How does Affiliate Marketing Work?


There are a few phrases a website owner likes to hear more than “passive income.” If you already run one or more sites, the odds are that you have heard about affiliate marketing. It seems like a magical way to generate passive income with little to no effort and to make loads of money in no time.

But, things are a bit different than they might seem at a glance. So, let’s take a closer look at the world of affiliate marketing to learn what it is precisely and how it works.

What is affiliate marketing?

Affiliate marketing is the process where you make money every time a visitor to your site checks out a company that you are promoting or buys their products or services. 

It is a form of referral marketing where you as an affiliate (also known as the publisher) use your skills to promote a company and refer your visitors to their products. When you are successful in your efforts, the company you are promoting rewards you with a commission.

The three critical elements of affiliate marketing

A successful affiliate marketing endeavor comes from well established and well-maintained relationship between its three crucial elements: the affiliate, advertiser, and the consumer.

An affiliate is an individual who promotes specific products or services on their website or blog. There are many ways to do it, ranging from video reviews to dedicated blog posts and everything in between. 

The advertiser or a merchant is a company that relies on an affiliate to promote its brand. This type of marketing is so popular that more than 84 percent of US-based companies currently use some form of affiliate marketing. Companies benefit from affiliates by increased online sales and improving brand awareness, and encouraging customer engagement.

The consumer is the final and the essential link in this chain. Without customers who would click the link and engage with the promoted content, neither the affiliate nor the company would make any money. That is why it is essential to treat the visitors to your website – i.e., potential customers with the most respect.

Advantages and disadvantages of affiliate marketing 

In its early days, this affiliate marketing was a dream come true for anyone eager to make substantial passive income. 

Early on, advertisers would offer a pay-per-click (PPC) type of deal where the affiliates would get paid every time someone clicked on a link leading from their site to the one owned by the merchant. Others would pay merely to have their banner displayed on a website and pay per impression. However, due to the high chances of faking these metrics by software, these practices are mostly abandoned these days.

Currently, most merchants pay for actual sales and qualified leads. There are strict metrics in place that determine what a valid interaction is.

All this means that there is much more that an affiliate has to do to make it in the competitive world of online marketing.

First, it is up to the affiliate to engage the audience by providing valuable and exciting content. Secondly, they must always be up to date with the current trends and potential problems with the materials or services they promote.

Lastly, they must consider dealing with the advertisers and pay attention to the fine print before entering an affiliate deal. Many deals even state that someone from the company must control the affiliates and ensure that the rules are followed.

Is affiliate marketing worth it? 

Despite all the tricky bits, this type of marketing is popular for a reason. While some folks make just several hundred dollars per month, influencers and people with a well-established online presence and a stable user base can make up to six figures every month.

Like with any other thing worth doing, success with affiliate marketing doesn’t come overnight. You must be able to offer a constant stream of quality content and boost your audience – and Google ranking – before you can expect to make it big in this competitive market. 

But, once you get the ball rolling, you might be among the lucky few that make a pretty penny thanks to their success in the field of affiliate marketing.