You’ve probably heard of affiliate marketing, but maybe you’re not quite sure what it is or how it works.
Affiliate marketing is when a business pays a commission to other people for referring customers. There are thousands and perhaps hundreds of thousands of different affiliate programs online. You’ve probably clicked on affiliate links without even realizing it.
For example, suppose you’re reading an article that mentions a particular book and the book title is linked to an Amazon sales page. Chances are the owner of the website is signed up for the Amazon affiliate program and has inserted their “affiliate code” in that link. If you end up buying something from Amazon within a day or so of clicking their affiliate link, they will get a commission from Amazon.
Here’s another example: if you happen to be reading my article How to Use AudioAcrobat to Record Conference Calls and Teleclasses, you might decide to click on one of the links that bring you to the AudioAcrobat website. If you subsequently decide to sign up for the AudioAcrobat service, I get a 33% commission every month for as long as you remain an AudioAcrobat customer. I currently have about 40 people who signed up for AudioAcrobat under my affiliate link, which translates to about $300 a month in commissions. Not bad for one article!
I also get commissions each month from Amazon, but the amounts tend to be small. In contrast to AudioAcrobat’s 33% recurring commission, Amazon’s typical commission rate is 5% – 7%.
Besides Amazon, another big player in online affiliate marketing is Clickbank, which provides a marketplace for information products. Here’s how Clickbank works: say you write an ebook or course. You can list your product at Clickbank, and then other people can get a commission (often 50% or more) by referring buyers to your product. Conversely, even if you don’t have a product, you can promote other people’s products and get the commission.
In order for affiliate marketing to work there are really only three things needed: 1) someone with something to sell (the seller or merchant); 2) someone else who promotes that product and collects a commission (the affiliate), and 3) a way for person #1 and person #2 to connect.
There are a couple of ways that person #1 and person #2 can connect. Sometimes it’s done directly: the seller has a form on their website that says “sign up for my affiliate program” (see an example here on my how to write a bio website). Another way for sellers and affiliates to get together is through what’s called an “affiliate network”.
An affiliate network is sort of a broker or middleman between sellers and affiliates. Clickbank is one well-known affiliate network; another is Commission Junction.
Normally an affiliate network will list hundreds or even thousands of products for sale, from many different sellers. The affiliate signs up for the affiliate network (normally this is free, but there can be some conditions such as having your own website or proving that you have a track record in affiliate sales) and then can choose from the different products offered by all the sellers. One advantage to both sellers and affiliates of using an affiliate network is that the affiliate network looks after all the administration and payments to affiliates.
Affiliate marketing is not a new phenomenon (think of door-to-door sales companies such as Avon or Regal), but it has really exploded since the Internet has been around. Prior to the Internet, it was much more difficult for sellers and affiliates to connect with one another. And customers were far less likely to to access products that were being sold through an affiliate arrangement. The Internet changed the game because it makes it easier for all three parties.