What Is Affiliate Marketing And How Does It Work? (2020 Update)

This one is my first ever blog post on my website. I'm very excited and nervous at the same time. I hope you'll like this post.

In this post, I'm going to talk about what is affiliate marketing and how does it work (in 2020)?

I'll also talk about how much money can you make with affiliate marketing and is affiliate marketing really for you?

Feel free to drop your comments down and let me know your thoughts over how your journey has been with internet marketing so far?

Without further due, let's talk about affiliate marketing.

Related: How To Be Successful In Affiliate Marketing? – 17 “Secret” Tips

1. What is Affiliate Marketing?

Affiliate marketing is basically a promotion strategy of the companies or vendors offering their products online or offline with the goals of making more and more sales.

It allows the vendor/company to reach market segments that it would not normally reach using its own marketing resources.

Now let's take a look at the definition of Affiliate Marketing from Wikipedia:

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate's own marketing efforts.

Internet marketing offers you an opportunity to start an online business with a very small investment.

You may want to invest more money as you make progress with your online business.

>>> How To Launch an Online Business From the Scratch (Free Training)

2. How Does Affiliate Marketing Work?

In this process, the vendor encourages influential marketers around the Internet to promote their products or services.

You're given the unique links

These marketers are given a unique link also referred to as an "affiliate link" by each prospective vendor that they can share with the people they could influence.

The person who clicks this link will be redirected to the vendor's website which gets tracked into the system which usually is taken care of by the affiliate network.

Some vendors also have their own link tracking system in place and they handle everything on their own.

What is an Affiliate Marketing and How Does It WorkImage source: https://www.oasdom.com

Related: 10 Common Affiliate Marketing Mistakes To Avoid As a Beginner

3. How Does The Affiliate Link Tracking Work?

For example, I searched for "buy cell phone online" on Google and I clicked on one of the search results which will redirect me to the webpage which talks about the best available cell phone in the market.

Call to Actions on the websites

The website has a "Buy Now" button or the link (also referred to as "Call To Action") somewhere on the page which I clicked.

As soon as I do that, a cookie would be stored on my computer with the marketer's information.

In this way, each vendor can track which links get clicked by the users and can then compensate to the affiliate marketer.

You get paid when the visitor buys the product through your link

If the visitor decides to buy a product or service, the marketer gets a commission for that sale which usually ranges from 1% up to 75% based on the vendor, product and price.

These cookies are typically tracked and remain active for roughly 1 day up to up 90 days.

So if someone clicked on your link but didn't make a purchase at that time but the person visits the same site again after a few days and buys the product, you would still get credit for that sale.

Watch the video: How Does Affiliate Marketing Tracking Work?

4. How It's Useful To The Buyer, Seller And Affiliate?

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.

The Buyer

By buying from an affiliate marketer, the buyer gets to learn about the product or service in detail before he makes 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.

The Seller

At the same time, the seller also has a gain.

For example, they get a sale that they normally wouldn't have gotten without the efforts of the affiliate marketer.

Without affiliate marketing, the seller wouldn't have reached the market segment of that marketer.

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.

The Affiliate

Lastly, the affiliate marketer gets a commission that is usually equal to a percentage of the sale which 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.

Related: How To Build a Successful Affiliate Marketing Website?

5. How Much Money Can You Make With Each Sale?

The amount of commission that you earn as the marketer depends on the terms and conditions of the affiliate program.

Commissions depend on the Affiliate Networks

The lower end commissions usually hover around 4-6%.

However, some vendors offer much higher commission rates up to 75%.

Some programs also adjust their commission rates based on the performance of the affiliate.

The program may usually start out at 4%-6% if you're just beginning with it.

As you sell more products in the month, the commission rate may also increase.

The Amazon Associates Affiliate Network works in a similar way.

Affiliates with a large audience can ask for higher commissions

If you have a big email list and get a large amount of traffic to your website, you could email the vendor directly and ask if for a higher commission rate for the products that you want to promote.

If you have authority in your niche and you think you can convince the seller to give you a higher rate, you should also contact them.

6. What's The Earning Potential?

Your earnings in this form of business will largely depend on your ability to make online sales.

Start by telling your friends

However, if you're a beginner with no prior experience in online marketing, you could start earning by telling your family and friends to buy using your affiliate link.

Let's say you are an Amazon Associates Program member and you know a lot of people who are already buying from the website. You should send them your link.

Explain to them how it works 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 and it will also help you grow your online business.

While this method will not add a significant amount of impact on your business, it will help boost your sales numbers to raise your commission rates.

You can build your website or set up a YouTube Channel

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 is not very effective and doesn't produce the results in the long run.

There are chances that you'll get banned if the vendor or the affiliate network consider it as spam.

Instead of posting the links everywhere on the internet, you should put up multiple online properties that discuss tips and tricks on a specific niche.

If you are good at something, for instance, fitness you could put up fitness tips online through a website or upload the fitness videos to your youtube channel.

You could then drive traffic to the vendor's website using SEO and social media marketing.

You can create the product reviews

In your website or the video, 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 trust and gain rapport with this audience which will help you get more sales.

Related: 9 Affiliate Marketing Compensation Models You Didn’t Know

7. Is Affiliate Marketing For You?

Is Affiliate Marketing For You?

Can you really make money with affiliate marketing?

The short answer is yes, you can earn a passive income and even a full-time income from affiliate programs.

The long answer is, it requires a commitment.

The process is not as easy as it sounds. It takes time and most people don't have the patience to keep pursuing it.

It's a Business

Remember, "Affiliate marketing is a BUSINESS" and if you want to achieve success at it, you must commit yourself to invest your time and keep taking the actions until you achieve the desired results.

Your chances for making money with affiliate marketing is probably no better and no worse than any other type of online home-based business.

You need to keep learning about new trends and affiliate programs in order to keep pace with the competition.

Your success will always depend on how committed you are at taking the actions at each stage and how well you execute your business plan.

what is an affiliate marketing and how does it work

Watch the video: What is Affiliate Marketing and How Does It Work For Beginners

I hope you enjoyed this blog post. 

Please comment below and let me know your opinion.

I would be happy to answer any questions you may have. 🙂


About the author 

Hardik Raval

Hardik is passionate about helping people launch their own online business. He loves to talk about online business ideas, affiliate marketing tools, tips and other sources of residual income available on the internet.


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