What is Affiliate Marketing? A Beginner’s Guide

If you follow a lot of bloggers or other business owners, you’ve undoubtedly seen one business promoting another business’ products or services.  But why? Do they just love the other business that much that they want to recommend it to all their followers?

Maybe… But more than likely there’s an affiliate relationship going on.

An affiliate marketing relationship is when one business or brand promotes another and receives a commission or fee as the result of any sales. And it can be a great way for a business to add a new revenue stream — without creating new products or services.

If affiliate marketing is something you’ve been wondering about (or even if you’ve never heard of it before today!), this post will give you the basics that you need to understand how affiliate marketing partnerships work, and what the benefits and drawbacks might be for you and your business.

To get started, I’ve created an Affiliate Program Tracking Sheet that will help you research, compare, and track any affiliate marketing programs you decide to join. Click here to grab it now.

What is affiliate marketing?

In its simplest form, affiliate marketing is when you, a business owner, recommend that your audience purchase a product or service from another business, and then receive a commission or fee when one of your audience members makes a purchase.

In today’s digital world, clicks and purchases are often tracked with unique URLs, cookies, or even coupon codes that allow the merchant business to track which of its affiliate partners is ultimately responsible for a sale and then pay them accordingly.

You’ve likely seen this in action when your favorite food blogger recommends the kind of cookware she uses — and includes a link to buy it on Amazon. If you use her link to click through and purchase those pots and pans, Amazon will pay her a small commission on the sale.

Likewise, you may have noticed when I send out emails occasionally about courses and products that my friends and colleagues are offering that I believe in. If you click on my unique link and then buy my friend’s course, I may receive a percentage commission on the sale.

It’s different from advertising. With advertising, the business displaying the ad is usually paid a flat rate or paid based on the number of impressions (views) the ad gets. With affiliate marketing, the business is usually based on the number of leads (clicks) or completed sales.

Who is affiliate marketing good for?

Affiliate marketing can be a good option to add a new revenue stream to your business regardless of what you actually do or sell.

For example, if you are a health coach, you may offer people ongoing coaching and diet plans to help resolve their health issues. But you may have certain products — like a particular water bottle, meal prep tools, or a scale — that you don’t make but use yourself and recommend to your clients. You may also have services that you recommend — like an app for tracking food intake or symptoms, or a workout program.

Each of these other products and services that you don’t make or offer could be an opportunity for you to make an affiliate commission. More than 80 percent of brands offer affiliate marketing opportunities, so that water bottle manufacturer or food tracking app may already have an affiliate program you can sign up for. Then it’s simply a matter of using your custom link or code whenever you recommend those things to a client, and you could be earning a commission.

The focus isn’t actually on the products; it’s on providing your customers helpful product and service recommendations that will help them get better results — and being compensated by the brands to do so.

There are literally thousands of affiliate marketing opportunities. No matter what your business or your niche, you can almost certainly find complimentary affiliate opportunities to promote to your audience.

How does affiliate marketing work?

Let’s say you’ve identified a product or service you want to recommend to your clients.  The first step is to find out if the merchant, or the business selling the product or service, already has an affiliate program set up.

If they do, you can apply to become an affiliate, or, in essence, a sales person for their product or service. Often their affiliate program is managed through an affiliate network, a digital platform that helps the merchant organize and manage their affiliate links and sales. Clickbank is one of the biggest affiliate networks.

Once you have applied and been accepted to an affiliate program, you will be assigned a unique affiliate link, a URL that is unique only to you which includes the tracking information the merchant needs to track your sales.

You’ll also be able to see some important information about the affiliate program, including the commission rate, or how much the merchant pays for each sale you send their way. Commission rates can vary widely from single digit percentages to as much as 50% for some digital products.

You may also be able to view your statistics and data through the affiliate network website, including your click thru rate (CTR), or the number of people who clicked on your link divided by the number of people who saw the link (called an impression); your average order value, or the average amount someone spends when they use one of your links; and your conversion rate, or the percentage of people who actually make a purchase.

Depending on the program, you may also be able to see how your sales are doing compared to other affiliates. This is called a leaderboard. Some merchants will offer prizes to their top affiliates during a big launch.

Once you have your unique link, you can promote it anywhere you like: on your website, blog, social media channels, email, etc. When someone from your audience clicks on the link, the affiliate network tracks them and attributes their purchase to your account. Then the merchant tallies your commissions and sends a payout.

How can you find the best affiliate marketing opportunities?

There are businesses out there who simply sign up for affiliate networks, like Clickbank, and troll around looking for what they think are the best opportunities — promoting different products and services based on their expected payout instead of any loyalty to the brand.

To me, that is little better than spamming your audience.

Instead, I recommend you carefully consider which products and services you already use and recommend to your friends and colleagues and find out if those brands offer affiliate programs. Recommending and marketing products you already believe in is much easier than trying to sell something with which you have no experience and for which you have no passion.

Remember: when you recommend a product or service, you are trading on your own brand reputation. Best to only back things you truly recommend and can stand behind so that your audience knows they can trust you and the brands you support.

The best way to start researching affiliate marketing opportunities is to download my Affiliate Marketing Tracking Sheet; it will help you organize the information and make an informed choice about which affiliate programs to join that will be best for you, your business, and your customers.


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