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The basic pillars of affiliate marketing

There are a lot of jokes online about our (not so) secret desire to make money while doing nothing at all. It’s probably the second most wanted way of earning revenues after winning the lottery. Modern technology does give us this wonderful opportunity of passively getting paid, even if we happen to be asleep at the time that happens.

It is called affiliate marketing and it is based on the concept of revenue sharing.

If you have a product or service and want to expand your customer base, you can offer promoters a financial incentive through an affiliate program. If you have nothing of your own to sell but still want to make money, you can become a promoter and make money as an affiliate marketer.

I know it sounds like a dream but don’t quit your day job just yet; here’s more about it.

The basic pillars of affiliate marketing

According to 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”.

Four different parties are involved in the process: the merchant, the network, the publisher, and the customer.

To give a more thorough description, this type of marketing is in its essence the process of growing the market for a certain product or service by involving numerous parties, each receiving a share of the revenue according to their overall contribution.

Basically there are two sides in affiliate marketing – the product or service seller (and perhaps its designer) and the affiliate marketer. Yet there is no clear border when it comes who one party is in this equation. One can be both the creator and the marketer and still get a profit from a revenue sharing scheme.

Let’s explore each of the parties of affiliate marketing:

The Merchant

The merchant (to use the name the world’s largest online encyclopedia chose) can also be the creator, the brand or the seller. It’s who designs the product or service and can be a big, well-known company like any smartphone producer for example, or it can be an individual who is either manufacturing something (like bath salts or scented candles) or offering a service (such as cleaning offices or homes).

The beauty of it is that it doesn’t matter the size of the enterprise. From really small start-ups to gigantic multinational companies, anybody could be the merchant behind an affiliate marketing program. They just have to have something for sale and be willing to work-up a remuneration scheme for their partners. Depending on what the target is – simply spreading the word and getting known or actually making a profit — it can be more or less generous.

The Affiliate

The affiliate is sometimes also called „the publisher”. This party can also range from individuals who either like or believe in the product or just want to make a little money to larger organizations who include this sort of endeavor in their own marketing strategies.

Depending on size and activity, the affiliate can make from small earnings to literally millions. This is where real marketing takes place – the affiliate promotes one or several products or services and tries to get potential customers interested before advocating the quality and value of the vendor’s merchandise in order to close the sale.

This can be achieved by a number of persuasion techniques. The most popular one is using personal experience with the product or service as a sales pitch. Writing a good review, telling people about how the affiliate’s own decision process went and what were the key points that determined them to make the purchase can be really powerful convincing tools.

The Consumer

The consumer (or customer) is like any business: the important factor that can make or break success. When sales are low, commissions are small and there is not much revenue to be shared. The customer can be reached on whichever channel feels more natural to the affiliate – marketing content on a personal or professional blog, social media platforms or online communities.

There is the question if the consumer is aware of being part of an affiliate marketing program. Some marketers chose to be transparent and own up to receiving some form of incentive for their efforts while others do the work and let the tracking system part in the background – the purchase is made as it normally would be while the affiliate still gets the deserved revenue.

The price would usually be the same as on the official website (retail) or even smaller as the affiliate can opt to offer a discount coming out of his own earnings in order to get a larger database.

The Network

This in an essential part of the affiliate marketing equation as it often acts as an intermediary between the merchant and the affiliate. These networks are professionally designed and offer a marketplace where affiliate programs are available to marketers. They are great online venues where producers and sellers can meet, get acquainted with one another and negotiate.

Since there is often a lot of suspicion on the part of the affiliates that they are not getting paid for all the sales they generate, having the network manage the tracking is best. Technically, direct revenue share is not impossible but it is made a lot easier by using specialized platforms. Plus, it makes the vendor seem more serious and professional and that is very important in business relations.

Closing remarks

It’s definitely hard work. One can make money even in their sleep by being an affiliate in such a program but only after putting in the initial effort of setting everything up for success. And then, of course, doing the same thing over and over again with new products and services.

Keep an eye on the Entrepreneurs Blog, as next time I’ll share some tips on how to use affiliate marketing to improve the bottom line of your online course. So stay tuned!

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