What is Affiliate Marketing?

affiliate marketing

Affiliate marketing has been very good to me for about eleven short years now. I still remember that day in 2005, I was watching CNBC when they were interviewing a CEO of a start-up company. The CEO was talking about their Company and how their product will benefit the American consumers.

I got really excited about the product and the interview. In my mind, this product is something that I should be able to sell online. As soon as the interview was over I called the company up and spoke with their business development manager.

They had 11 employees at that time.  I told the manager that I feel that I can help them with their business and ask if they have an affiliate program. They didn’t, but that’s not the end of the story.

He got back to me after two days and ask me about my requirements and experience. Long story short, I signed a contract and three years later, I was able to bring this Company over 100,000 customers, all from online affiliate marketing.

This company went public a few years ago and currently have more than 200 employees.

What is affiliate marketing?

A category of marketing, where a merchant provides performance-based rewards to its affiliates for each customer brought or product sold. Affiliate marketing offers the opportunity to make money on commissions by promoting other company’s products and services.

The four key players in typical affiliate marketing program are the merchant/seller, the network, the publisher/affiliate, and the customer.

The most popular advertising methods used in affiliate marketing include SEO, paid search engine marketing (PPC – Pay Per Click), e-mail marketing, content marketing, or publishing reviews about of the product or service.

In the advance of internet technologies, affiliate marketing is sometimes regarded as a strategy of yesterday. Due to Google’s new algorithms for SEO, link building is getting out of date, which can depress affiliate activity.

However, even in this case, there are a bunch of methods to use SEO and build your brand.

You might encounter some link problems with Google if you are not managing your program, but mostly the full concept of affiliate marketing still makes sense to Google – it offers another appropriate and applicable resource to consumers.

Major commission models used in affiliate marketing are presented below:

  • Pay-per-Performance – merchant pays affiliate commission based on a percentage of the total order value
  • Pay-per-Lead – merchant pays affiliate commission for every lead or order referred from their site
  • Cost per Impression – merchant pays affiliate commission for every 1,000 impressions of their banner on affiliates’ site
  • Cost per Click – merchant pays affiliate commission every time a visitor clicks on their banner on the affiliates’ site

Three broad categories can be outlined concerning how people make money as an affiliate.

  • The affiliate has no presence and no authority in the process of promoting a product or service. He/she only put an affiliate link in some ads in a hope that the end consumer will click on it and purchase the product, which will earn the affiliate commissions.
  • In some cases, the affiliate has some sort of presence online. For example, the advertisement links are presented through a blog, a podcast, videos, or something else related to the product or service.
  • An affiliate actually uses the product or service he/she promotes and makes a recommendation based on his/her own experience.

Most used ways of conducting affiliate marketing business are listed below:

  • For example, a CouponMom.com website, which notifies its members with ways to save money at particular retail stores by providing them access to coupons that give them this opportunity.
  • Product review websites, which provide information on the products and services the customers will be potentially interested in. The affiliate earns a commission when the member of this site click the affiliate link and purchases the offered product.
  • Another category is when the affiliate links appear in a “partner center” or “blogroll” section of a website, which redirects the visitor to some third-party sites.
Author

BA in Accountancy, he entered the entrepreneurial world by starting his first online marketing business in 2004. Passionate about personal finance, the stock market and a digital marketing addict. I also love to read books on entrepreneurship and technology and always on the lookout for new opportunities. I'm an avid golfer and currently a 15 handicapper.

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