Affiliate marketing is an online marketing advertising channel that puts merchants in charge of an online marketing sales force. In simple words, affiliate marketing involves referring a product or service by sharing it on a blog, social media platforms, or website. The affiliate earns a commission each time someone makes a purchase through the unique link associated with their recommendation.
Roles in Affiliate Marketing
- Merchants (Advertiser)
If you have a company and website, and you sell a product or service, you are a merchant. The merchants are the companies that sell a product and/or service, and they are the ones that pay affiliates for their marketing campaigns.
- Affiliates (Publisher)
Affiliates are the website owners who allow a merchant to advertise on their site or blogs, respectively. They are the one who get paid whenever an ad performs, so it is in their best interest to have merchants with which they have an affiliate partnership.
- The Affiliate Network
An Affiliate Network handles all tracking, reporting and payment to affiliates. It allows affiliates to find merchants which are suitable for their site.
It is a win-win situation for both affiliates and merchants.
Affiliate Marketing Process
Affiliate marketing is a transaction on a commission basis.
- A website owner (e.g. a blogger) provides advertising space on his website (website owner: PUBLISHER/AFFILIATE).
- The website owner offers this space to a company (or an organization) who wants to sell products or services (company: MERCHANT/ADVERTISER).
- By placing the links of the partners on their webpages they pass on the traffic to the advertiser‘s webpage.
Some companies have a huge affiliate network at their disposal which guarantees them a constant flow of traffic.
How Does Affiliate Marketing Works?
- Find and join an affiliate program
- Choose which offers to promote
- Obtain a unique affiliate link for each offer
- Share those links on your blogs, social media platforms, or website
- Collect a commission anytime someone uses your links to make a purchase.
Pros of the Affiliate Marketing
- Zero/Minimal Investment – You can run your business almost with free of cost using different blogging sites. You just need to promote products.
- Learning through earning – Affiliate marketing also can generate relatively passive income through commission, the ideal money-making scenario. Though initially you’ll have to invest time creating traffic sources, your affiliate links can continue to deliver a steady paycheck.
- Work From Anywhere – One of the reason why affiliating marketing is booming on the internet is because you can run your business from anywhere in the world. You just need to have a laptop and internet connection to run your business.
Cons of Affiliating Marketing
- Commission Based Payment – Companies largely paid the cost per click (traffic) on banner advertisements. As technology evolved, the focus turned to commissions on actual sales or qualified leads. Though there are still ads for the visitors to click on, affiliate programs usually only pay when a purchase takes place.
- The early affiliate marketing programs were vulnerable to fraud because clicks could be generated by software, as could impressions.
- No Guarantee of Revenue – Pay-per-performance can be a tremendous opportunity as well as a significant risk. No one promises that working as an affiliate marketer will be easy and that you are going to earn the expected revenue right away. It’s a challenge you have to face and put all your efforts into maximizing the opportunity, but all in all, it’s difficult to predict how much money you will make on it in the end.