promote their services and products to help them grow their business. It can be a large company like Allstate insurance company, which sells insurance policies to U.S. citizens. Or, it can be a medium scale company like BlueHost, which offers hosting products and services like shared hosting, VPS or dedicated hosting to its clients across the globe.

 BlueHost Affiliate Program — BlueHost is one of the top hosting company which offers shared web hosting, VPS hosting, dedicated hosting and WordPress hosting etc. It is one of the four hosting providers recommended by for WordPress hosting. BlueHost affiliate program is very impressive as the company paid over $5 million to its affiliate last year alone. It offers $65 per sign up for 1-5 sales per month at the beginning and it can be extended up to $100-$125 for big number of sales. 

2. The Publisher

The publisher is sometimes also known as the affiliate. The affiliate can be an individual or a company that promotes an advertiser's products or services on their website or blog to earn the commission on sales. The publisher is responsible for marketing the products of the seller. 

The advertiser is responsible to provide promotional materials to the publisher – in the form of links, text ads, banners, discount codes, or even unique phone numbers – that the publisher then put them into their website or blog. 

Metalogics uses affiliate marketing to promote products and services from our partner programs like BlueHost to recommend best products to our visitors. This is also an example of the publisher.

The publisher can choose to promote one or multiple products from one or more advertisers and tries to write product review and product comparison to convince the potential customers of the value of the advertiser's product, so that they end up buying that product. 

3. The Consumer

The consumer or the customer is the final necessary component that completes the affiliate marketing relationship triangle. The customer is the one who helps the whole affiliate system keep moving. Because without any active sales, there won't be any revenue collected and no commission to be shared. 

It is the affiliate who tries to reach the potential customers on whatever place they see fit, whether that is a social network, email marketing, digital billboards or through content marketing on their blog or website.

It all depends on the affiliate whether he wants to let the customers know whether they are reading affiliated content or not. Some people choose to let their reader know to remain transparent about their marketing incentives, but others don't. 

4. The Affiliate Network

Although, the affiliate network or just the network is not considered as an active part of affiliate marketing campaign, but it appears handy especially if you are intended to join multiple affiliate programs. The affiliate network plays a role of a middleman between a publisher and an advertiser.

There are many companies which offer in-house affiliate programs, which you can join, but it makes it difficult to manage multiple programs. The affiliate network helps you focus more on promoting the products and services rather then wasting time on payments and product promotional materials. 

Amazon Associates is an example of one of the biggest affiliate networks for promoting consumer products like books, tools, toys as well as household items. It allows you to promote any item that is sold on their platform to earn commission. 

There are many other affiliate networks which offers different products and services to affiliate for promotion. CJ Affiliate by Conversant (formally Commission Junction), Impact Radius and Clickbank are few among notable networks. 

The Rule of Thumb for Successful Affiliate Marketing!

The affiliate marketing may look like an easy way of earning money, yet it needs a lot of patience and dedication. It is not like you sign up for any affiliate program, copy paste their affiliate links on your website and boom, you are millionaire! It may take months of constant efforts, high quality content creation, out of the box marketing strategy, and the goodness of your relationship with fellow affiliates before you expecting something to earn. All of these factors are important to run a successful marketing campaign. 

There are few extremely important rules when it comes to promote products and services that are not your own. You don't need these rules to become an affiliate, but to become a successful affiliate, you may find them useful.  

  1. Never recommend something you are not familiar with! It is a million dollar advice. If you really want to win the trust of your reader, be honest with them. If you never heard of, or used any product or service, don't recommend it to others. For example, I am a developer, I've created many websites and I know what the heck is web development. I do know about what is web hosting, domain registration, website design etc. What if I start recommending medical products or services to my visitors, does it make sense? Nopes, not at all.
  2. Don't go beyond your experience with that product or service. Never tell directly to your visitors to buy a product! Don't exaggerate the facts! Always write to help the others based on your personal experience with that particular product or service. Don't review or compare any product or service just to force the reader to buy it.
  3. Know your website audience first! It may look overlapping with first point but it is entirely different. Always follow the theme of your website. Know your audience first before you jump into affiliate marketing. It is very critical and many people ignore it completely. For example, if you are running a blog writing about website development and design, it is worth promoting products and tools which are useful in launching a successful website rather than going off the topic to promote health products. 

Honest affiliate marketing is what that can make difference in your journey of success. It may be easily to misguide the visitors by exaggerating facts, but remember, we're living in digital era where nothing is secret to anyone. You may be able to earn quick cash, by it will lead the visitors move away from your site. 

I hope you find this starter's guide to affiliate marketing useful and it will help you to understand what the affiliate marketing is in general and how it works. If you have any additional questions or concerns, feel free to ask me in the comments section below.

 Interested in knowing more in-depth about affiliate marketing? Our next article, Inside the Affiliate Marketing & FAQs, covers the technicalities involved in affiliate marketing (the most famous terms used in the world of affiliate marketing) as well as answers the frequently asked questions.

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Disclosure: This page may contain external affiliate links that may result in us receiving a commission if you choose to purchase said product. The opinions on this page are our own. We do not receive payment for positive reviews.
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Atta-Ur-Rehman Shah      

A passionate programmer, domainer, writer and photographer! Love writing about web development, latest trends in technology and domain name industry. Working hard to make the world a better place!