Affiliate Marketing Explained
Continuing in our series of the five best business models explained. Our second business model in the series is Affiliate Marketing. Our first business model was niche sites in case you missed it. If so, go back and check that out. In this series, I’m going from easiest to hardest, and the number two model, affiliate marketing is pretty straightforward. In our discussion about niche sites, there was a lot of mention of putting ads on your website using AdSense.
I also mentioned getting an email list developed so that you can promote affiliate offers to the people on the email list. Let me clarify what an affiliate is in case you don’t know. An affiliate is someone who refers customers to a business. For instance, let’s say you go to the barbershop, and they say, ” next time you bring a friend with you to get a haircut, you’ll get 20% off of your haircut. They are asking you to be an affiliate for them.
It’s simply you bringing them new business. They call that affiliate marketing. Amazon has one of the largest affiliate marketing programs in the world, and you can promote just about anything you can think of on Amazon. When you do, you’ll usually get somewhere between a 4 to 8% commission.
Generally speaking, the more business you bring them, the higher your commissions will be. Amazon commissions also vary based on category, price of the item, and what country you are in. If you want the most straightforward affiliate program to sign up for and you don’t want to overthink it, Amazon is probably for you. It can be very lucrative for someone interested in creating niche sites, setting them up with affiliate links, and then building it up from there.
Google Adsense is another ridiculously simple affiliate program where all you do is put a snippet of code on your website, and Google will start showing ads on your site wherever that code is. Just like Amazon, the commissions arent mindblowing, but the ease with which you can get started makes them a no-brainer for someone new to the game.
Now there’s a whole world of affiliate marketers, and there are different types of affiliate marketing. Some guys are out there spending, tens of thousands of dollars a day promoting affiliate offers.
Those types of affiliates tend to do what is called Cost Per Action or CPA marketing. For example, let’s say an insurance company wants people’s zip codes so that they can market to them. We, as affiliates, can run ads that drive people to that insurance companies website or landing page using our affiliate link.
That link tags the site’s visitors that we sent there, and that’s how they track how much they need to pay us based on the amount of traffic we sent their way. So if you can get people to sign up for the zip code offer, they’ll likely pay you something like 75 cents to a dollar per zip code entry tagged with your affiliate link.
There are more complex affiliate offers, of course, some will say, “if you can get people to give us their name and address, we’ll pay you $10 for each person who signs up on our website through your affiliate link.
To get started, you sign up with an affiliate network; these are companies that act as a middle man between you, “the affiliate,” and the company needing the customers “the advertiser.” That means that the networks make sure that the affiliates (also called publishers) are reliable and not scammers and that the advertisers pay for their affiliate’s traffic. So in a sense, they are the glue that holds everything together.
Affiliates can promote affiliate offers several ways through content online like a blog or youtube channel. Generally, the most successful affiliates use advertising. Whether it be an ad on Facebook or an ad on Google, we’ve all seen affiliate content and ads many times.
Getting into some of these affiliate networks can be challenging because, for the most part, they don’t want to deal with amateurs. They don’t want to deal with people who are inexperienced in promoting offers, and they don’t want to deal with advertisers who don’t have a good amount of money to run the offers.
Like anything in life, the more money you have, and the more experience you have, the easier it is to be successful. That’s a pretty concise description of how affiliate marketing works; the intricacies could fill a book, but it is precise.
One of the things that I always tell people about affiliate marketing is the potential to make additional income from your cookie. “What is a cookie?” you ask. It’s a small piece of code that tags a website visitor when they visit certain websites like Amazon, for instance. Some cookies last a few hours others last weeks it all depends on the advertiser.
Amazon’s cookie lasts for 20 hours, if a visitor you referred to Amazon purchases within those 20 hours, you will get a commission based on the amount of money they spent on that particular purchase. A cool part of the cookies system is that regardless of what product you refer them from whatever they purchase in that window of time will be credited to you. So, for instance, your site may have referred them based on a set of knives you reviewed on your website, but the person likes a TV and decides to buy a $2,000 TV. That commission would be yours for the total amount they spent in those 20 hours.
This means you are probably going to get something in the area of about 4% of $2,000, which would be about $80 bucks. Not bad, right? You can get multiple people per day, just like that. That’s awesome. Is the TV very competitive? Absolutely. Things that are high priced, aka high ticket, are usually competitive.
But everything’s competitive. So don’t let your limiting beliefs and the thought that, oh, so many people already doing it. There’s no space for me. It just depends on your approach, the quality of your content, and how effectively you promote the content, you create.
Remember that SEO (search engine optimization), and the way that Google ranks things, all that stuff has changed dramatically over the years, and it will continue to change.
Right now, what’s working is long-form content, high quality, well-written content, with about six to seven images per article, a couple of links, and preferably a video. Create articles like that, and you’re going to get traffic.
Let’s suppose your website is all about movie projectors for the home; those things go for anywhere from $1,000 to $5,000 easily for a good one. If that’s what you’re reviewing and you make quality content about them, you might drive, two or three buyers a day at $40 to $200 in commission adds up pretty fast.
That’s a pretty decent income for a few hours of work each week. If you’re looking at CPA offers, which are cost per action, the profits can be exponentially higher. You can also do cost per lead, which is CPL. Cost per lead is when we want the person to give us all their information, including their email and their phone number so we can call them up and try and sell them something. Bring those people to advertisers, and they’ll pay you $50 or more each. Pretty, petty… good!
You do have to keep in mind that the more money the affiliate offer pays, the more competition there will be, which means you’re going to be going up against guys who are very experienced and have deep pockets. So when you’re first starting, it’s probably a better idea to compete for things that pay a dollar or two per action, as opposed to something that pays $50 or $100 per action or lead.
Cause then you’re competing with very experienced people, which makes winning harder. Over time, your experience will increase, and so will your income. Note I said, over time, not overnight.
Let’s talk about advertisers for a minute. When you’re dealing with companies that are providing products and services, sometimes these companies can go belly up overnight, or sometimes they can’t handle the amount of traffic that some of these publishers drive to the advertisement.
That can cause problems for all the publishers promoting that offer. Sometimes the advertiser can shut off an advertisement, and the income stream you enjoyed suddenly disappears. That sucks, but its part of the game. These are just realities that exist in the affiliate marketing world.
That’s why I prefer information products; you can sell a million PDFs at $15 because they’re only created once. Not only that, there are two major marketplaces for selling information. The first and oldest is called ClickBank. They are the pioneers who started the whole affiliate marketplace space.
They’re still the leader. But there is another major player called JVZoo. The difference between these two marketplaces is that ClickBank when you purchase through them as a customer, they will support that product and give you up to 60 days to refund your money. If you have issues with the product, they will provide customer service.
JV Zoo, on the other hand, you have to do the customer service yourself. So that is a major difference. Now with JV Zoo, if you’re interested in listing information products there yourself, you can do that for free. On ClickBank, it costs you $50 per product.
Now the beautiful thing about this, and one of the ways most savvy affiliate marketers do it, is you go onto these marketplaces like ClickBank and JV Zoo, and you start promoting offers. You want to look for offers that are related to a website you currently have, or you can build a website around a topic or niche, and find offers that are well suited for your site, and you promote them.
Once you’ve done this, you may come across an offer that does really well, right? In which case, all you have to do is create your own version of that product. In other words, create a competing product of your own for your top-selling affiliate offer that you promote. You’ve already proven it sells. Now, all you have to do is create that product on your own, and then switch out your links wherever you promote it.
Now when people go to buy the product, they’re no longer going to buy the product from whoever you were advertising for. Instead, they’re going to purchase the product from you. You already figured out how to get that traffic. Right? So now, by switching out your links, you get 100% of the profit instead of a percentage of the profit, which at ClickBank and JV SU tends to be something in the area of about 50%, so that’s another way that you can win with affiliate marketing.
As I said, this article is for the sake of giving you a generalized knowledge. That way, you understand enough to go out and investigate and learn more so that you can start doing this. This is a primer so that you can decide which of these business models you’re going to go after because, in my opinion, you should only go after one at a time and go deep on the one you choose.
The biggest problem with amateur entrepreneurs is that they want to do a million things. The difference between amateurs and pros is, pros are good at saying “no.” They know how to delegate and get out of the way so that their business can grow. As a new business owner, you wear a dozen hats because you have to do sales, accounting, advertising, social media, fulfillment, etc. and you have to do all the grunt work. You’re wearing a bunch of hats.
It’s not good to take that valuable energy and spread thin across multiple business models. It doesn’t make sense. It’s better if you go deep on one thing, and when that one thing, you’ve become an expert at makes enough money to where you can hire employees, then you can go and explore other opportunities.
The beauty of it is that as time goes on, you’re going to get very good at this one thing. And that’s going to open you up to new experiences and new opportunities to deal with people who are experts in something else that you might be interested in.
Once you reach that level where you have some money and experience, you can partner up with those experts you’ll meet to get your feet wet, instead of having to start something from scratch and be an amateur at it all over again.
The trick is consistency and applied knowledge, not learning a ton of stuff about a bunch of different ways that you could make money. That road is full of failed entrepreneurs who didn’t accomplish anything or did it half-ass and failed because they spread themselves across three or four different ventures and didn’t make any money.
This is by far the most prominent mistake that amateur entrepreneurs make. They spread themselves too thin. They spend way too much time trying to learn something instead of practicing by doing it. Make your mistakes along the way while you do it, and you’ll learn so much more. Focused action on one project will give you more rewards than you’ll ever get from a book or course that’s talking about someone else’s experience, who’s done it.
It’s not that hard to choose a path. You can read an article like this one, watch two or three videos and then make your decision as to what it is that you’re going to go with and get started. Don’t stop until you’ve reached the level of success that you’re aiming for. I cannot stress that enough if I had taken this same advice when it was given to me many years ago, I would not have struggled and sacrificed half as much, and I would have made a ton of more money.
That’s not to say that you’re not going to struggle and sacrifice at building your business, but I did so needlessly, way more because I didn’t listen when I received this same advice.
That, my friend, is my crash course on affiliate marketing. As I’ve said before, if you’re interested in these things and you can’t find a video, or there’s a piece of information that you have a question about, I’m happy to guide you through it. Let me know, and I will go ahead and create that content for you so that you can get started.
In my next post, we’ll be discussing the third online business model that you can do as a business online, and that is e-commerce. Which just happens to be blowing up right now.