What Is Affiliate Marketing?
Affiliate marketing is a type of performance-based marketing where a business rewards one or more affiliates for each visitor or customer brought by the affiliate's own marketing efforts. In other words, it's a way for businesses to compensate people for referring new customers and clients to them.
Affiliate marketing is often referred to as “performance-based marketing” because the affiliate is only paid when they generate results.
There are three main types of affiliate relationships: pay per lead (PPL), pay per sale (PPS), and pay per click (PPC).
Under PPL arrangements, an affiliate is typically paid a commission whenever they provide a website visitor who then becomes a customer of the advertiser. With PPS deals, an affiliate is typically paid whenever they refer a sale that results in revenue for the advertiser. And under PPC agreements, an affiliate gets paid every time their ad generates clicks from potential customers.
Affiliate marketing is a great way for businesses to expand their reach and bring in new customers.
However, it's important to remember that not all affiliates are created equal. In order to ensure you're working with high-quality partners, it's important to vet any potential affiliates before signing upâ€”and always monitor your own website and social media accounts for illegitimate activity.
The Most Commonly Must-Know Affiliate Marketing Terms
Below you can find some of the most commonly used affiliate marketing terms.
Keep in mind that this list is not exhaustive, but, as in Washington's Wealth fashion, it's the essentials that you'll need to know. This is more than plenty for 98% of (aspiring) affiliate marketers like yourself.
Affiliate marketing is the use of third-party advertising to sell products or services, typically in relation to Internet marketing. The affiliate marketer receives a commission on sales made by their referrals and sometimes on sales made by other advertisers that they have referred.
The advertiser is a person or organization that pays for the placement of an advertisement.
Affiliate is a term to describe any person or business that promotes, advertises, and/or links to your website in exchange for monetary compensation.
There are several different types of affiliate programs, but the most common are pay-per-click, pay-per-lead, and pay-per-sale. In order to participate in an affiliate program, merchants must first create a program and then recruit affiliates to join it.
Once an affiliate joins a merchant's program, they are given a unique link that they can use to promote the merchant's products/services.
An affiliate network is a 3rd party that acts as the middleperson between merchants and affiliates.
Many sites and platforms, like Skillshare and Canva, use affiliate networks. (Skillshare uses Impact at the time of writing). This means that, to become a Skillshare affiliate, you'll need to create an account over at Impact and apply through that platform.
Any commissions from Skillshare are, actually, paid out to Impact. And you receive your commission withdrawals from Impact.
An offer is the product or service that the merchant allows affiliates to be an affiliate for.
An offer URL is the link you'll promote to your audience in order for them to read more about your product or service, and hopefully make a purchase.
A conversion in the (online) marketing world can be many things.
It's the desired next step in a marketing funnel. A conversion can be someone clicking on an ad. Or someone submitting their email and contact information. A sale is also a conversion,
If a conversion is someone reaching the next desired step in the funnel, then the conversion method is how they got there.
If a desired conversion is making a sale after reading a landing page (more on those later), then the landing page is the conversion method.
If the conversion is a click to a website after seeing an ad, then the ad is the conversion method.
Conversion rate is the amount of conversions divided by .how many people have seen your conversion method.
For example, if 50 out of 100 visitors to your landing page bought the product you were promoting on that landing page, the conversion rate would be 50%.
Conversion rate can be calculated from one conversion method/step to the next one, or an entire funnel.
If you push 1000 people through your marketing funnel, and, at the end, only 25 people decided to purchase whatever product or service you're promoting, your entire funnel's conversion rate is 2.5%. (25 conversions / 1000 visitors = 0.025 = 2.5%)
CTR (Click-Through Rate)
Similar to conversion rate, CTR measures the amount of clicks you're getting from a conversion method (an ad, a landing page, …) in a percentage.
By taking the amount of clicks received divided by the number of ad impressions or page visitors, you get the Click-Through Rate.
For example, 30 clicks out of 900 impressions = 0.03 = 3%.
The tracking link is the link that the affiliate uses to send out to their audience. This will always include some kind of identifier so the merchant, or the affiliate network, knows that this particular visitor to the offer came from a specific affiliate.
If a purchase is made, they then know who they need to send the commissions to.
The creative in affiliate marketing usually refers to the visuals of a product, service, ad, or landing page. This can be either video, audio, image(s) or a combination of these.
A marketing pixel is a piece of digital code that's embedded on a website, which allows marketers to measure the success of their campaigns and track user engagement. The goal of the pixel is to allow marketers to better understand how their campaigns are performing and what they need to do in order to improve performance.
A landing page is a standalone web page that has been designed specifically for the purpose of advertising and capturing leads from potential customers.
Cost per Action (CPA)
Cost per Action is the amount of money a company spends on advertising to get one person to take an action, such as make a purchase or fill out a form. The company will spend more money if the user takes an action and less money if they do not.
Niche is a term used to describe the specific topic or topics that are of interest to an individual. For example, if someone were interested in becoming a vet, they would be considered a niche within the veterinary field.
It's said that there are only 3 niches (health, wealth, and relationships), and all other niches can be bucketed into one of these.
Attribution isn't unique to affiliate marketing, but to marketing in general, whether that's online or offline.
Attribution is similar to conversion method. When analyzing attribution, the goal is to see where or how the most actual (affiliate) sales came through.
Can most of the ROI (return on investment) be attributed to a couple of blog posts, a lead magnet, a particular landing page, or an entire paid traffic campaign?
Search Engine Optimization (SEO)
When it comes to marketing a website, one of the most important techniques that you can use is search engine optimization, or SEO. SEO is the process of improving the visibility of a website in search engine results pages (SERPs), through the use of techniques such as keyword research, content creation, and link building.
By optimizing a website for search engines, you can help improve its visibility and attract more traffic from potential customers. This increased traffic can result in more sales or leads for your (affiliate) business.
Cost per Click (CPC)
This is a metric that measures how much a click is actually costing you.
Cost per Lead (CPL)
This metric measures how much a lead (usually defined as someone who gave you their email and other contact information) has cost you to acquire.
Earnings per Click (EPC)
When you're looking to measure the success of an affiliate marketing campaign, the common metric used is Revenue / total clicks. This will give you a good indication of how much money has been made versus how many people have clicked through your links.
However, it's important to note that there is no one perfect EPC figure – as you get more familiar with your chosen niche and offer, you'll be able to gauge what an acceptable average earnings per click looks like for you. Keep in mind that this number can vary drastically depending on the country or region your traffic is coming from.
Pay per Click (PPC)
In PPC advertising, you only pay when a user actually interacts with your ad. This can help you avoid paying for ineffective campaigns, and keep costs down.
What is the most popular platform for PPC?
The most popular platform for PPC is Google Ads, as it helps to avoid paying for ineffective campaigns and keeps costs down. It's an efficient way to generate sales by only paying each time someone clicks on your text or display ads.
Examples of Affiliate Marketing
Here are some examples of affiliate marketing.
Amazon Affiliate Marketing
Amazon's affiliate marketing program is one of the world's largest and most successful, with over 900,000 participants worldwide.
In order to participate in Amazon's Affiliate Marketing Program, you must be approved by Amazon and meet their stringent criteria. Your site must have original content that meets certain quality guidelines set by Amazon, and you must agree to drive at least 3 sales every 180 days. If your application is rejected, it will not be eligible for reconsideration.
Bloggers who are accepted into the program receive commissions on products sold through their site at a special rate. In fact, 65% of all traffic to Amazon comes from bloggers participating in its Affiliate Marketing Program.
Etsy Affiliate Marketing
Etsy offers an affiliate program to help promote its products. In order to apply, applicants must submit an application online through the affiliate program portal.
Once approved, Etsy pays a commission for sales generated by their affiliates, which are likely due to website promotions of the product on the site's website.
The commission rates vary and are paid on the order price. Sellers can be affiliates, but they cannot earn commissions without special permission from Etsy – which reserves the right to terminate any agreement at any time for any reason (and withhold compensation).
You can find out everything about Etsy's Affiliate Program over here. (not an affiliate link – lol)
eBay Affiliate Marketing
The eBay partner network is an affiliate marketing program that pays its members for sharing personal listings of items on eBay. The commission rate is up to 6%.
If the buyer purchases the item within 10 days, the seller will receive a commission if they win the auction.
Commissions depend on the category of items sold and range from 1% to 4%. You can find an up-to-date overview of these commission rates over here. Gifts cards, items sold by charities, or special promotions are typically excluded as qualifying sales due to their low revenue streams.
High-Ticket Affiliate Marketing
The examples I've covered above are the types of affiliate programs most people start out with, or stick with. If that's you, all the more power to you.
But, commissions on the platforms mentioned above are usually. Not only in terms of commission rate, but also, 5% commission on a $100 product = $5.
Whereas, if you were to promote programs and services with a higher ticket price ($500+), that 5% suddenly becomes $25.
Usually, these higher ticket products or services also come with a higher commission rate of at least 10%.
So, instead of having to make 500 sales to get to $1000 in commissions, you could find a program that you're comfortable promoting and get to that $1000 in commissions with just 100 sales, or even half of that.
Frequently Asked Questions
What are the 3 pillars of being a successful affiliate marketer?
There are three main pillars that you need to succeed as an affiliate marketer:
Paying attention to customer lifetime value (LTV)
An accurate number for your LTV helps you determine how much you're able to spend on acquiring a new customer. Unlike with AOV, the LTV includes all spending over the lifetime of a customer â€“ this can give you some extra breathing room in how much you pay to acquire customers.
Making money from the backend:
Affiliates can make up for any upfront losses by making more money on the backend, either through selling other affiliate offers or promoting products themselves.
Focusing on 3 core Pillars – In order to be successful as an affiliate marketer, it's important that you focus on these three key areas and continue optimizing them over time.
How much money can you make as an affiliate marketer?
It really depends on what is being marketed, how much influence the marketer has, the affiliate's reach, and how much time is invested in marketing products. Generally speaking, though, an affiliate marketer's income can vary widely depending on those factors. Some people make just a few dollars per month while others make thousands of dollars every month. It all comes down to working hard and putting in the effort!
How do I find keywords for affiliate marketing?
When it comes to affiliate marketing, one of the most important aspects is finding the right keywords. This involves using a variety of tools and strategies in order to find the best keywords for your website or campaign.
One way to find good keywords is by using Google AdWords Keyword Planner. This tool allows you to see how many people are searching for a particular keyword, as well as other related information such as competition and suggested bid prices.
You can also use SEOmoz's Keyword Explorer tool, which offers similar data but also includes information such as monthly search volume and SERP features.
Another great tool for finding keywords is SEMrush's Position Tracking Tool. This tool lets you track your site's rankings for specific keywords over time, as well as spy on your competitors' rankings!
What does CPC mean in affiliate marketing?
CPC stands for cost-per-click. It's an incentivized method of advertising, where the advertiser pays their affiliates based on the number of clicks they receive. This type of affiliate marketing is also known as performance-based marketing.
Is it free to be an affiliate?
There is no cost to be an affiliate, and there are many benefits that come with the role. These can include increased website traffic, access to exclusive promotions and higher commissions on sales. Additionally, being an affiliate allows you to build a closer relationship with customers by providing them with helpful information and recommendations.