That’s the dream, right?
Make money while you sleep.
For 99% of people, affiliate marketing is how they get started.
The idea behind it is that you promote other people’s products, often through an affiliate network, earning a commission if people actually end up buying, thanks to your marketing.
It’s based on revenue sharing. If you have a product and want to sell more, you can offer promoters a financial incentive through an affiliate program. If you have no product and want to make money, then you can promote a product that you feel has value and earn an income from it as an affiliate marketer.
The best definition of what affiliate marketing is can be found on Pat Flynn’s Smart Passive Income:
Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make.
However, Wikipedia talks about 4 different parties that are involved: the merchant, the network, the publisher and the customer.
Other definitions talk about 3 parties, instead of 4.
(Image source: CJ)
I will explain all 4 parts in a second. But, when it comes down to the actual marketing, there are 2 sides of an affiliate equation: the product creator and seller and the affiliate marketer.
Therefore, affiliate marketing can be seen as the process of spreading product creation and product marketing across different parties, where each party receives a share of the revenue, according to their contribution.
It’s not just the promotion or just the product creation that define who you are as an affiliate marketer.
You can be both the creator and the marketer and still profit from the underlying idea of sharing revenue.
Now let’s look at all of the parts of a successful affiliate marketing system.
The Merchant: Sometimes also known as the creator, the seller, the brand, the retailer or the vendor. This is the party that creates the product. It can be a big company, like Dyson, who produces vacuum cleaners.
Or, it can be a single individual, like Mariah Coz, who sells online courses to female entrepreneurs.
From solo entrepreneurs to startups to massive Fortune 500 companies, anyone could be the merchant behind an affiliate marketing program. They don’t even have to be actively involved, they just have to have a product to sell.
The Affiliate: This party is sometimes also known as the publisher. Affiliates can also range from single individuals to entire companies. An affiliate marketing business can produce a few hundred dollars in commissions each month or tens of millions of dollars.
It’s where the marketing happens. An affiliate promotes one or multiple affiliate products and tries to attract and convince potential customers of the value of the merchant’s product, so that they actually end up buying it.
This can be achieved through running a review blog of the merchant’s products. For example:
It could also be an entire site that’s dedicated to finding cool products around a certain topic and promoting those affiliate products.
(This is why I’m broke is one of the most popular affiliate network sites)
The Consumer: The customer or consumer makes the affiliate system go round. Without sales, there aren’t any commissions to hand out and no revenue to be shared.
The affiliate will try to market to the consumer on whatever channel they see fit, whether that’s a social network, digital billboards or through a search engine using content marketing on a blog.
Whether the consumer knows that they are part of an affiliate marketing system or not is mostly up to the affiliate.
Some choose to let their consumers know and more and more affiliates tend to be transparent about their marketing being incentivized financially, but others don’t.
They let the tracking system work in the background, where the customer can follow the purchase process just as usual and the affiliate still ends up being paid a commission.
The consumer will not typically pay a higher price to the affiliate marketer, as the cost of the affiliate network is already included in the retail price.
The Network: Only some consider the network part of the affiliate marketing equation. But, I believe that an affiliate marketing guide needs to include networks, because, in many cases, a network works as an intermediary between the affiliate and the merchant.
While you could technically promote an online course someone has created and just arrange a direct revenue share with them, letting a network such as ClickBank or Commission Junction handle the payment and product delivery puts a more serious note on your affiliate marketing.
Sometimes, affiliates have to go through a affiliate network to even be able to promote the product. For example, this happens if the merchant only manages their affiliate program on that network.
The affiliate network then also serves as a database of lots of products, out of which the affiliate marketer can choose which to promote.
(Clickbank is an example of a network)
In the case of promoting consumer products, like tools, books, toys and household items, the biggest affiliate network, by far, is Amazon. Their Amazon Associates affiliate program lets you promote any item that is sold on their platform.
Anyone can sign up and then generate a custom affiliate link to Amazon products. If someone purchases through your link, you earn a small commission.