How Does Affiliate Marketing Work?

Affiliate marketing is an Internet-based system where you (as an affiliate) get paid for referring sales or customers to another business.

There are many different ways you can earn money from being an affiliate marketer, including commission-based affiliate programs and AdSense. Here are some fictional examples of these:

Commission Based Affiliate Programs

Geoff has a website full of dog-training advice; on the side of his pages he has placed an ad for a dog-training eBook. If any of his visitors click on his ad and buy the eBook from the merchant's website, Geoff receives 75% of the price of the book as commission for sending the visitor to the merchant.

 

Marnie runs a very popular newsletter for people who want to learn yoga. She regularly sends out lessons and tips to her list members, and occasionally she promotes products that offer affiliate commissions. Whenever somebody from her newsletter list clicks on a link in her emails and buys one of the various products she's promoted she earns a percentage of the product price.

  

AdSense 

Tara has a health supplements website containing lots of useful information about various health supplements. By pasting a small segment of code into her website she gets ads relevant to her content automatically showing up on her page. She earns money every time a visitor to her site clicks on one of these ads, even if they don't end up buying from the merchant.

 

Affiliate marketing can be a very lucrative business. There are a huge number of affiliates earning full-time incomes from affiliate marketing, and a lot of affiliates doing considerably more than that! Take a look at these figures...

This is real money, and real people just like you are earning it. So let's take a look at what affiliate marketing is...

Affiliate Marketing Is....

…Pay-for-performance. You only earn money as an affiliate if you're producing results for the merchant of a product or network such as Google, whether it's from sales, clicks or registrations.

…Big business! Affiliates worldwide collectively earn billions of dollars each year. One report estimated that affiliates in the UK alone earned over 2 billion dollars in 2006. Of course within that there are affiliates turning over millions of dollars a year, affiliates who scrape by earning $20/week and everything in between.

…A long established business model. Affiliate marketing has been around since people realized the Internet could be used for commerce. One of the earliest big affiliate programs was started by Amazon.com in 1996 (although, just quietly, their commissions aren't anything to write home about!)

…Internet-based. You can promote yourself or your website using offline methods, but when it comes to earning commissions, all the tracking and processing is done through the Internet. There's no door-to-door selling here!

…Open to anyone. You don't need any special credentials to be an affiliate. Since affiliate marketing is pay-for-performance, most affiliate programs are open to anyone, regardless of whether you're experienced or a complete novice. You also don't need to be a computer genius to be a successful affiliate - everyone goes through the same learning process.; it really only comes down to whether you can fight your way through to the other side!

Now that we've seen what affiliate marketing IS, here's what affiliate marketing is NOT:

Affiliate Marketing is Not...

…Creating and selling your own product. Creating your own product is a different business that requires a lot more risk than affiliate marketing. When you create a product you invest money in creating the product, marketing the product, handling payments and delivery, providing customer support and ongoing development. An affiliate is simply responsible for sending prospects to a merchant - a much less daunting task!

That said, product owners can learn a lot by being affiliates first, and a lot of affiliates go on to build their own products later in their careers.

...Earning $14,000 overnight just by uploading this one website and script (which you can buy here for $49.95 $29.95 for the next ten minutes only!) There are a lot of websites out there that will tell you that THEY have the secret formula.,THEY can tell you secrets that the experts don't want you to know, THEY can give you all the information you need to start your lifestyle of cars, boats, houses and giant wads of cash stacked on the table and THEY can back it up with screens and screens of testimonials from very satisfied and very rich customers. THEY will deliver you the world, at an absolute bargain price.

Here's the real scoop, the information that the "experts" REALLY don't want you to know, and I'll give it to you for free: there are no magic overnight success formulas. Certainly, there are people doing very well out of affiliate marketing: they've been working hard for a long time, they've made some good decisions and they deserve every success. Sure, there are campaigns that might turn over huge amounts of money in one day: they will have been planned for months in advance by very clever people with a lot of experience in making a lot of money.

The reality of affiliate marketing is that you need to spend time learning the ropes and, after that,  spend time implementing what you've learned. You need to make a lot of mistakes and spend a lot of time anguishing over why you're making no sales. Then you WILL start making a few sales, and it will grow from there.

There are people and websites who can help you along the way (I personally recommend www.affilorama.com/premium), but no one has the ultimate, definitive solution.

There are occasionally good pieces of software developed that can also speed things up, but there's nothing that will automate everything for you. You'll still need to know what you're doing, and you'll still need to work; The gold-rush days where you could just rock into affiliate-town one day and strike it rich the next are steadily diminishing, if not gone altogether. Anyone who tells you different is (obviously!) selling something.