What is affiliate marketing?
In essence, it’s the internet’s equivalent of being a commission-only sales person.
That’s the simple answer – you get paid an affiliate commission for each sale generated as a result of a visitor you send.
It would be difficult to employ tens, hundreds or even thousands of people to potentially sell a product so affiliate marketing provides a solution.
Software handles all the complicated behind the scenes work – we’ll take a look at that as we go.
Each affiliate is given a unique way to identify themselves.
This varies according to the software that is behind the affiliate program.
It could be:
- A number
- Letters or a word
- A mix of letters and numbers
Those may or may not be meaningful.
Some of the affiliate programs I’m a member of, my “ID” is trevor (my first name) – because I chose to use that and because there were no other Trevor’s promoting the product, so my name was available.
In other programs, my name had been taken so I added my house number to the end (much like people add their year of birth to their email addresses to be able to get a unique address).
In other programs, I was assigned a numeric ID that was one higher than the previous person who’d been assigned an ID. That keeps the programming simple but makes the ID less meaningful.
Then – again depending on the software that’s running the affiliate program – I get a special link that allows the clicks that I send to be tracked.
These links often look quite ugly because they’re designed to make sense to a computer and are designed to be unravelled by the computer so that the tracking can take place.
This is one of the nicer looking links:
You can see that it uses my name in the link.
And at the end there’s a section that allows me to track where the clicks and sales came from when they reach the affiliate software – not all programs offer that but it can be quite nice if they do, so long as you don’t spend all day poring over stats. That’s the bit that says ‘t’ (for tracking) and then ‘afm’ which is my choice of letters so that I know it’s come from this site.
When a sale is made, a commission is put aside for the affiliate.
Sometimes there is a commission when someone just enters their details (called a “lead”) on the site. That varies between sites.
The commission you’re paid as an affiliate varies.
The price paid by the customer is the same whether they arrive at the site via an affiliate link or not.
For the site above, I get paid 60% of the amount the customer pays as my commission.
I also get a 5% commission for any sales made by affiliates who join the program via that link. Not something that’s offered by lots of programs but useful if an active affiliate (one who actually makes sales) joins the program that way.
Commissions vary a lot.
Anything from a few percent (typical on programs like Amazon where there are actual, real, physical products involved) through to 100% of the initial sale price.
Sometimes even more than 100% – some product launches do this because they know that they can make money from the customers generated over the coming months and years.
Some affiliate programs pay a recurring commission for as long as the customer you introduce as an affiliate stays a customer.
Others only pay for the initial sale.
Others track the customer and pay out on subsequent purchases as well as the initial one.
All those options (and more variants) can happen depending on how the affiliate program is set up.
But they all boil down to you getting something – usually money – for introducing a new buyer to the company.
You might ask yourself why a company would do this?
Again, it’s a simple answer.
Unless the company has a massive budget they can’t hope to reach every possible buyer.
Paying an affiliate a commission is very similar to paying for an advertisement with the added advantage that the payment is only made if a sale is made (or sometimes if a lead is generated).
So it’s win-win.
The affiliate gets a commission.
The company pays that commission but only if the affiliate generates something they consider worth paying for – usually a sale or maybe a potential sale when someone joins their email list.
Anything else doesn’t cost the company anything apart from a small amount of bandwidth to their host, the same as if Google had sent a visitor.
For the company, there’s no real risk. It’s not like placing an advert and hoping that the advert will attract paying customers.
They know that the affiliate has attracted a paying customer when the customer actually pays for something.
It’s very simple, very elegant and very workable.
If you’d like to find out more about affiliate marketing, take a look at this page.