What is affiliate marketing and how to work with it

7 min


All people have ever had the thought — is there a way not to go to work, and at the same time get money anytime and anywhere? While all people think that this is a fantasy, webmasters are making huge money from affiliate marketing from the comfort of their villa in Bali. But what is affiliate marketing, how does it work and why is it so profitable? Let’s answer all these questions in this article.

What is affiliate marketing

Affiliate marketing is the promotion of goods or services of a company by webmasters for a commission (part of the profit from the sale). Promotion is done with the help of affiliate links – users follow the link to the page where the product or service is sold. Affiliate marketing brings an extremely large income to both partners and advertisers, as the former receive a large, unlimited income, and the latter receive a huge number of new potential customers. Despite the fact that affiliate marketing is a very competitive niche, every marketer can get rich in it. But to successfully pour traffic and keep up with the competition, it is important to understand how affiliate marketing works.

How affiliate marketing works

Affiliate marketing always involves three persons:

  • Advertiser;
  • Webmaster;
  • The buyer.

The advertiser, who needs to sell his services to buyers, turns to the webmaster, who promotes the advertiser’s products as an intermediary. For this, the webmaster gets paid in the form of a share of the sale. Let’s break down each person to better understand the principles of affiliate marketing

Advertiser

The advertiser can be either a small enterprise or a large company. The advertiser must advertise and promote their goods and services to potential customers in every way possible. The product or service can be anything from grooming cosmetics and software to paid subscriptions and sports betting. If an advertiser doesn’t have an in-house marketing department or the strength of the team is lacking, they utilize the services of webmasters.

Webmaster

Webmasters can either work alone as a freelancer or as a team of several partners. A webmaster promotes an advertiser’s product so that potential consumers are interested in the product and more likely to purchase it. If the consumer bought the product because of the webmaster’s promotion, the webmaster receives a portion of the advertiser’s revenue. Since the advertiser’s products and services are most often related to a specific niche, consumers should relate to the target audience of that niche. Webmasters target the advertiser’s target audience so that the advertiser’s products are more likely to be purchased.

Consumer

Consumers are the core of the affiliate marketing chain. If there were no consumers, advertisers and webmasters would have no money. Webmasters find consumers on various platforms such as social media, websites, forums, and then promote the advertiser’s product or service to them. If consumers are interested in the product or service, they click on the webmaster’s affiliate link and pay for the purchase. However, it is very important that consumers do not click on the link in order to get the reward that they were promised by the webmaster — this method of attraction is prohibited by many advertisers.

Consumers are the core of the affiliate marketing chain.

Types of affiliate marketing

Often there are situations when it is difficult to find out whether the webmaster is really sure of the usefulness and benefits of the promoted product or whether he advertises it only for the purpose of generating income, without thinking about the potential harm of the product. Buyers may care that the webmaster is confident in the positive qualities of the product, but may not care.

In 2009, affiliate marketing professional Pat Flynn divided affiliate marketing into three types: uninvolved, trusted, and engaged. Let’s break down each type separately.

Uninvolved 

In uninvolved affiliate marketing, the webmaster is independent of the advertiser and has nothing to do with the product being promoted. Uninvolved affiliates have no authority in the promoted niche and can promise the qualities of the promoted product. In this type of marketing, the webmaster does not risk losing his authority by promoting a low-quality product or service, but the conversion rate from this method will be much lower. The most common payment method in independent marketing is CPC (Cost Per Click).

Trusted

Trusted marketing combines engaged and uninvolved marketing. In the trusted type of affiliate marketing, the webmaster has experience and authority in a particular niche. They may have their own channel or blog dedicated to a particular topic, traffic from which they pour in to advertisers. In trusted affiliate marketing, the affiliate can pour more traffic, but if the quality of the product is questionable, they risk losing their authority.

Engaged

In engaged marketing, the affiliate has a direct connection to the product or service being promoted, such as having used the promoted product or service themselves. As a consequence, the affiliate knows the quality of the product and has credibility with potential buyers. An involved affiliate drives most of the traffic to the offers in his niche, but if he promotes a low-quality product, all his authority will be lost. An affiliate has to do a lot of work to gain that much authority, but in the long run it will generate a lot of income. 

Generating income in affiliate marketing

Affiliate marketing gives webmasters the opportunity to make a lot of money. But it’s not that simple — it’s not always enough for a potential customer to simply click on your link. What exactly you get paid for is determined by the payment model of your offerer. Before you sign a contract with an advertiser, it is important to know about the specifics of payment models. Let’s analyze what payment models exist and how they differ

CPS

CPS (Cost Per Sale) is the most common payment model in affiliate marketing. According to this model, the advertiser pays a percentage of the sale of a product or service to the webmaster when the client attracted by him makes a purchase. Otherwise, the affiliate will not receive income.

CPL

CPL (Cost Per Lead) is a less common payment model. In this model, the affiliate is required to have a potential customer leave their data on the advertiser’s website, for example, fill out an application to purchase a product, fill out a questionnaire, complete a newsletter or subscription, or register on the website. 

CPC

CPC (Cost Per Click) is a payment model in which an affiliate is required to have the referred customer visit the advertiser’s site. In other words, the affiliate gets paid for increasing traffic to a website that sells some products or services. In some cases, this payment model requires potential customers to perform some additional action, such as leaving a request for a newsletter. This model is called CPA (Cost Per Action).

CPI

CPI (Cost Per Instal) is a payment model in which an affiliate earns revenue when referred customers install an advertiser’s product, such as a mobile app or software.

Benefits of working with affiliate marketing

Passive income

The most important advantage of affiliate marketing is that you don’t have to do something all the time to make money. If you have successfully conducted a marketing campaign and customers buy the promoted product, you don’t have to follow up all the time — you will get money for your work anyway. Moreover, you will get money for a long time, as customers will respond to the advertising creatives without your involvement. This is an undeniable advantage of affiliate marketing over regular work, where without your direct involvement no one 

will not pay you.

Work from anywhere

Working in affiliate marketing, you don’t have to be tied to any one location. All you need to work is a computer and a stable internet connection. You can work from home without even getting out of bed. Affiliate marketing is perfect for anyone who doesn’t like working in stuffy offices.

Convenient schedule

If you work alone and not in a team of marketers, you can choose your own time to work. You can also pick your own promotional strategies, create your own bundles and be independent from anyone. 

Fair remuneration

Unlike other fields, in affiliate marketing your income is equal to the amount of effort you put in. If you spend a large amount of time developing an effective strategy, looking for the best traffic sources and giving the advertiser a high conversion rate, your income will be comparably large. In addition, your income is limited only by the number of customers you attract — if customers bought a lot of product and you earned $10000 on it, you will get exactly the same amount, the advertiser will not profit from you.

Popular sources of traffic in affiliate marketing

While there are many sources of traffic, the top five sources are best suited for affiliate marketing: influencers, microsites, newsletters, and large sites. Let’s look at each source in more detail.

influencers are content creators who have a huge audience and authority

Influencers

Influencers are content creators who have a huge audience and authority in their field. Influencer content can consist of articles, videos, reviews, live streams, photos, and so on. Influencer audiences consume this content and trust everything the Influencer says. This trust can be used to promote advertisers’ products and services. If the webmaster makes an agreement with the Influencer to promote the advertiser’s product, it will create a large conversion rate and greatly stimulate sales. However, the webmaster should choose the Influencers carefully – you need to choose the right niche and make sure of the integrity, credibility of the Influencer so that you don’t lose trust in the advertiser’s product. 

Microsites

Creating microsites is also very useful for promoting the advertiser’s products. A microsite is an analogue of the advertiser’s website, but optimized to promote specific products and services or to attract a specific audience. This source of traffic is more suitable for those cases when it is necessary to promote a wide range of goods and services of the advertiser for different target audiences.

Newsletters

Creating and distributing mailing lists used to be the most popular source of conversions. Of course, now it has lost its prevalence, but newsletters have not stopped bringing traffic. The principle of mailing lists is that the webmaster creates an email with a link to the promoted product, and then sends it to many email addresses. The effectiveness of this method directly depends on the number of mailings — the more potential consumers the letter was sent to, the more likely that some of them will buy the promoted product. The content of the letter is also important — a crookedly written letter is unlikely to stimulate anyone to buy the advertiser’s product

Large websites

Large websites circulate a huge amount of traffic that can potentially be directed to the advertiser’s site. All a webmaster needs to do is create an advertising creative and buy ad placement on a major site. Of course, the cost of placement will be far from small, but it can potentially bring a very. large conversion rate. It is important to responsibly approach the choice of the site and its theme — the theme should correspond to the target audience of the advertiser. 

Conclusion

Affiliate marketing is already very effective in the circles of webmasters. At the same time, this industry is actively developing and promises great prospects for marketers in the future. To effectively direct traffic and make good profits, it is important to learn every aspect of affiliate marketing – from working principles and basic types to payment models and the best traffic sources. Remember that every user can be a potential customer – you just need to know how to attract their attention.


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RateMeUp Team

We’re not just a group of anonymous affiliate marketing experts; we’re a close-knit team that’s been working together for over a decade. Our journey began at the inception of this industry, where we laid the foundation for the very first verticals. If you’ve ever been intrigued by traffic arbitrage case studies, chances are you’ve already come across our work.