What Is Affiliate Marketing?

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For the uninitiated, the various sub-domains of digital marketing can seem like a distorted maze. In fact, for a lot of people, digital marketing in itself is a black box. However, for those who do understand the intricacies, there is nothing to stop them from striking gold in today’s online world.

In this article, we are going to talk about one of those domains of digital marketing that has enabled a vast group of people to make enough money to quit their jobs and retire early. Sounds like a dream, eh? It’s true, though. This is the method where you literally make money while you sleep. We are talking about the golden child of marketing, affiliate marketing. Let’s break it down for you!

The Definition

When you search on the internet, you’ll come across a plethora of blogs and websites offering you different definitions of the term ‘affiliate marketing’. It’s really easy to feel lost.

Affiliate marketing is the internet version of the age-old offline personal selling, where you would buy a branded product from some highly enthusiastic salesman at your door. He would get a commission for every sale, and the brand would keep the rest of the profit.

To put it simply, affiliate marketing is a method through which you work as an advertiser for another company’s product and earn a commission every time someone buys that product through your recommendation.

Pillars of Affiliate Marketing

Now that we know what the process is, what parties are involved in the affiliate marketing process?

There are four pillars of affiliate marketing – the affiliate, a.k.a the publisher, the merchant, the network and of course, the end customer.

The Merchant

The party creating the product is called the merchant, also known as the vendor. It can be any individual or company with a product to sell. For example, Wildcraft can launch an affiliate program to sell its backpacks, or Coursera can run a program to advertise its courses. The merchant essentially is the primary seller of the products.

The merchant can also be an affiliate. Many bloggers, for instance, have their own products to sell while they also recommend third-party products to their visitors.

Through affiliates, the merchant gets access to a readymade customer base and does not have to spend time, effort and money to seek out that audience.

The Publisher

The publisher, hereby called the affiliate, is the party that advertises the products of the merchant. It could be a single product or a variety of products, using embedded links in their blog posts or displaying product banners on their website. They could simply write a review of the product and include a link to the merchant’s website.

Every reader that ends up purchasing the product through this link is affiliated to the publisher’s review and henceforth, the publisher earns a commission. Affiliates, again, can either be individuals or companies.

The Network

More often than not, and reasonably so, there isn’t just one affiliate that merchants work with. There is an entire affiliate network that works in tandem to promote a variety of products. The networks are essentially a marketplace in their own right, with a whole lot of offers in stock to promote. They act as a middleman between the merchant and the affiliate.

The affiliate can always deal directly with the vendor, but joining an affiliate network gives them more opportunities in the form of access to a database offering tons of products. The most prominent example is the Amazon Affiliate Program – a network created by Amazon for affiliates who want to promote any product listed on the portal.

The Customer

Well, this one is evident, isn’t it? Without customers, there is no meaning to the entire concept of marketing. The affiliate marketing concept rests on the fact that customers visit the affiliate’s portal, click on the recommendation link, reach the merchant’s website and end up purchasing the product.

The affiliate seeks out the customer through different mediums like social media, display ads, emails, etc, depending on the audience being targeted. The customers do not have to pay the affiliate.

As the affiliate network acts as a middleman between the merchant and the affiliate, the affiliate serves as the intermediary between the customer and the merchant.

How Does It Work?

Cutting to the chase, how does the entire process really work? How does the merchant know whether the purchase has been made via the affiliate’s recommendation link? How do affiliates actually earn through this?

The entire framework is based on a tracking system.

As an affiliate, the merchant or network provides you with a unique tracking link for each product or offer you promote. This tracking link, or URL, is then inserted into your tracking software.

Every time you write about the product or advertise it using PPC advertising, social media, emails, etc, this link has to be included in your ads. The customer then clicks on the link and lands on the product buying page.

If the customer does purchase the product, you make a pre-decided commission on the transaction. Once it is set up, you don’t have to do anything. The system facilitates itself and your promotion works even when you are not working.

Pros of Affiliate Marketing

What makes this concept such a sought-after business activity everywhere? Let’s take a look at some of the benefits of affiliate marketing:

  • The cost of investment is low since you don’t need any major infrastructure.
  • You can be based anywhere and be an affiliate; all you need is an internet connection and a laptop.
  • You don’t have to worry about stocking products or logistics since the affiliate has to market the product.
  • You face no geographical restriction.
  • You have a an exciting opportunity to generate passive income after the setup.
  • There is no commitment and you can stop or start anytime.
  • It can be an extremely fruitful side hustle.

Cons of Affiliate Marketing

Even though everything looks hunky-dory here, are there absolutely no negatives in this process? There are certain downsides to affiliate marketing, indeed. Take a look at some of them:

  • As an affiliate, you have utterly no control over how the merchant is running their business and hence, you cannot vouch for their quality.
  • There is a lack of stability; you can earn a thousand dollars one day and end up with zero profits the next.
  • You have to compete with many existing affiliates, and therefore have to be unique and innovative in your approach.

Is It Legit?

You have read about the entire process and understood the concept of affiliate marketing. Finally, let’s address the elephant in the room.

Is it actually legitimate? Does this genuinely work? Do people, in reality, make a ton of money through affiliate marketing? Can they sustain this as their main occupation? Can you really make money while you are sleeping?

The answer to all of these questions is yes.

However, what you have to understand is this. Like every other business, establishing yourself as a successful affiliate marketer is not an overnight job. You have to build your reputation by creating quality content around your program and persuading customers to trust your recommendation. A single campaign will not make you the king; it has to be numerous campaigns over a long period of time.

There are a few cons to affiliate marketing, but that’s true of any business. Conducting thorough research and sniffing out the right opportunities will definitely save you from failing.

Although affiliate marketing is not rocket science, it does require persistence, sound business sense and a penchant for marketing. Of course, all these can be learned over time!

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