Over the past few years, affiliate marketing has grown into a tremendous business online that allows people to sell their products and services. It is a partnership that involves three components:
- An “advertiser” — The merchant wanting to sell their products and services
- The “marketer” – The affiliate who wants to help them to sell their products and services
- The “customer” – The person who buys the product or services
When the affiliate marketer sells the other person’s product or service, they get a percentage of the profits from the affiliate advertiser. In essence, the advertiser is outsourcing their sales to the marketer so they have help selling their product or service.
How Does This Work?
In the majority of cases, an affiliate marketing situation works like this:
- The affiliate marketer finds an affiliate product they want to offer for sale to their audience.
- The affiliate marketer creates compelling content and marketing to sell the product or service to attract potential customers.
- The potential customer clicks onto the affiliate link in the content and that goes to an affiliate merchant’s sales page.
- The potential customer becomes an actual customer by purchasing the affiliate product or service.
- The affiliate marketer gets a percentage of the sales of the affiliate product or service
Think of affiliate marketing as a cost per action type of advertising. The bottom line, however, is that the affiliate marketer doesn’t get a penny just for attracting a potential customer to his website or even by getting them to click onto the link to the merchant website where the product is being sold. The affiliate marketer only gets paid if the visitor turns into a customer and buys the product or service.
Why do Merchants Like Affiliate Marketing?
Affiliate marketing is enabled by the affiliate hyperlinks that let merchants track where their customers come from. These links make it easy for merchants to know how many sales are generated by each affiliate marketer so they can pay them the percentage they earned accordingly. An affiliate marketer’s success in being able to sell the merchant’s products or services relies on how well they can convert visitors into sales. If they put out a good advertising strategy that gets the visitors to buy the product or service then they should get high conversion rates.
Affiliate marketing success depends on how well the product or service relates to the content you create. For instance, if you have a blog that is on raising dogs, then you would want to offer an affiliate product for something like a dog training book and not be trying to sell a book about how to buy a house. The more relevant the product or service is, the better chances you are going to attract the right customer base.
Since affiliate marketers only get paid if they make a sale, affiliate marketing is a really safe bet for merchants. As long as merchants have enough sales overall (i.e. they are selling the product themselves, plus they have several affiliates selling the product for them) then they’ll do well. Unlike a full time sales employee, if one affiliate marketer doesn’t do very well, the merchant doesn’t have to pay them because they didn’t make sales. Affiliate marketing is like free advertising for the merchant until the affiliate makes a sale and has to be paid their commission.
Why do the Affiliates like Affiliate Marketing?
Affiliate marketing is very appealing to the affiliate marketers because they can make money by selling a wide variety of products and services for multiple merchants. This is much cheaper to do than having to create their own product or service because they only have to sell it, they don’t have to package it, or mail it out to the buyers. Plus, depending on how much of a commission they get per sale, the affiliate marketer could potentially make quite a bit of money.
Affiliate marketers can choose several strategies to get the targeted audience to buy the products they are selling for the merchant. It all depends on the niche they are targeting and the type of product or service. Some of the strategies that have been used with success include:
- Offering Coupons or Promo Codes
- Doing Product Reviews or Ranking
- Doing Product Aggregation or Price Comparison
All in all, affiliate marketing is a process set up to allow a merchant to sell their product or service through a willing affiliate, who then makes a profit of a percentage of the sales they make on their website.