What is Affiliate Marketing & How Can It Make Me Money?

There are a lot of different definitions that people will give you if you were to ask: What is Affiliate Marketing? However, all of these definitions come down to basically the same thing. Affiliate marketing is a large and growing sector of the internet business world. It is an agreement between someone selling product (the merchant) and website owners who agree to advertise that product (affiliates). Affiliate marketing has proven itself as a cost effective way to increase sales and is popular with people who want to use their websites to make a little extra income. People take up the business of affiliate marketing every day but often fail due to not really understanding the business.

One thing which is a common misconception about affiliate marketing is that it involves selling – while selling is something which is a part of affiliate marketing, it is not as if affiliates need to get out there and sell as if they were on a used car lot. Another is that it is a kind of advertising business. While there is indeed advertising involved as well, there is more to the business than this.

Affiliates are paid for each visitor, customer and/or subscriber referred to the merchant through their marketing work.  This compensation is usually a per-visit or per-purchase commission. For merchants, this is a cost effective way to advertise, since the affiliate need not be paid until they bring in the desired results.

Generally, affiliate marketing programs are operated by affiliate networks, which are comprised of group merchants and group affiliates. Each has their own role to play in the business, with the network acting as an intermediary, making sure that the merchant’s ad campaigns are delivered and the affiliate’s commissions are paid.

Merchants may be any website owner who has a product or service to sell and wants to gain the advantages offered by performance based marketing strategies. The merchant must start up the affiliate program and look into prospective affiliates to see if their sites would be a good fit for the business. Finding a website with relevant content can make more sales for a merchant. The merchant will also provide affiliates with banner ads which will attract the interest of visitors without detracting from the content on the affiliate’s website. The merchant must also determine how much they will pay affiliates per sale.

The affiliate also gets a lot of benefit. The affiliate is generally also a site owner who agrees to promote one or more merchant products through their affiliate program. For the affiliate who is willing to put in the necessary work, affiliate marketing can produce a full time income. Affiliates have to seek out products and services which will appeal to their existing audience. For example, if a site’s readership is largely birdwatchers, then an affiliate program promoting binoculars would be a good fit.

Affiliate marketing can be a great thing for merchant and affiliate alike. When they work together, they can both benefit greatly from the situation. It is a sensible, easy and cost effective way for the merchant to increase their sales and affiliates to make extra money. It’s easy to begin; you can be up and running as an affiliate and start earning commissions within a matter of days. There is just one thing which an affiliate must do – drive traffic to your site and stand out form the competition by offering better content to readers.

29 Comments

  • Jussi Koiranen

    Reply Reply November 18, 2008

    Great round up of the subject. Affiliate marketing is a great way to monetize your passions, your special talents, which otherwise could go without real value, as true the net you can reach millions after millions of people looking for info, service or products in a certain niche.

  • David

    Reply Reply November 18, 2008

    Very good overview of Affiliate Marketing. I have been in Network Marketing for over 10 years and just in the last year started Affiliate Marketing – in my opinion they make great combo!

  • Robert (sec)

    Reply Reply November 18, 2008

    I would say that you are right ‘on the mark’ with this blog submission. I can see how it would be a great income opportunity especially for those with a product to sell. Instead of having a product, building a website, and then looking for customers, I did it ‘bass ackwords’ if you get my drift. I built a website to have a place to put a chat room and over the years, I’ve been trying to get into affiliate marketing. So far I have been unsuccessful; but, as noted above, I plan to succeed with a little work and from learning from others (like Reed). Thank You for your great guidance!

  • Mike Robertson

    Reply Reply November 18, 2008

    Another informative post with valuable content.
    I look forward to reading more from you in the near future

  • Luca - Profit Lance

    Reply Reply November 18, 2008

    Affiliate Marketing is a great way to learm Internet Marketing. You can first promote affiiate products with article markting, ppc and on forums and then work your way to creating your own product and have others promote it for you.

  • Good points.

    One of the missing elements, however, in most people advertising affiliate products is RELEVANCE. It is totally unnecessary to market a product you KNOW beforehand will never give you any sales.

    Go for products that are RELEVANT for your readers, and which you feel can bring TRUE VALUE for them. As I said in one of my videos on YouTube, the greatest danger is recommending far and wide in manners that resemble spam. Whenever you lose your audience you lose your sales potential.

    Watch the video. It’s free, and can be found over at http://www.youtube.com/watch?v=dTm_ocQeles.

    Thanks for a good blog, Reed. I hope you enjoy the feedback when things come to mind as you write. 🙂

    Henrik Blunck – Denmarks last blog post..Stop Writer’s Block: Use PLR Articles

  • Pat Gunning

    Reply Reply November 19, 2008

    Terrific summary of the affiliate relationship cycle, Reed!

    Typically merchants often ignore their affiliates when they should really be building those relationships. Like any business it is the sales force that feeds the beast and should always have the highest value to the organization.

    Sales people are just another advertising method used by businesses. Many businesses in tough economic times like these decide to cut back on their marketing including cutting their sales force.

    Bad move!

    This is when you put more efforts into your marketing and really get creative! Offer your sales force (affiliates) additional perks, particularly for those high producing gems, you know the ones earning your income!

  • Gimme A Dream

    Reply Reply November 19, 2008

    I’m a relative newbie to the affiliate marketing scene. Thank you for sharing your insights on this business.

  • Larry Johnson

    Reply Reply November 19, 2008

    Reed,
    As always your “spot on”
    It’s nice to have someone to point out the benefits of affiliate marketing.
    It’s That Important!
    It could make a big difference in your bottom line.

  • Ari Lestariono

    Reply Reply November 19, 2008

    Reed one point I would like to stressed on Affiliates Programs for newbies there are hundred even thousands of affiliates, perhaps we should give them advice on how to select the affiliate programs and the credibility on pay out plan, I hate to see newbies get disappointed when they choose wrong affiliates.That’s all

    Ari Lestarionos last blog post..7 Secret Benefits of Tomato as Natural Remedies

  • Timothy Millar

    Reply Reply November 19, 2008

    Hey Reed, Affiliate Marketing is a great way to
    make money online but it is not the easiest,Sure
    does take a lot of knowledge to keep up with the
    Bigboys. Definately investigate the entire setup
    before you jump in so you don’t end up worse off.
    Have a Wonderful Day, Timothy Millar

    Timothy Millars last blog post..Paid to Read update #3 Jacob mails

  • Bryan Hee

    Reply Reply November 19, 2008

    Affiliate marketing is the easiest online business to implement. It’s required minimal capital which is include register domain for opt in page(to build the list), hosting,continuous education and etc..

    To Your Success
    Bryan Hee

  • Sylvia Richards

    Reply Reply November 19, 2008

    A nice overview of affiliate marketing – concise and clearly explained. Being somewhat of a newbie myself, I agree with Ari. It can get quite confusing when you’re not sure of yourself and I, for one, am always grateful for any guidance. I look forward to your next post.
    Sylvia

    Sylvia Richardss last blog post..WHO ARE YOU PART 2

  • normz2

    Reply Reply November 19, 2008

    Good post. Affiliate marketing is a good way to give your customers a bigger spectrum of related products to choose from. I am now trying to group products together. Some merchants are very obliging in giving helpful tools to use. As you get to know them better, their tools become more worth while.

  • Binwal Ahmat

    Reply Reply November 19, 2008

    Your title – What is Affiliate Marketing & How Can It Make Me Money? | Reed Floren – caught my eye on the technorati feed page. I’m not sure that the content of the post actually matches the title though. You sure you’re not writing post titles to get readers, rather than representing the content of the post? 😉

  • Frankie Teo

    Reply Reply November 19, 2008

    Affiliate Marketing is definite a great way to start for newbies initially as you don’t have to go through the technical details of creating your own product.

    You can also search for a mentor on ready-made product with tools & support to kick-off if you’re still wondering how to market Affiliate Products.

    Nice Tips, Reed. Thanks..

    To Everyone Success,
    Frankie
    http://www.fortunewith500creators.com/

  • Alston

    Reply Reply November 19, 2008

    Thanks for bringing out the fact that it’s a win-win scenario and has promise for good potential in a few days for the right persons.
    Good insight!

    Alstons last blog post..2004 Scion xA Repair Manuals Volumes 1 & 2

  • Lena Khalid

    Reply Reply November 19, 2008

    Hi Reed,

    Great input and info. Affiliate marketing is a great way to earn online.

    Regards,
    Lena Khalid

    Lena Khalids last blog post..10 Blogging "Traffic" Tips

  • Richard

    Reply Reply November 19, 2008

    Another very informative post Reed. Anyone new to internet marketing (or struggling to achieve success) is missing a trick if they are not a regular reader here.
    Richard’s recent post:http://www.moneymaker4u.com/wordpress/2008/11/18/this-is-how-you-create-free-traffic/

  • Geoff Dodd

    Reply Reply November 19, 2008

    Reed, neat overview of affiliate marketing. You can tell a good affiliate program because it’s f-ree. Alarm bells go off for me when you have a high entry charge to an Aff-program. I’ve made hundreds of thousands from ‘no-cost’ paid for performance programs. Commission selling.

    Geoff Dodd
    Australia

  • Anna Kindler

    Reply Reply November 19, 2008

    Mornin’Reed, Thank you for another infomative read. I thank you for writing where someone like this granne newbie can understand affiliate marketing a little better. I am a slow learner, but with your simple explinations about topics, I am learning the important terms and words to make my decisions about affiliate marketing. Thanks Granne Anna

  • Jerry Goodwin

    Reply Reply November 19, 2008

    Hi Reed,

    As usuual your post is rigt on the Mark. I do some affiliate marketing and once I start developing my own produucts I will definitely be setting up an affilliate program of my own or using something like clickbank to get people selling for me.

    Great Post, fantastic information. Thank you for sharing this.

  • Paul Livingston

    Reply Reply November 19, 2008

    Great post as always Reed. Thanks.

    One thing many affiliates overlook is getting *targeted* leads. People already interested in their product.

    It’s much easier to sell to people who have already identified a need than it is to convince people they have a need.

    Paul Livingstons last blog post..Wow, 34 Targeted Leads in 18 Seconds!

  • Wayne Bell

    Reply Reply November 19, 2008

    Another great post Reed. My wife and I managed to turn a hobby into a full time Work At Home career through Affiliate Marketing.

    Regards – Wayne

    Health, Happiness And Success
    Wayne & Susan Bell
    http://bellshomeprofitnetwork.synthasite.com/

  • Christine Imamshah

    Reply Reply November 19, 2008

    Nice summary of Affiliate Marketing. It is definitely one of the easiest ways for a newbie to get their feet wet in internet marketing. It’s an ideal way to learn while you earn and then graduate up to creating your own product to sell through your own affiliate program.

    Having been an affiliate you will then know how best to support yours with marketing tools etc.

    Thanks,
    Chris
    http://www.fastinternetmarketingtips.com

  • Jean Qld

    Reply Reply November 20, 2008

    Hello Reed, I would like to try affiliate marketing, but the traffic part is giving me a lot of headaches, as I cannot afford PPC.

  • PV Reymond

    Reply Reply November 21, 2008

    Hi Reed,

    Affiliate marketing is a good way to get started, learn the ropes and make some money.

    You clarified some good points here.

    Thanks,
    ^PV Reymond

    http://www.startup-internetbusiness.com

  • Dora Kok

    Reply Reply November 22, 2008

    Affiliate Marketing is a cheap and easy way to start an online business esp. for newbies. You don’t necessarily need to have a website so you don’t have to pay for hosting.

    Reed, your article is very informative and interesting.

  • admin

    Reply Reply November 26, 2008

    @Jussi thanks agreed

    @David they can be a nice combo but I prefer affiliate marketing hands down

    @Robert I did the same thing on one of my sites wasn’t very profitable

    @Mike thanks glad to hear

    @Luca that you can

    @Henrik great tip

    @Pat Agreed you can really make a lot of changes and improve your business in a downturn

    @Gimme you’re welcome

    @Larry thank you

    @Ari yes a few others posts on this blog have covered that thanks

    @Timothy what’s been the easiest for you?

    @Bryan agreed

    @Sylvia keep coming back and it’ll come together

    @normz2 tools or custom emails written for you can really help

    @Binwhal I thought the title summed it up but thanks for your feedback, what title would you choose?

    @Frankie yes a mentor is great. I offer a mentoring program if anyone here needs it http://thejvbootcamp.com/

    @Alston you’re welcome

    @Lena that it is

    @Richard thanks

    @Geoff agreed stay away from those who charge for that. The only ones I’d consider paying for are the closed door ones where you have to be a customer of the actual product.

    @Anna you’re welcome

    @Jerry you’re welcome

    @Paul agreed you need to have people who are interested in your products and services in order to make any money

    @Wayne congratulations!

    @Chris agreed

    @Jean keep coming back here for traffic tips. I would recommend looking into joint ventures and list building

    @PV thanks

    @Dora agreed thanks.

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