There are a thousand and one ways to earn money online. From freelancing to website building to internet marketing, millions of people are able to successfully work virtually and develop part or full time businesses.
In this post I’ll be talking about the basics of how to earn money with affiliate marketing. If you haven’t seen the Intro to Affiliate Marketing article I suggest you start there first.
What Is An Affiliate?
Affiliate marketing is a branch of the lead generation industry. An affiliate is an individual, company, or website that earns money in exchange for sending potential customers (also known as referrals or leads) to another company’s website, with the aim of selling products.
In the “traditional” lead generation process, a marketer will source, or qualify, leads for a third party company. The company, will then buy the leads from the marketer in order to run a campaign. One example of this online is when a company buys an email list targeted to a specific demographic.
Affiliates, however, are not paid directly for providing the leads, but are paid only when a referral “converts” by paying for a product. In return, the affiliate receives a percentage of the sale price.
Advantages and Disadvantages
Like any business model, there are both advantages and disadvantages of this structure.
- High commission rates. Because online services and products usually have a very high margin with low fixed costs, businesses can afford to pay a significant percentage of sales (50% commission is not uncommon) to people who provide the traffic.
- No need to collect customer information. Unlike other methods of lead generation, affiliates have no obligation to collect customer information, which makes the flow of control of a user (eg: how to channel a user to a partner site) easier to manage.
- Easy to track. Affiliate technology is now very well-refined, making the entire tracking and payment process extremely easy to integrate into a site. Anyone with a traffic-generating website can sign up to become an affiliate.
- A customer must make a purchase. Many online advertisers offer payment based on cost-per-click or cost-per-impression, regardless of whether the customer makes a purchase. Affiliates only earn when a user actually buys a product, so there is no guarantee of revenue at any stage.
- Commission rates vary widely. This can lead to uneven revenue stream and a need to choose partners carefully. Physical products tend to have lower commissions (in the 2-8% range) while online information products with little overhead offer significantly more (50% and up!).
- Generating traffic takes time. You should view your affiliate site as you would any other business. The site takes time to cultivate into a profitable enterprise, and even though the risk is fairly low, there are no guarantees.
I am a firm believer that online businesses should come naturally based on your interests, experiences, and hobbies. The fastest way to fail is to start building a business designed solely for the purpose of making money.
The first step to getting started is to keep browsing this site! For more information you should see my articles on how to learn affiliate marketing, the best things to sell online or the top affiliate programs beginners need to know about.
As always, let me know if you have any questions and best of luck getting started earning money online!