Understanding how affiliate marketing works is the first step to success; however, it’s a step that many people skip in the hopes of fast profits. However, profits only come from understanding and learning, and in this article, we’ll teach you the basics.
How Does Affiliate Marketing Work?
Affiliate marketing involves sharing marketing responsibilities across several parties and utilizing their abilities to create effective strategies and generate profits.
There are 4 key players in the affiliate marketing process. These are:
- Advertisers
- Affiliate Networks
- Affiliates/Publishers
- Consumers
Here’s a quick overview of the role of each of these parties.
1. Advertisers
The name advertiser in affiliate marketing is a bit of a misnomer, as they are not the ones who do the advertising. Instead, advertisers are the product owners. They have goods and services to sell, and they need people who can sell them.
Advertisers come in all shapes and sizes, but their key role is to develop an offer that people want. The better the product, the more people are happy with it. The happier people are, the bigger the potential profits for the other parties.
2. Affiliate Networks
Affiliate networks are the middle-man between advertisers and affiliates. It’s the network’s job to find advertisers with great products and affiliates who can advertise them.
Affiliate networks have a lot of responsibility as they need to ensure that both advertisers and affiliates are getting a good deal. Advertisers don’t want to pay money for bad leads, and they don’t want to pay too much for good ones. Similarly, affiliates don’t want to spend money on traffic that doesn’t convert when people reach the offer, and they don’t want to be underpaid when customers convert.
3. Affiliates
Affiliates are the ones who advertise online. They often specialize in specific traffic sources such as blogs, native or social media. They will have built up an audience of people interested in the offers they are promoting and can provide advertisers with high-quality traffic.
4. Consumers
Consumers are the people who buy the products or services. They are the unwitting final party, but they are also the most important. It’s their job to be interested in what is being advertised, get through an affiliate’s funnel, and land on the advertisers’ offer page. If everything comes together, they will do this quickly and effectively, and all parties involved will benefit.
How Do Affiliate Marketers Get Paid?
There are many different payment models in affiliate marketing, and it’s easy to get confused. However, the basic principle is usually the same.
As previously mentioned, it’s the affiliates job to advertise to potential consumers and get them to follow their links to the advertiser’s page. If they then complete the necessary actions there, then the affiliate will earn a commission.
In short, for every person that commits to a predetermined action after an affiliate guides them to an offer page, the affiliate will earn a commission. For example, a person sees an affiliate’s ad on Facebook, and they click it to get more information. They are taken to a pre-lander, which tells them how incredible the offer is. The visitor likes what they see and click to go to the offer page, where they then purchase the product. This purchase is then counted as a conversion, and the affiliate earns a commission.
All of the links that the customer uses are tracked, and data is sent from those clicks to the affiliates tracking platform. All of the clicks on the advertiser’s offer are then attributed to the affiliate who guided them there.
The goal of affiliate marketing is to earn more in commissions from conversions than you spend on advertising.
Not all offers have the same payouts, and often the higher the payout, the more difficult it is to get a conversion. It’s also important to note that there are many different conversion events, and it’s essential to know which event you are getting paid for. Some offers you will get paid every time someone purchases a product. Others you will get paid every time someone signs up for a service or simply leaves their details. Generally speaking, the more steps required, the better the lead and the higher the payout.
The Bottom Line
Affiliate Marketing is a varied industry, and you can approach it in many different ways. The ultimate goal is obviously to be profitable but to do this, it’s essential to look at long-term prospects rather than hoping for overnight success. Of course, there will be good days and bad days, but it’s necessary to learn and adapt to new audiences in growing markets constantly.