Affiliate Marketing Business Model

Affiliate Marketing
Business Model

This page is an introduction to affiliate marketing as a business model.  We go into much more detail elsewhere, but this introduction will allow you to have an understanding of whether this is an interesting approach for you and allow you to get started with an online affiliate marketing business.

How You Earn Money as an Affiliate:

If you are an affiliate of the ABC company, you will earn money when someone goes to the ABC company’s web site following your link with your special code embedded AND performs an action for which the company pays.

The most common action for which a company will pay is if the visitor buys a product or service.  For that action, you will be paid either a flat fee, or you will be paid a percentage of the price of the sale (not counting shipping or tax, obviously).

Some affiliate programs will pay for a non-sale action, such as if the visitor (who arrived using your coded link) completes a form including his or her name, email, etc.  These programs will pay a flat fee for the completion of that action.  Some will also pay again if that same visitor later buys a product or service, within a specified time frame (30 days, for example).

How You Become an Affiliate:

If you know of a specific product or vendor with whom you want to affiliate, you can do a search for «ABC company affiliate program.»  I believe a preferable approach is to join one or more of the affiliate program management companies.  These are specialist in affiliate marketing who handle the affiliate programs of a number of companies.  In fact most major companies are contracted to have their individual affiliate program managed by such a company.

Two of the major such companies are Link Share and Commission Junction.  Each of those holds the affiliation accounts of hundreds (perhaps thousands) of individual retail and service companies.  At their sites, you can register, look for affiliate programs in your niche, apply to the programs, find approved links with your own code imbedded in them, see reports of your earnings and more.

I am a member of both of those programs and a few others.  The two mentioned above fulfill almost all of my affiliate needs.

How Affiliates Find Customers:

There are three major ways that an online affiliate marketer can locate people to send to his affiate’s company’s site.  They are cost per click advertising (CPC), free advertising and having your own web site.

  • CPC advertising is, in my opinion, an inefficient option.  You would put an ad (say, on the Google Adwords network) and pay each time someone clicked on your ad.  The major problem with this technique for an affiliate marketer is that you will be in competition with businesses who rely on repeat business to make their ad campaign profitable, whereas you only get one crack at the clicker.  CPC is important for other business plans, so I address this option in more detail elsewhere.  For now, stay away from it.
  • Free classified advertising sources exist on the web.  Craig’s list is perhaps the best known example.  While Craig’s list, at the time of this writing, does not allow affiliate links, there are ways around this problem.  It is time consuming, but possible, to create enough ads in free venues to generate sufficient traffic to make some sales.
  • Most successful affiliate marketers have their own web site.  In fact they often have a number of affiliate sites.  We look at the types of affiliate web sites in the next section, as this is the preferable means of generating traffic for an affiliate marketer.

 Affiliate marketing can be highly profitable, but it takes time and effort, just as does any business.  Don’t believe the claims of some trying to sell you secret plans to start making a profit immediately.  All businesses must be intelligently nurtured over time.