Have any idea about the buzzwords that pop-up across websites, “Make Money Online” or “Work From Home“? That too, in an uncomplicated way? I guess you say YES.

I too heard those types of buzzwords and while on the look for the answer, I understood most of those kinds of make money online are related to Affiliate Marketing.

So, now let me guide you to understand what is affiliate marketing and how does it work.

What is Affiliate Marketing?

Affiliate marketing is the process of earning a commission by promoting or selling other people’s or company’s products wherein you find a product you like, promote it to others and earn a piece of the profit for each sale that you make.

To break this up, there are two dimensions or sides to affiliate marketing. One, the business or merchant who tries to sell. Secondly, a marketer who sells on behalf of the business or merchant and earns a commission.

Now let us briefly look into the meaning of affiliate marketing,

a) General Understanding of the Term “Affiliate”

You may know what Marketing is. At the same time, you may also have heard of the word Affiliate if you would have studied under a university college.

Let’s say, my college where I study is affiliated to a university. So, I study in the college but I get a recognized degree certificate only from the university.

There is a mutual understanding of protocol between the university and my college. Both benefit from each other. This is an educational affiliation.

b)  What is it “To Affiliate” in online?

Now, what is affiliation in online business? Let’s say I am an Affiliate with Amazon. What does that mean?

As an Affiliate with Amazon, I use my marketing skills or the skill needed to sell Amazon’s products.

I convince a person into buying a particular Amazon product. This convincing skill of mine is called Promotion. That is, I effectively convince a person to either follow the Amazon product details on the internet or buy that product itself.

After my effective promoting, if the product is sold or bought, then I am awarded by Amazon.

So Amazon gives me a commission for selling its product or for helping them to get leads. That is, I get some percentage out of the price the product was sold for.

Here, I got attached or affiliated with Amazon. Viewed their products. Promoted their products. And sold them. This attachment to Amazon is called affiliation. So I become an Affiliate.

Affiliate Marketing is “Performance-Based” marketing. I am paid a commission only if an action or purchase (performance) has been made with the product or service. In short, this is how affiliate marketing works.

c)  Affiliate Marketing Explained Through An Analogy

Let me give you an analogy to help describe what has been said above.

I am sure you very well know about Amazon’s e-commerce. They sell products under various categories like TV, Appliances, Electronics; eBooks; Beauty, Health, Grocery etc..

In order to boost their online sales, Amazon gets persons like me who are otherwise called Affiliates. As an Affiliate, I am granted permission to advertise and promote Amazon’s products on my website.

I make all the effort to promote and sell Amazon’s products. Upon doing so, I get success in selling 50 + Amazon products.

So for every product that was promoted and sold by me for Amazon, I get a certain percentage of commission out of the price at which the products were sold. This is called Affiliate Marketing.

How Affiliate Marketing Is Better Than Door-To-Door Sales?

The door to door model is dying because it’s inefficient compared to mailing or the internet. The spirit of these salesmen has evolved into affiliate marketers.

The effect of affiliate marketing is 1,000X better than door to door sales.

Let me point out some advantages of affiliate marketing.

Time doesn’t determine your income

You don’t have to go calling door to door. Rather you can build a website and start campaigning.

This will make you money even while you sleep. Moreover, websites don’t get exhausted from walking all day.

Your selling is not limited to your area

Suppose it’s the 1960’s and I lived in Chennai, India. My selling area would have been limited to where I lived.

But it’s just the opposite now. With the internet’s power, I can make money in countries I’ve never been before. You also should know that some countries are much easier to make money in.

You need not work for one company alone

The glad news is that you don’t have to get caught in contracts. Switching to another company is really simple as logging into a website (affiliate network) and gaining a link.

It’s a cheap business to start doing your thing

There are no startup costs. I need not worry about storing or manufacturing goods. No need to develop any services.

I can choose my own game plan. I can create my own website and make money through effective monetization methods.

Affiliate programs are free. But in the beginning, you just have to pay a very minimal amount for web hosting and your site domain. And again, another main cost is your site content which should be of the highest quality.

Professional independence

You can be your own boss. Decide your working hours. You can work from home, cafes, beaches etc.

Freedom to sell the products that you like

You are in no way forced to push products that you don’t like. Work with brands you respect and promote products you personally value.

Start earning income quickly

With affiliate marketing, you can start earning money straight away. You can choose the niche or field that you like, for example, technology or fashion, and start promoting and selling those products.

Affiliate marketing works in a way that it’s enough for me to just refer few customers every month to make good money. I am free from the need to provide customer service for the referred customers in the affiliate programs work.

Who Can Do Affiliate Marketing?

I would say anyone can do Affiliate Marketing. Just to cast off your hesitation I have listed a few categories of people who can do Affiliate Marketing. But the options don’t stick to this list.

Students

Students can earn extra money through affiliate marketing. Millennials today are glued to the internet which would help them to easily navigate the possibilities of affiliate marketing.

Engaging in affiliate marketing programs can help students pay their loans, tuition fees, books fees etc.. All that the students would need are the following,

• A fast internet connection.
• A blog or a website.
• If not blogs, you can review products online via YouTube and directly include affiliate links in the description of your YouTube videos.
• You can start a Facebook business page or make use of Facebook store or Facebook groups to sell the affiliate products.
• Instagram is another channel through which you can display products in an appealing manner. Just display your affiliate product link in your bio and ask your followers to click that link to make the purchase.

By doing the above students get a good learning exercise of how affiliate marketing works and the first-hand experience in marketing and sales.

Bloggers/Influencers

If you are a blogger/influencer then affiliate marketing can be your lifeline. Because you would already have a lot of followers. And you can easily promote and sell products.

As a blogger, your audience will already be trusting you. So by reviewing the products on your blog and with a clear call-to-action to your readers, you can earn good commissions.

Brands

Brands can engage in affiliate marketing through viable affiliate networks to increase their online presence and have a wider reach. About 80% of brands use affiliate marketing to increase conversions and brand awareness.

Also read: How to promote and sell your products through affiliate marketing

How Does Affiliate Marketing Work?

Having answered what is affiliate marketing, now let me come to the core explanation of how affiliate program works. You need to know the process of how affiliate networks work or the technicality involved in doing affiliate marketing.

How is the whole process of Affiliate Marketing done or executed step by step? Let me give you the answer to this question segment-wise.

Let me begin by mentioning the people or parties who will be involved in the affiliate programs work:

Five parties are involved in an affiliate marketing work process.

First, I the Affiliate or the Publisher

I am the Affiliate.

I am the middleman connecting the customer to the product or service. Affiliate can also be a big-sized company.

I create the marketing funnel which includes the ads, landing pages, text links, and other means to attract potential customers and convince them about the value of the products and persuade them to buy the products.

Hence my job as an Affiliate in the affiliate programs work is to,

• Find products and services to promote (offers)
• Find potential customers (Traffic sources)
• To get and use marketing material (Ads, Landing Pages etc.) and
• Optimize (to test different parts of the campaign) until I gain profits.

Second, the Affiliate Network

Affiliate networks are the intermediary between a merchant and an affiliate. Affiliate networks are simply referred to as networks. They are marketplaces for offers.

Here offers refer to the products or services that companies try to sell.

I can simply log into an affiliate network and find thousands of products to promote.

Some of the verticals in which offers are given in an affiliate network are,

• eCommerce
• Insurance
• Mobile
• Gaming
• Competitions
• Weight loss products
• Advertising networks and many more.

When you join an affiliate network, you’re assigned an “affiliate manager”. The affiliate manager will be your contact person. You can contact them if you have any issues with your campaigns or if you want to promote a new offer.

Moreover, affiliate networks are optional. You can even work directly with the advertiser or merchant, like in the case of Amazon’s Associates or Affiliates who directly work with Amazon.

At times the advertisers or the merchants will have their own internal affiliate programs with which you can sign up with directly.

But to begin, it is good to go through an affiliate network.

Also read: Top advertising networks for affiliate marketers

Third, the Advertiser

Advertiser, also known as the Brand, Retailer or the Merchant is the company that sells the product or offers the service. Amazon in the above example is the Advertiser or the Merchant.

The Advertiser partners with you, an Affiliate or Publisher, to generate more leads or sales. Advertisers pay for the affiliates in three circumstances, namely, Pay Per Click (PPC), Pay Per Lead or Action (PPL) and Pay Per Sale (PPS). To sum it up Merchants in affiliate marketing, like Amazon are,

• The Retailer/Brand/Vendor who creates a product and puts it up for sale
• The Advertiser or Merchant can also be an individual, blogger, entrepreneur and big brands like Amazon. They just need a product to be sold.

Fourth, the Traffic Source

Traffic source is from where your customers come. You usually build a website that advertises your products. You need a way to make people visit your website.

Several websites sell ads on their sites. And this is how Facebook and Google sustain themselves.

There are two types of traffic sources,

• Direct Source

In a direct source, you can purchase banners directly from the site itself.

• Ad Network

Ad Networks is the marketplace where you have a bunch of different websites.

Fifth, the Consumer or the Customer

The consumer is the one who completes the affiliate cycle in affiliate marketing. Here, I am the Affiliate.

Only when a consumer clicks on my product link and goes to the merchant’s site to buy the product, I am entitled to earn a commission.

Usually, a ‘cookie period’ is offered by the merchant until which the affiliate is entitled to the commission. For example, if the cookie period is 10 days, I will get the commission of the sale if a customer uses my link and buys the product within the next ten days.

Now, let me explain The Technical Process Of Affiliate Marketing to you:

Affiliate marketing is a simple process.

In a basic business transaction, the following happens,

• We have the business and the consumer.
• The business has a product for sale. It promotes the products to the customer.
• And the customer makes a purchase.

Affiliate marketing adds a third element to the above process,

• The business or Amazon offers a product for sale
• I the affiliate, who promotes the product or service on behalf of the business or Amazon.
• And the consumer makes a purchase either directly from the business or through me.

As I aid in the transaction, I earn a good commission from the business.

This commission is either a fixed amount per transaction or a percentage of the overall sales price.

How are these affiliate referrals tracked? Or how does affiliate marketing actually work? (The Technicality Involved)

• Cookies are used to track my (the affiliate) referrals and earnings.
• Each affiliate for a business or product gets a unique ID  that gets stored as a cookie.
• An affiliate cookie is usually inserted using a special link that is given to me by the business.
• Each cookie is valid only for a time period that is set by the business.
• A cookie duration is usually between 30-60 days. It may even be longer or shorter.
• If a purchase is made by someone who has an active cookie the affiliate receives a commission.
• Once the time period is over, I will no longer earn a commission if the referred visitor makes a purchase.
• Affiliate referrals can also be tracked by using special landing pages for each affiliate or by giving unique coupon codes to the affiliates. In this case, the affiliate is credited with purchases that come from the landing page or when the coupon code is used.

Depiction Flow-Chart Of The Above Technical Explanation

How Do I Get Paid As An Affiliate Marketer

My contribution to the seller’s sales will be measured differently and I get paid accordingly. Some of the ways in which I as an Affiliate would be paid are,

• Pay Per Sale

This is the usual affiliate marketing structure. In this model, I (the Affiliate) receive a percentage of the sale price of the product as a result of my marketing strategies that made the customer buy the product.

• Pay Per Lead

In this method of payment, my merchant pays a fixed commission for every reasonable action that is made by the site visitors. This action can be installation, online form submission, free trial, short survey and the like.

• Pay Per Click

In this method, I as an Affiliate Marketer get paid for all valid clicks that I generate regardless of sales and leads.

• Cost Per Acquisition

In this method, I am paid commission only for the first time the customer comes to the merchant and transacts via my Affiliate Site. This is called Cost Per Acquisition, meaning the cost to acquire a new customer.

• Cost Per Install

This is a mobile app promotion campaign. Here I as an Affiliate get paid for every mobile app installation done through my site.

• Cost Per Mille

This means cost per thousand impressions. Here I as an Affiliate Marketer promote goods and products of the merchant through digital banners. My web page is a real estate on which many ads are found at one time.

Impression means the display of an ad to a potential customer while he is viewing a website. Therefore Cost Per Mille refers to the commission paid to me for every thousand impressions or views received on an affiliate ad.

Let’s Discuss More About Affiliate Marketing

I want to wind up my conversation here. Hope I have made the explanation about how Affiliate Marketing is done very simple. But if you have any more queries to help start an Affiliate Marketing business, I am ready to further discuss the process with you.

On the other hand, if you are already an Affiliate Marketer, you can share some tips and experiences in the comment section.

I think without giving any second thoughts you can start with Affiliate Marketing no matter what you do. Discover your creativity and earning potential straight away with Affiliate Marketing. Feel free to discuss with me more on this.

I am signing off for now. Until we meet next time wish you all a good business prosperity.