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Sales Strategy
What is Affiliate Marketing? Everything you Need to Know
Liucija Adomaite
August 20, 2024
|
7 min. read
Liucija Adomaite
LAST UPDATED
August 30, 2024
READING TIME
7 min.
83% of marketers use affiliate marketing to raise their brand recognition, according to Forbes.
No wonder, this industry is booming. And it’s gonna get even bigger.
By 2027, the affiliate marketing industry is expected to reach $48 billion. That also explains why you see affiliate marketing everywhere these days.
If you still don’t know exactly what it is and how it works this article is for you.
We dive deep into everything you need to know about affiliate marketing, as well as how to start your affiliate marketing career and get the most benefits out of it.
What is Affiliate Marketing?
Affiliate marketing is a marketing method that rewards individuals or entities with commissions for promoting a company's products or services through unique tracking links that generate sales, leads, or clicks.
This method is both performance-based and revenue-sharing.
Third-party affiliates promote the company's products or services using unique links and earn a commission for every sale or lead generated through those links.
It's a way for companies to expand their reach and for affiliates to earn money by promoting products they believe in.
An affiliate is often a YouTuber, a blogger, or a social media influencer.
Essentially, affiliates perform online marketing on behalf of a business and drives traffic and conversions.
The affiliate earns a commission (percentage of sales) or gets rewarded by the merchant for every conversion or click, depending on the agreement in affiliate program.
Affiliate marketing brings many benefits to both participating parts, including the merchant (the company or organization that runs an affiliate program) and the individuals who promote them (the affiliate marketers.)
Read more about the main affiliate marketing benefits in our article including its pros and cons, so you know what to expect when becoming an affiliate.
What is an affiliate?
An affiliate is an individual who promotes a company's products or services in exchange for a commission on sales or actions generated through their unique affiliate links.
Affiliates use various channels such as blogs, social media, or email marketing to reach potential customers.
The main benefit for affiliates is the opportunity to earn passive income with minimal upfront investment.
They also have the flexibility to choose the products they believe in and work from anywhere.
However, there is a risk of fluctuating income based on market demand and competition.
Affiliates also rely on the merchant's ability to convert leads and manage payments.
Additionally, there's potential for strict compliance and regulatory issues in certain sectors.
They allow affiliates to have a solid plan and long-lasting goal where they focus on consistently creating quality content and building trust with their audience.
Contrary to common thinking, working as an affiliate takes a lot of time, effort, and dedication.
This is not an easy way to earn money, and it can take years to build an authority to make your followers convert.
How does affiliate marketing work?
The process in affiliate marketing is simple and straightforward: apply, promote, track, and earn.
Affiliate marketing involves three key players: affiliates, merchants, and customers.
Affiliates apply to a program and, once approved, receive unique links to promote the merchant's products or services.
They share these links on their websites or social media, and when customers click on them and make purchases, affiliates earn a commission.
Merchants provide the products, set the program terms, and track sales or conversions.
Sometimes, an affiliate network acts as an intermediary between affiliates and merchants.
If you still wonder how affiliate marketing works and want a more in-depth explanation, read our article that explains it in details.
3 main types of affiliate marketing
There are three main affiliate marketing types: unattached affiliate marketing, involved affiliate marketing, and related affiliate marketing. Here's how they work:
1. Unattached affiliate marketing
Unattached affiliate marketing is a type of affiliate marketing where the affiliate promotes products or services without any direct involvement or personal relationship with the product or audience.
This type of affiliate is a general advertiser or a promoter of a brand, and is not personally involved in it and its niche.
Affiliates operate without building a personal brand or a loyal audience. They often rely on paid advertising methods to promote affiliate links rather than using a blog, social media presence, or email list.
They also focus more on ad placement. The primary strategy involves placing ads (such as Google Ads, Facebook Ads, or other PPC (Pay-Per-Click) advertisements) that drive traffic directly to the company's site or a landing page with affiliate links.
2. Related affiliate marketing
Related affiliate marketing involves promoting products or services that are connected to the affiliate's established niche or area of expertise.
The affiliate usually has a blog, website, or social media presence (LinkedIn, TikTok, Instagram, X, and so on) where they share content related to the products they promote.
This approach is based on the affiliate's existing audience, who trusts their recommendations because they are relevant to their interests.
The affiliate integrates affiliate links naturally within their content, such as blog posts, videos, or social media updates.
Essentially, related affiliate method balances advertising with valuable content, enhancing credibility and boosting conversion rates.
3. Involved affiliate marketing
Involved affiliate marketing is when an affiliate has a deep connection and personal experience with the product or service they promote.
The affiliate uses the product themselves and can provide genuine reviews and testimonials based on their firsthand experience. This creates a high level of trust with their audience, as the recommendations are seen as reliable and authentic.
They often share detailed insights, tutorials, and real-life applications of the product on their blog, social media, or videos. This personal endorsement significantly enhances credibility and can lead to higher conversion rates.
Moreover, many involved affiliate marketers gain a reputation for trustworthy product recommendations. By earning their audience's trust, involved affiliates are able to build a lasting and sustainable affiliate marketing business.
Amazon's affiliate marketing program, known as Amazon Associates, is one of the world's largest affiliate marketing programs. It has the largest market share of affiliate networks, at 46.15%.
Amazon associates earn commission by creating unique product links, promoting the links on their website or social media, and driving referral traffic back to Amazon.
Here's how it works:
Join the Amazon Associates Program by applying online and getting approved to become an affiliate.
Generate unique affiliate links for the products you want to promote using Amazon's dashboard tools.
Share these affiliate links through your website, blog, social media, email newsletters, or any other marketing channels.
When users click your affiliate links and make a purchase on Amazon, the transaction is tracked.
Receive commissions based on the sales generated through your affiliate links, paid out according to Amazon's payment schedule.
Amazon commissions range from 1% to 20% depending on the product category. The highest commission rate of 20% is applied to Amazon games, and the second highest goes to luxury beauty and Amazon explore with 10%.
Other popular B2C affiliate marketing programs include:
B2B affiliate marketing example: lemlist affiliate program
lemlist is the powerful all-in-one outreach tool and sales engagement platform that gets you leads, helps to close deals, and drives revenue.
The lemlist affiliate program is designed to reward existing and future clients for referring new paying customers to lemlist.
As an affiliate, you can earn commissions and other incentives by promoting lemlist through unique referral links provided in the company's Affiliate Partner Media Kit.
Here's how lemlist affiliate program works:
Sign up for the lemlist affiliate program and get approved through a review process
Track your referrals and earnings through a dedicated platform
The more clients you bring in, the bigger the reward you get
You can also get exclusive benefits like co-branding opportunities and feature placements in lemlist's communications
The key benefits of the lemlist affiliate program include the potential for significant revenue growth, the opportunity to strengthen professional relationships, and the ability to establish oneself as a thought leader by recommending a reliable service.
This program is especially suited for content creators, agencies, consultants, and technology reviewers in the B2B space.
When it comes to lemlist commission rates, they range from 10% to more than 20%.
For lemlist standard affiliate partners, the comission offer is 18% on monthly plans, 20% on quarterly plans, and 22% on yearly plans.
Other great software affiliate marketing programs include:
How do you get paid from doing affiliate marketing?
Contrary to some belief, affiliate marketing is legit and it's an excellent business model to earn money, promote goods, and build your personal brand.
The most common ways you get paid as an affiliate are:
Pay-per-sale (PPS) is a payment model in which affiliates earn a commission each time a sale is made through their unique affiliate link. When a customer clicks on the affiliate's link, makes a purchase on the merchant's website, and the sale is verified, the affiliate receives a percentage of the sale amount or a fixed fee. This model incentivizes affiliates to drive actual sales rather than just traffic or leads.
Pay-per-lead is a commission model where affiliates earn money each time they successfully generate a qualified lead for the merchant. A "lead" typically involves the referred customer taking a specific action, such as filling out a form, signing up for a newsletter, registering for a free trial, or providing contact information. The affiliate is compensated based on these completed actions rather than direct sales. This model is particularly useful for businesses looking to build their customer base and gather potential client information, and it benefits affiliates by providing earnings opportunities even if no immediate purchase is made.
Pay-per-click can be a CPA (cost-per-acquisition) model in which an affiliate gets paid each time the seller or retailer acquires a lead, which is when an affiliate link takes the customer to the merchant's online store and take an action, ke filling a form. It can also be an EPC (earnings-per-click) model which means an affiliate earn an average from the agreed amount of clicks for the participating affiliates.
Pay-per-install (PPI) is a model where affiliates earn money each time they successfully get a user to install a software application or mobile app. Specifically, when a customer clicks on the affiliate's unique link and completes the installation process, the affiliate earns a predetermined fee. This model is commonly used by software companies and app developers who want to increase their user base. PPI is particularly effective in promoting apps in niches like mobile games, productivity tools, or any software that relies on user acquisition. It provides a straightforward metric for affiliates to earn commissions based on the number of installations they generate.
Pay-per-signup is a similar model to pay-per-lead but often specifically tied to users signing up for a service, newsletter, webinar, or other similar engagement. It focuses on capturing user registration information.
Pay-per-impression (PPM)or Cost Per Mille (CPM), is a model where advertisers pay a fee for every 1,000 ad impressions, regardless of user clicks.
Pay-per-download (PPD) is a model where affiliates earn a commission each time a user downloads a specific file or digital product, such as an eBook, software, or digital document. This model is common with free trial software or digital content providers.
Lifetime commissions are a model in which affiliates are paid not only for the initial sale but also for any subsequent purchases made by that customer for the lifetime of their relationship with the merchant. This model rewards affiliates for bringing in loyal customers and can result in ongoing passive income.
Two-tier commissions is when affiliates earn commissions not only from their own sales but also from the sales made by other affiliates they refer to the program. This model introduces an additional earning potential by building a network of sub-affiliates, creating a multilayered income stream.
Revenue sharing commission is a model that's similar to lifetime commissions. It means that businesses pay affiliates a portion of the revenue generated from customers they refer. This can include a percentage of ongoing subscription fees or other recurring payments made by the customer.
Some affiliate programs combine multiple commission models to create a hybrid approach to paying their affiliates. For example, an affiliate might earn a small commission for clicks or leads (PPC or PPL) and a larger commission for completed sales (PPS). This incentivises generating initial interest while also focusing on conversions.
Affiliate Marketing vs. Referral Marketing
Referral marketing focuses on leveraging existing customers to recommend a company's products or services to their personal network, often offering rewards like discounts or bonuses for successful referrals.
Affiliate marketing, on the other hand, involves partnering with individuals or organizations (affiliates) who promote the company's offerings to a broader audience, typically in exchange for a commission on resulting sales or leads.
Referral marketing is usually based on personal relationships and trust, often occurring in smaller, close-knit circles.
In contrast, affiliate marketing is more structured and scalable, utilizing various marketing channels to reach a larger, often more diverse, audience.
Frequently Asked Questions
Is affiliate marketing legit?
Yes, affiliate marketing is a legitimate and widely recognized business model. It involves promoting products or services in exchange for a commission on sales or leads generated through unique affiliate links.
Reputable companies like Amazon, Google, and various other brands run affiliate programs, providing transparency and reliability.
However, success in affiliate marketing requires ethical practices, quality content, and compliance with both the affiliate program's terms and legal regulations to ensure credibility and sustainable earnings.
As with any business model, it's important to research and choose trustworthy affiliate programs and networks.
Is affiliate marketing legal?
Yes. However, you have to disclose your affiliate relationship with the company so that your audience is informed that you are receiving a commission on sales.
In the U.S., the Federal Trade Commission (FTC) requires websites with endorsements to include affiliate disclosures.
Some affiliate marketing programs also require affiliate disclosure statements. An affiliate disclosure should be written and displayed clearly and conspicuously.
How do you earn money in affiliate marketing?
In affiliate marketing, you earn money by promoting a company's products or services through unique affiliate links provided to you upon joining an affiliate program.
When someone clicks on your link and makes a purchase or completes a desired action (like signing up for a service), you earn a commission. This commission is typically a percentage of the sale or a fixed fee, depending on the program's terms.
In order to maximize their earnings, affiliates often focus on creating high-quality content, driving targeted traffic, and optimizing their promotional strategies.
Payments are generally tracked and processed through the affiliate program's dashboard, with earnings distributed according to the program's payment schedule.
Is affiliate marketing risky?
No, if you disclose your affiliate relationship with the service or products you promote.
One of the biggest risks of affiliate marketing is violating the laws and regulations that govern online advertising and consumer protection.
No matter the program, affiliates can never make false or misleading claims to their audiences. Maintaining honesty and transparency is crucial in making your affiliate marketing legit and successful.
How to start affiliate marketing?
There's so much information about becoming an affiliate it can be overwhelming.
If you're a rookie in the game, our best advice is to:
Choose your niche and industry that genuinely interests you or where you have a high level of expertise. It doesn't matter how big or small the niche is, there's always an audience for it. As a successful affiliate, you must focus on going into the industry that truly excites you, otherwise you won't be able to give your audience real value, build trust, and lasting reputation. Remember that affiliate marketing is all about reputation you build.
A solid affiliate marketing strategy is something you have to build after identifying your primary niche. That's where understanding your target audience, their pain points, and needs are crucial. Resonating with your followers in a truthful way is how you boost your affiliate marketing efforts and ultimately drive conversions.
How much money can you earn as an affiliate?
According to Glassdoor, the median annual salary of an affiliate marketer across all industries and levels of experience is around $64,000.
Over 57% of affiliate marketers make less than $10,000 a year. Around 16% of affiliate marketers make between $10,000 and $50,000 a year.
Liucija Adomaite
Liucija Adomaite is a viral content writer and organic traffic expert on a mission to help turn ambitious businesses into big names.
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