How Does Affiliate Marketing Work?

Posted 12.06.2020

By Luke Pickering

Simply put affiliate marketing is the idea of promoting someone else’s product and in return, you earn a commission if people make a purchase due to your marketing. It’s all to do with revenue sharing. It’s similar to doing sponsorships however doing it this way it allows you to not overpay for the marketing. You’re only ever paying out a portion when someone buys one of your products. There are two sides to affiliate marketing, you have the seller and you have the affiliate marketer. Through this blog post, we’ll be talking about both perspectives and how you can use it to make more money either as an individual or a business.

The Seller

Setting up affiliate marketing can be a great way to grow the size of your business. You are getting free advertising and only having to pay out if someone makes a purchase through the affiliate link. So how do you set it up?

You will first need to create a system where users can come over and sign up to be a part of your affiliate programme, this could be an email or a form. You then provide your affiliates with t links or images that when a user clicks on them and makes a sale it tells you that they were referred from a certain place. For your business, you can work out a pay-out strategy and what percentage you are going to pay per transaction. Companies like Amazon have a good affiliate marketing scheme that anyone can get involved with and they can pay out anywhere from 1% to 12% per purchase made but you tend to make more money the more you sell. It all depends on what your business sells and what margin you make on it in the first place then you can decide what percentage you can afford to pay to your affiliates. It’s important to remember though you need to make your affiliate scheme appealing, you need to make it worth their while to get involved. 

If you set up your affiliate marketing scheme properly and effectively you can expect to see a big increase in your sales. But it has more positives than just a sales boost. You can likely expect an improvement in the traffic to your site and it will likely improve your brand awareness as a whole.

The Affiliate

Who should you choose to be an affiliate marketer for? And how should you market it? These are very common questions when deciding to get involved in affiliate marketing. The big one is to make sure whatever the products you’re choosing to advertise you’re knowledgeable and passionate about them. If you have no passion to sell them then it’s likely you’re not going to perform as well as you could. If you’re looking for the best businesses to be an affiliate for, I recommend reading this article. But in general, if you’re looking for the best businesses to be an affiliate for in general it’s usually subscription-based services. In particular cloud-based companies who offer extra storage. This is because usually if you’re using a company like this you’re going to be paying month after month and it’s going to make them a lot of profit in the long run. For example, boxcryptor who are a cloud-based storage business offers a 25% commission and there’s some that go higher. But this means if you make one sale on their lowest plan you’ll make $12, but if you market it to a business you could comfortably make way over $1,000. But how do you market it? Well, there a number of ways you are able to advertise what you’re trying to sell:

  • Social media
  • Blog posts
  • Business meetings
  • Phone calls

Obviously some methods work better than others, but for a small individual level advertising on social media is a great way as you can reach big audiences and people are able to trust as they are able to see who they are buying the product from. Blog posts are a great place to advertise to people who are likely going to be interested in your product. Say you’re part of Amazon’s scheme and you’re trying to sell Women’s Clothes a fashion blog post could be a brilliant place to advertise the products you’re trying to sell. Then if you’re looking to step your game up and instead go for bigger sales it could be worth finding a product that you can approach a business with. If you can get an entire business to come on board with what your selling likelihood is you’re going to get a better commission rate.

Overall affiliate marketing is a brilliant way to make money for both individuals and businesses. As Bo Bennett said, “Affiliate marketing has made businesses millions and ordinary people millionaires.” It’s something that’s definitely worth getting involved in if you have the time and the drive.

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