Affiliate marketing is a product promotion style of companies offering their products online. The ultimate goal of this product promotion method is to make more sales. It allows the seller company to reach market segments that it would not normally reach using its own marketing resources.
In this process, the company encourages influential marketers around the Internet to promote their products or services. These marketers are given a unique affiliate link by each prospective company that they can share with the people they could influence. The normal everyday users who click on these links will be directed to the webpage of the given company’s product or service. If for example, I clicked on one of these links a cookie would be stored on my computer with the marketer’s information. In this way, each company can track which links get clicked by visitors and can then give credit to the marketer. If the visitor decides to buy a product, the marketer gets a commission of the sale. These cookies are typically tracked and active for roughly 30 days. So if someone had clicked on your link but didn’t make a purchase just yet this is ok because should they visit the same site again you would still get credit for the sale.
In this process, there are three stakeholders, the seller, the marketer, and the buyer. Affiliate marketing provides a platform wherein all participants come out as winners. By buying from an affiliate marketer, the buyers get to learn about the product in detail before they are committed to a purchase. This gives the buyer a reputable source of pre-purchase information. In the process, they are more likely to make informed decisions and avoid buying bad products.
At the same time, the company also gains something. For one, they get a sale that they normally would not have gotten without the efforts of the internet marketer. Without affiliate marketing, the seller would not have reached the market segment of the buyer. They also would not have gained the trust of the buyer that facilitated the purchase. If their product or service meets the expectations of the buyer, they could turn one-time buyers into loyal customers.
Lastly, the affiliate marketer gets a commission that is usually equal to a percentage of the sale. This is his or her reward for successfully facilitating a sale. In many ways, the affiliate marketer acts like an online salesperson. He finds products and services and promotes them to the right people.
History of Affiliate Marketing
Revenue sharing or paying commissions for a business that has been referred is not a new concept. In fact, this concept came into being way before the advent of the internet and affiliate marketing. The transition of revenue share principles to mainstream e-commerce began in November 1994, approximately four years after the implementation of the world wide web.
The concept of affiliate marketing on the internet was conceived by, implemented and patented by a man named William J. Tobin, the man who created PC Flowers and Gifts. PC Flowers and Gifts was launched in 1989 on the Prodigy Network and operated in that service for seven years until 1996. By 1993, PC Flowers & Gifts had generated a sales amount that exceeded $ 6 million per year on the service of Prodigy Network. In 1998, PC Flowers and Gifts created a business model of paying a commission on sales to the Prodigy Network.
In conjunction with IBM, because it owned half of Prodigy, Tobin ventured on to the internet with a PC Flowers and Gifts beta version in 1994. Within a year, a commercial version of the PC Flowers and Gifts website had been launched. The company also had 2600 affiliate marketing partners on the internet. Realizing the value of the business model he had started, Tobin sent in an application for patents on tracking and affiliate marketing on January 22, 1996, and was issued U.S. Patent number 6,141,666 on Oct 31, 2000. Tobin took it even further to receive a Japanese Patent (number 4021941) in 2007 and U.S. Patent 7,505,913 in 2009 for his part in affiliate marketing and tracking. In 1998, PC Flowers and Gifts carried out a merger with Fingerhut along with Federated Department Stores.
One of the first innovators in the field of affiliate marketing was cyber erotica, which had a cost per click program.
The innovation continued with CDNOW which started the BuyWeb program in November 1994. The idea came to CDNOW that websites that had to do with music could list or review albums that they felt that the visitors to the website might be interested in buying. What the websites could do was offer a link that would take prospective buyers to the CDNOW web site where they could make their purchases. This whole idea first came into being thanks to conversations with Geffen Records, a music label. What Geffen wanted was to be able to sell their artists’ music directly on their website. However, they did not want to have to create this feature themselves. Instead, they talked to CDNOW about a program that would let CDNOW take care of the orders. They discovered that CDNOW had the capability to link from the artist on its own website to Geffen’s official website. This would bypass the homepage for CDNOW and go straight to the music page of the artist.
In July 1996, Amazon, via Amazon.com, started an associate program which allowed the associates to place text links or banners for individual books on their site. The program also allowed them to link directly to the Amazon home page. When people who visited the associate’s site clicked through to Amazon and bought a book, Amazon gave a commission to the associate. Amazon was by no means the first company to offer such incentives in the form of the affiliate program. However, its program was the first to really catch on and eventually served as a business model for other such programs.
February 2000 saw Amazon making the announcement that a patent had been granted to the company on certain parts of an affiliate program. The application had been submitted in June 1997. This was before most affiliate programs came into being but not before certain programs such as PC Flowers & Gifts.com which submitted its application in October 1994, AutoWeb.com which did the same in October 1995, BrainPlay.com/ Kbkids.com in January 1996, EPage in April 1996 and quite a few others.
Affiliate marketing has grown quickly since its inception. At the beginning of the internet era, e-commerce web sites were looked at more as a fun marketing toy, but soon played a prominent role in businesses’ overall marketing plans, and for some business savvy professionals, it grew to a bigger business than the existing offline business. One report indicated that affiliate networks generated a total sales amount of £ 2.16 billion in the United Kingdom in 2006. In 2005, the sales estimates had hovered around the £ 1.35 billion mark. The research team at MarketingSherpa came up with the estimate that around the world, in 2006, the earnings of affiliates came to around the US $ 6.5 billion in commissions and bounty. The sources ranged from retail to gambling to telecom to education to travel and also methods of lead generation apart from the contextual advertising programs.
Affiliate marketing was most popular in sectors such as gambling, file-sharing services, retail industries and adult entertainment in 2006. The three divisions that were expected to experience the highest level of growth were the cellular phone, financial, and travel sectors. The following behind these sectors were the entertainment/ gaming sector and service sectors that were internet-related (ISPs). At this time, several of the affiliate solution providers anticipated receiving increased interest from marketers related to business and advertisers wanting to use affiliate marketing as a part of their marketing mix.
Websites and/ or services that were based on Web 2.0 concepts, such as blogging and interactive communities, have had a huge impact on the affiliate marketing world as well. These platforms allowed improved communication between merchants and affiliates. Affiliate marketing channels have also been opened to writers, independent website owners, and bloggers, thanks to Web 2.0 platforms. Publishers who don’t have very high levels of web traffic use contextual ads to place affiliate ads on websites.
The way ads are presented to visitors by brands, ad networks, and companies has also changed because of the advent of new types of media. Let’s take YouTube for example. Video makers on YouTube are permitted to embed ads through the affiliate network that Google has. Unscrupulous affiliates have begun to find it more difficult to make money thanks to new advancements. These advancements can detect fraudulent affiliates who are just starting out and identify them to the affiliate marketing community faster and more efficiently.
How much do you earn from each sale?
The amount of commission that the marketers get depends on the terms and conditions of the affiliate program. If you want to be a part of a program, check this information first.
The lower end commissions usually hover around 4-6%. However, some companies offer much higher commission rates. Some programs also adjust their commission rates based on the performance of the affiliate. If the affiliate is a beginner, the program may start out at 8%. As he sells more products in the month, the rate may also increase. The Amazon Associates affiliate network works in a similar way.
Professional affiliate marketers with long email lists and millions of traffic on their website could email the company directly and ask if they can get a higher commission rate. If you have authority in your niche and you think you can convince the seller company to give you a higher rate, you should also contact them.
How much will you earn from this form of business?
Your earnings in this form of business will depend on your ability to make online sales. However, you could start earning even if you still do not have a business system in mind by telling your friends and family to buy using your affiliate link.
Let’s say you are already an Amazon Associates member and you know a lot of people who are already buying from the website. You should send them your link. Explain to them the situation and ask them to help you out. While talking to them, emphasize that using your link to make their purchase does not add any cost to their purchases.
While this method will not add a significant amount to your business, it will help boost your sales numbers to raise your commission rates.
The bulk of the potential income, however, comes from your online marketing efforts. Most people just place their affiliate links around the Internet, hoping that people will click on them. This strategy or lack thereof is not very effective at all. It will also get you banned if the website’s moderators consider it as spam.
Instead of creating spam, you should put up multiple online properties that discuss tips and tricks on a specific topic. If you love baking, for instance, you could put up baking recipes online through a website. You could then drive traffic to that website using search and social media marketing.
On your websites, post contents that suggest products that you use. Also, create a product review of the things you are promoting. In your reviews, you can place your affiliate links and encourage people to buy them. You will be able to build an audience using this method. At the same time, you will be able to build trust and gain and gain rapport with this audience which will help you get more sales.
This is not as easy as it sounds. It takes time and most people don’t have the patience to keep pursuing it.
Affiliate marketing is not a get-rich-quick scheme. It requires time and patience to build a long-term and sustainable business. Most beginners usually doubt if doing this type of business is actually worth the effort. We will discuss the many advantages of starting an affiliate marketing business to help you decide if being an affiliate marketer really is for you.
Advantages of Affiliate marketing
• It requires little to no capital to get started
This method of earning money online requires just a small amount of capital. For example, you can send traffic through your affiliate links using only Facebook and Instagram. You could also use your own website to do it. You can easily build one for less than $ 30.
• You don’t need to spend time creating your own product
Product creation can take a long time. If you start a traditional business, you will need to think of a product, make prototypes of it, and test it and see how it fares in the market before you make money. Even after all this effort, there is no guarantee that you will make a profit. Before you make money, you first need to pay off the amount you spent on product creation.
Effective products usually take time to develop and sell. It requires trial and error on the part of the product creator. If you have a limited budget for product creation, the process may burn through your budget before you even reach your product launch date.
Affiliate marketing allows you to start a business with minimal risk. You do not need to risk your capital, time, and other types of resources on trial and error. Instead, you only need to focus on the most important part of the process, the sale of the product.
• You don’t need years of experience to start your online business
People who have studied for many years and have had a lot of market experience and exposure create some of the most successful products and services in the world. They know what the market needs and they have the expertise to design the right products or services to meet those needs. They also have the knowledge on how to facilitate the manufacture and delivery of those products and services. They know where to find the cheapest materials and the people with the right skill set to build the products or provide services. Being able to build a successful business does not necessarily mean you have to be an expert in a given field, but experience does indeed make life easier.
With affiliate marketing, you can start a business without these prerequisites. You could learn most of the things that you need through free and premium online resources. If the processes of using these services seem complicated to you, you could also go to YouTube and check out instructions from gurus.
• You do not need to spend a lot on marketing materials or sales funnels
As an affiliate marketer, you only need to promote products and services. Even with this part of the process, you don’t even need to do much because each company will create the marketing materials for you. They have a full-time marketing staff creating and testing banners, text links, and even email copies for you to use. You don’t even have to worry about the whole backend of each company. All you have to do is to present these marketing materials to the visitors of your own website or to the followers of your social networking accounts.
• You do not need to worry about customer service or product delivery
If you have your own business, you usually need to provide customer service to become successful. After the sale, you have to facilitate the delivery of your product or service. After this, you may still need to provide customer support to people who are having difficulties using your product.
These parts of the process are not income-generating. Instead, businesses lose money when carrying out these tasks. In affiliate marketing, you no longer need to deal with these. Instead, the creators of the products and services are the ones who handle their delivery. They also provide the customer support process. As an Internet marketer, you only need to focus on making more sales.
Disadvantages of Affiliate Marketing
• Affiliates Come and Go
When you first start out as an advertiser with an affiliate program, you’ll find that the curious visit you in droves. There may even be plenty of excitement – at first. It isn’t long, though, before the next e-commerce sensation bursts upon the scene, and your affiliates move away from you.
Another thing to keep in mind is that affiliates keep a very close eye on their commission reports. They even check these reports more than once in just one day. If they see that earnings have decreased for even a small amount of time, they can get quite jittery.
• Affiliate and Network Commissions Will Fade Your Bottom-line
If you consider the best-case scenario, affiliates help you boost your sales. However, this increase in sales comes with some additional costs. The commissions you pay out to your affiliates are generally in the range of five to ten percent. On top of that, if you’ve joined affiliate networks, you have to pay them too.
• Profits May Decline by Routing Through Affiliates
This one is a major disadvantage but something that a lot of e-commerce sites don’t always take into account. Consider the following scenario.
So you’ve started out, and the number of sales is very encouraging indeed. You haven’t yet started using affiliates. When you finally do sign some up, the number of sales goes up. That’s great, isn’t it? However, you’ll come back down to earth with a bump when you realize that your aggregate sales level hasn’t changed much. Why? Well, that’s because your affiliates convinced a visitor to come to your site using a link with an affiliate code. The direct sale becomes something that makes you pay out commissions to the affiliates.
Now you’ll want to know how this happened. Well, there are plenty of methods available to them such as SEM, SEO, fake promotions, creating fake coupon codes and so on. An affiliate could even pull off something like ensuring that the only way a visitor comes to your site is by clicking on their link.
• Affiliates May Not Treat Your Brand with the Respect and Care it Deserves
You spend a lot of time, money, energy and creativity in coming up with the concept of your brand and developing it. Then you get an affiliate who doesn’t care about your brand at all. The next thing you know, you’re having to deal with issues created by affiliates messing up the image of your brand or even completely misrepresenting what you offer.
Mistakes Affiliate Marketers Make
Since affiliate marketing programs are easy to become part of and pay commission on a more or less regular basis, many people join up. However, if you want to succeed in this field, you need to be consistent, and you need to have a marketing strategy that is effective. Therefore, it is absolutely essential that you use the best techniques available and try to avoid making mistakes. Try to choose best affiliate marketing programs.
Here are thirteen common mistakes that affiliate marketers make. Don’t forget; these mistakes can be quite harmful to the growth of your business. It becomes essential for affiliate marketers to avoid making these mistakes and also find solutions wherever possible.
1. Not Concentrating on the Pre-offer
Excessively numerous affiliate marketers focus on offering the administrations and results of a customer or telling potential clients the negative and positive parts of specific items or administrations. At the point when an affiliate marketer invests a ton of energy attempting to portray items/ administrations of a customer or noting all questions in regards to the customer, he/ she makes an enormous fumble. The significant objective of an affiliate marketer ought to be pre-offering the customer. As an affiliate marketer, you ought not to offer uncertain data to planned clients.
2. Promoting Products and Services Without Using Them
A few web marketers and website admins make a noteworthy screw up by advancing administrations and items they don’t utilize. In the first place, it might appear to be okay. In any case, after further examination, you will find this is a gigantic oversight that can cost your affiliate marketing endeavors. At the point when a client purchases an item from a sales representative who has been utilizing a similar item, the client has more prominent trust in the item. Similarly, an affiliate marketer can’t be effective in publicizing or advancing an item they have not attempted or utilized some time recently. For instance, you can’t advance PC recreations in the event that you don’t play them.
As an affiliate marketer, you ought to maintain a strategic distance from this misstep by obtaining and investing energy to comprehend the item. Regardless of what the item is, you ought to utilize it to have a hands-on-approach. Potential customers will believe you more since they will see that you are a bona fide individual who is advancing an item from a state of learning or encounter and not a point of voracity. As opposed to committing this error, take as much time as is needed, and turn into a client of the administration or item.
3. Lacking an Email List
An email rundown is a crucial segment of affiliate marketing. By keeping up an email show, you get the chance to publicize a customer’s administrations/ items to potential clients over and over. By the by, on the off chance that you do not have an email show, you lose the opportunity to contact a colossal gathering of people, in this manner minimizing the possibilities of up-offer. You ought to maintain a strategic distance from this mess by guaranteeing that you have an email list.
4. Picking the Wrong Affiliate Program and Product
Not all affiliate projects might be the best for you. Most affiliate marketers pick programs that compensate high commissions or those that offer items/ benefits the marketers have utilized some time recently. These components don’t really imply that you have picked the right program. An affiliate marketer ought to consider payout, convenience, and time while picking an affiliate program or item to advance. To abstain from committing this error, you ought to consider how much time you have to devote to an item or program to wind up effective. Select projects that you can serenely advance inside a specific time span without overstretching yourself. This will go far in helping you to end up a fruitful affiliate marketer. In affiliate programs, payout or commission is an imperative viewpoint. While selecting an affiliate program, guarantee that you adjust commission per deal with the measure of exertion/ work or time you will require devoting to pre-offer an item. Ordinarily, these two segments go as one. Additionally, guarantee that the affiliate program you join is genuinely usable and will offer incredible support of potential clients. At the point when a program is really usable and gainful to customers, a marketer gets to be energetic and enthusiastic about that item or administration.
5. Not Dedicating Yourself to the Marketing Program
There are various affiliate programs. Subsequent to selecting the right program, guarantee that you devote and confer yourself to the program. Affiliate marketing requires a great deal of tolerance, exertion, and responsibility for one to be effective. It additionally requires plentiful time to construct and keep up a client base. To abstain from making this screw-up, calendar your time legitimately. Designate abundant time for the program notwithstanding when you are making great deals or the business is developing. Your dedication will pay off at last when clients return over and over to see what new administrations or items your program are advancing.
6. Promoting an excessive number of Services or Products
As an affiliate marketer, you can’t be effective by advancing excessively numerous affiliate administrations or items in the meantime. On many occasions, affiliate marketers select such a large number of items in the conviction that they will acquire a tremendous rate of commission or payout after these items are sold. Be that as it may, potential clients are just inspired by valuable items. You ought not to advance a few items at the same time since you won’t have the capacity to calendar enough time for every item. This implies a drop in deals. The answer for this screw up is to concentrate on expanding deals instead of expanding the quantity of affiliate administrations and items.
7. Promoting Poor or Low-Quality Products
Advancing low-quality items is another element that can be considered as an affiliate marketing botch. Quality is a vital inclination for every single customer. On the off chance that you are an affiliate marketer and you are advancing low-quality items, your site guests will simply avoid those items. Also, if, by luckiness, they happen to buy such items, never again will they purchase items through your site.
Along these lines, it is indispensable that you make a relationship of trust amongst you and your clients and advance important items. A fulfilled client won’t just come back to your site additionally prescribe your site to his/ her associates and companions. So by advancing profitable items, you are hitting two winged creatures with a similar stone. You increment your client list and additionally hold your present clients. Along these lines, it is essential to ensure that the affiliate item you are advancing is something that is genuinely usable and significant to individuals.
8. Not Having a Blog or Website
When you are an affiliate marketer, you will not become successful by only promoting affiliate services or products through things such as mailing lists, social media sites, or paid advertisements.
A blog is a useful medium to promote your affiliate services or products. Your blog/ website serves as a showcase that promotes the affiliate products under your professional name. Your website or blog will help you to establish your niche and originality in front of potential clients. It reinforces confidence in the minds of your website visitors.
9. No Keyword Research
Keyword research is a very important factor in affiliate marketing. You are likely to lose a lot of traffic if you do not use the proper keyword research. Actually, by undertaking thorough and comprehensive keyword research, you get to know precisely what people are looking for when searching for the services or products. Keyword research, therefore, helps you to develop your web page, or home page appropriately, do well with SEO, and to utilize those target keywords that can bring a large amount of traffic to your site or blog. Therefore, keyword research is very important for successful affiliate marketing.
10. Not Writing Quality Reviews
Quality reviews from previous customers can help promote affiliate products while also providing information about affiliate products or services. People want to have some knowledge about the services or products that they want to purchase. They like to know the benefits, pricing, and features. A quality review gives them the basic and desired information that they desire to know in an easily laid out manner, so it becomes easy for them to understand what the product is all about. You can confuse potential buyers when you do not provide quality reviews. When there is little to no clarity all about a product, the prospective buyer may decide not to purchase from you, and go elsewhere. In short, to become successful as an affiliate marketer, it’s highly important that you provide quality reviews about the products that you promote.
11. Depending on Just One Source of Traffic
If you really want to be successful as an affiliate marketer, you should never rely on only one source of traffic. You should take every effort to maximize your varying sources of traffic so that you can receive visitors from several sources. The sources of traffic can be a variety of areas; social media sites, search engines, and even advertisements. It is important to utilize several channels that can bring a lot of traffic to your website and thus can promote and expand your affiliate marketing.
12. Not Believing in Yourself
If you are not confident that you are going to succeed as an affiliate marketer, then more than likely you won’t. It is perfectly normal to be concerned as you begin a new venture and attempt to direct all of the new information related to affiliate marketing. However, it is important to have confidence in yourself as well as your ability in order to become successful in this business.
While success is not wholly based on the belief that you can be successful, it is highly important for individuals that are earning cash through affiliate marketing. Be sure to take the time to understand the errors and know the programs to avoid; only then, you can have faith in yourself and your ability to enjoy making money with your affiliate marketing business.
13. Believing That getting Quick Money
Affiliate marketing is not a way of getting rich quick, but a way of making money. If you are under the impression that affiliate marketing will make you large amounts of cash in a quick timeframe, then you will quit when you fail to reach your goal.
Affiliate marketing takes consistent attention on your part to turn it into a successful business model. You need to understand that business, which gives quick cash, is not a stable business and can never be a permanent source of income.