Affiliate Marketing: How it Works & How To Start in 2023

Affiliate marketing has taken the online advertising world by storm.

Indeed, many online shoppers now begin their searches for products or services by reading blog posts.

But did you know that those posts are most likely crafted by affiliate marketers who advertise for various companies?

Those marketers could be you in the future.

Affiliate marketing has gained a reputation as an accessible way to earn passive income, even if you don’t have marketing experience personally.

And that’s true!

Affiliate marketing can be a great way to earn passive income over time.

However, you must know how affiliate marketing works to get the most bang for your buck.

Today, let’s break down what affiliate marketing is and how you can start marketing in 2023.

What is Affiliate Marketing?

Affiliate marketing is an advertising method by which content publishers earn commissions (percentages of product sales) by promoting products or services on behalf of others.

Affiliate marketers advertise or promote products for other companies.

They receive a commission if those promotional efforts lead to sales, conversions, or other desirable metrics.

Simple, right?

Let’s take a look at an example.

Say that an affiliate marketer partners with a company that produces cleaning supplies.

The affiliate marketer then creates a blog post detailing cleaning strategies.

In the post, the affiliate marketer references one of their partnered cleaning company’s products.

If a blog reader clicks on a linked cleaning product and makes a purchase due to reading the blog, the affiliate marketer earns a commission.

Pretty easy, right?

But it gets even better for you, the aspiring affiliate marketer.

Affiliate marketing programs are either free or very cheap to join.

They can be highly profitable and advantageous for content creators, bloggers, and other online business owners.

What’s not to like?

Affiliate Marketing Definitions

Here’s a breakdown of some of the most important affiliate marketing definitions:

• Affiliate link – An affiliate marketer’s website links to a product, service, or page for one of their partners.
  Affiliate links inform the affiliate’s partner that a viewer/customer came from the affiliate marketer’s blog/website
• Affiliate program – A program where an advertiser or business owner pays commissions to affiliates in exchange for promotions on that affiliate’s blog, content network, or other materials
• EPC – Earnings per click. EPC is the average amount of money earned each time a person clicks an affiliate link
• CPA – Cost per acquisition/action. It’s a metric that measures conversion rate compared to money spent on advertising
• RPM – Revenue per mille. Mille is another word for thousand.
  This metric breaks down the revenue per 1000 page views for a webpage and can be used to determine the efficacy of affiliate marketing content or programs
• ROI – Return on investment, which measures how much of a profitable return an affiliate marketer, an advertiser, or another party receives in exchange for their investments

How Does Affiliate Marketing Work?

Affiliate marketing works a little differently for each party involved.

But the basic process is ultimately the same:

• An advertiser or company enlists the help of an affiliate marketer to promote their products or services
• The affiliate marketer creates content.
  Then they either directly advertise for the advertiser/company in that content or weave subtle promotions into the content depending on the strategy
• A consumer views the affiliate marketer’s content, like a blog post or YouTube video, and clicks on an affiliate link
• If the affiliate link click leads to a desirable outcome – such as a page view or purchase – the affiliate marketer receives a commission or percentage of the resulting sale

Let’s take a closer look at how affiliate marketing works for each party involved in the affiliate marketing process.

How it Works for Product Owners

Product owners, product creators, or sellers kickstart the affiliate marketing process.

After all, they’re needed to enlist the help of affiliate marketers in the first place.

Product owners seek out affiliate marketers to perform a specific type of advertising or product promotion.

For example, a graphic design company might enlist an affiliate marketer to create web copy, like blog posts.

They hope that the affiliate marketer’s content will bring visitors to their site and convert them into clients/paying customers.

How it Works for Publishers and Affiliates

Affiliates or content publishers can include companies or individuals, depending on the size of their organizations.

In any case, affiliates and publishers join affiliate programs that product owners or companies run.

Once they join an affiliate program, they create content to appeal to their partners’ target audiences.

For example, if an affiliate marketer promotes a cleaning company, they create blog posts breaking down cleaning tips, great cleaning products to purchase, and so on.

The affiliate marketer only gets a commission or portion of the revenue made if their efforts lead to conversions, impressions, or sales.

It all depends on the specifics of the affiliate program in question.

So, while affiliate marketing can be easy money, it can also lead to no money.

It’s a far cry from a guaranteed paycheck!

How it Works for Consumers

Consumers are also necessary for the affiliate marketing process to work.

Consumers read or consume the content from the affiliate marketer, then either click affiliate links or choose not to.

If they click on affiliate links, they count as impressions or leads generated by the affiliate marketer.

Notably, consumers must be made aware that affiliates receive commissions for advertised or listed products in their content.

Legally, all affiliate marketers must disclose their relationships to retailers or product manufacturers.

This allows consumers to make educated decisions on whether an affiliate marketer’s content is trustworthy.

How it Works for Affiliate Networks

Affiliate networks are groups of loosely associated companies that produce complementary or compatible products.

They team up and pass leads to each other to improve everyone’s success.

For example, an auto repair shop might join an affiliate network with an auto cleaning supply company.

Both companies create content that directs traffic between each other.

In theory, this leads to greater sales and more traffic for both companies across the board.

Types of Affiliate Marketing

As affiliate marketing has become more popular and profitable, distinct affiliate strategies have become more well understood.

There are three broad types of affiliate marketing you can pursue.

Unattached Affiliate Marketing

Unattached affiliate marketing means that affiliate marketers have little to no authority in the niche or specialization in which they advertise.

There aren’t any connections between affiliate marketers and their customers.

In many ways, this is the easiest way to affiliate market, but it runs the risk of not being profitable.

Since unattached affiliate marketers don’t build connections between them and their viewers or consumers, they rely on pay-per-click advertising campaigns in most cases.

They create a lot of content and hope that consumers click on the affiliate link, earning them a small commission in the process.

On the downside, there’s no audience trust.

So getting those clicks can be tougher than you think, especially if the target audience relies on trust before buying something.

Related Affiliate Marketing

Related affiliate marketing involves affiliate marketers promoting services or products they don’t personally use that are nonetheless related to their niches.

Related affiliate marketers have target audiences in industries or niches and often have dedicated audiences who regularly consume their content.

In other words, they build up trust with their readers/consumers.

This makes them very valuable to companies who want effective affiliate marketing services.

For example, a baking company might rely on the affiliate marketing of a recipe website.

The recipe website may not have personally tried the baking company’s foods.

But since they do have expertise in cooking in general, their audience is still likely to trust their opinion (in theory).

Involved Affiliate Marketing

Involved affiliate marketing involves only recommending or promoting products and services that you’ve used personally and will believe in.

It’s the exact opposite of unattached affiliate marketing, and it takes the longest to become profitable.

That said, it can be very advantageous.

Involved affiliate marketers build up a lot of audience trust and have dedicated audiences they advertise to regularly.

Since they use the products and services they promote personally, they offer trusted recommendations and opinions that their audience members are likely to take to heart.

This type of affiliate marketing takes more time, but it might just lead to a very sustainable business model… and lots of passive income for you.

Types of Affiliate Marketing Programs

The nature of an affiliate marketing program – and the consumer actions it wants to generate – can heavily affect whether one or another is right for your goals.

Let’s take a look at the four common types of affiliate marketing programs.

Pay-Per-Sale

Pay-per-sale affiliate marketing programs are the simplest and most common type.

In short, you (the affiliate marketer) get a commission for each sale a customer makes, provided that the customer came to the product creator’s site through your affiliate link.

Pay-Per-Lead

Pay-per-lead affiliate marketing programs instead reward affiliate marketers whenever a consumer signs up for something, like an email newsletter, a website membership group, a subscription, etc.

Companies may use pay-per-lead affiliate marketing programs for sweepstakes offers, lead generation, and more.

Many beginning affiliate marketers enter pay-per-lead affiliate programs since it’s easier to make leads than sell products.

The reverse is true after an affiliate marketer builds an audience.

Once a marketer builds enough audience trust, they may find it easier to sell products directly.

Pay-Per-Click

Pay-per-click affiliate programs provide marketers with commissions each time a consumer clicks on an affiliate link.

These are rare affiliate programs since they reward affiliate marketers for the least consumer activity.

Generally, larger merchants who want to build or bolster brand awareness use pay-per-click programs.

Pay-Per-Install

Pay-per-install affiliate programs pay marketers for each time a consumer clicks on an affiliate link and installs software or mobile apps.

This is a distinct affiliate marketing model since the consumer doesn’t have to necessarily pay for the software or mobile app if they’re free.

Technically, there is a fifth type of affiliate marketing program: pay-per-action.

However, this generalized affiliate marketing program may include each of the above types.

Pay-per-action programs provide affiliate marketers commissions whenever a consumer does a certain action.

This can include submitting a form, signing up for a newsletter, making a sale, etc.

Types of Products to Promote

Affiliate marketers can promote a wide range of different products.

Generally, the most successful affiliate marketers stick to a single industry or niche and exclusively advertise products or services in that area.

For example, a yard supply affiliate marketer might exclusively advertise physical products that yard owners should find useful when maintaining their properties.

Such a marketer likely won’t advertise digital products like software (with perhaps a few rare exceptions).

Digital Products

Digital products are among the most common for affiliate marketers to promote.

Digital products include:

• Software
• Mobile apps
• Cloud software (shared/hosted by cloud servers)

Naturally, digital product affiliate marketing is more common in the IT industry, B2B marketers, and similar situations.

Physical Products

Affiliate marketers promote physical products even more commonly than digital products.

That’s because companies make physical products for practically every conceivable need and purpose.

Affiliate marketers promote physical products in industries including but not limited to:

• Car maintenance
• Yardwork
• Cleaning supplies
• Construction supplies
• Toys
• Outdoor equipment
• Household machines
• Computers and computer accessories

Because physical products are available in such sheer variety, most affiliate marketers in this field follow unattached or related affiliate marketing strategies.

They don’t necessarily use any of the products they promote or advertise.

Depending on their audiences, though, they can be more or less experienced/trustworthy regarding the quality of those products.

Services

Other affiliate marketers promote services.

These services include:

• Cloud hosting services
• Consultancy services
• Advertising services
• Digital design services
• And more

Technically, affiliate marketers who advertise for local businesses also promote services.

Service-based affiliate marketing can follow any of the above-mentioned strategies.

However, involved affiliate marketers are often more successful than unattached marketers in this arena.

Consumers are more likely to trust a service recommendation from someone who has actively used it compared to someone who has not.

Consulting

Lastly, affiliate marketers can promote consultants or consulting services.

These include life coaches, marketing consultants, and other types of business consultants.

Again, the most successful affiliate marketers in this area tend to be involved rather than unattached.

People are more likely to take a chance with an affiliate marketer for a physical product than they will for a service, experience, or consultant recommendation.

Affiliate Marketing Pros and Cons

Affiliate marketing is becoming more popular around the Internet, but it has its positives and downsides.

Would-be affiliate marketers should fully grasp these before launching their own affiliate marketing businesses.

Pros of Affiliate Marketing

Many online business owners think affiliate marketing is well worth it – especially since it has become more profitable in recent years.

According to recent statistics, the affiliate marketing industry is worth over $8 billion now compared to over $5 billion in 2017.

The many advantages of affiliate marketing include:

• It’s incredibly easy to execute. Affiliate marketers don’t need to design and create products, nor do they have to fulfill orders or ship products to customers.
  They just have to advertise them
• It’s very low risk. Affiliate marketing programs are typically free, so affiliate marketers can begin making money without much of an upfront investment.
  Once successful, many affiliate marketers generate a good amount of passive income through commissions
• Affiliate marketing is easy to scale. Many affiliate marketers run several blogs, influencing consumers or advertising products across different industries/niches.
  Earnings from commissions can be fed back into one’s business for further expansions and greater profits in the long term

Cons of Affiliate Marketing

Even with those advantages, it’s important to know the potential cons and challenges of affiliate marketing.

These include:

• Affiliate marketing frequently requires patience. Most successful affiliate marketers have to work at it for several years before building up the sustainable blog infrastructure and audience trust necessary to generate consistent passive income
• Affiliate marketing profits are always commission-based. Thus, one’s profits are contingent on how successful their efforts are and overall market trends
• No control over affiliate marketing programs. All affiliates have to obey the rules set by program overseers, such as product companies.
  Therefore, many affiliate marketers don’t have as much freedom as they might otherwise want

Popular Affiliate Marketing Channels

To succeed at affiliate marketing, you have to choose the right affiliate marketing channels to develop and maintain.

Affiliate marketing doesn’t just take place on blogs (although starting a blog can be a smart way to jump right into this business model).

It can also take place across a variety of different channels and content types. Here are some examples.

Niche Websites

Niche websites include the above-mentioned blogs: the most common affiliate marketing channels.

For example, an affiliate marketer whips up a blog post breaking down the best products in their industry.

They include a few affiliate products in the product round-up.

However, micro-sites or company blogs also count as niche websites for affiliate marketers.

These are usually advertised within partner sites or sponsored listings for search engines.

Niche websites appeal directly to very specific target audiences, such as a single profession at a certain level in an industry.

Many niche website affiliate marketing efforts focus on B2B consumers (i.e., middle managers who purchase things for their employing organizations).

Social Media

However, affiliate marketers can also effectively advertise on social media platforms.

Instagram, by far, is the easiest example of this marketing in action.

Influencers on Instagram and other platforms partner with brands, then take photos or videos wearing those brands’ products or using their stuff.

This type of advertising can be more passive or more aggressive depending on the influencer’s audience, goals, and personal strategy.

Email Marketing

Email marketing may also be advantageous when trying to build an affiliate marketing audience or presence.

Many affiliates use email lists to promote their partners’ products or services.

They weave hyperlinks into the email newsletters, which operate as traditional affiliate links.

Alternatively, affiliate marketers can build affiliate email lists over time.

They can use different campaigns to collect email addresses, then send out those emails for new products they choose to promote in the future.

Popular Affiliate Programs

There are dozens of high-quality, very popular affiliate programs one can join.

However, some of these are more effective (and potentially profitable) than others.

Here are three of the most popular affiliate programs to consider.

Amazon Associates

The Amazon Associates affiliate marketing program is accessible and, more importantly, provides affiliate marketers with sales potential for all the products contained in the Amazon marketplace.

As a member of the Amazon Associates program, affiliate marketers bring clients via external traffic sources to Amazon.

Since Amazon has millions of different products, affiliate marketers have their pick of which products they wish to advertise or pitch.

Many beginner affiliate marketers find the Amazon Associates program to be the best for developing their skills in building an audience.

YouTube Partner Program

The YouTube Partner Program lets YouTube content creators monetize their videos by partnering with different advertisers (who are also partnered with the program).

YouTube content creators can become affiliate marketers by:

• Allowing ads from partnered advertisers to show up on their videos
• Directly advertising for those partnered advertisers during their content, like a commercial

The YouTube Partner Program is a great way for consistent YouTube content creators to make income from their videos.

It’s also a good way to become an affiliate marketer on the side while focusing primarily on your YouTube content and high-quality videos.

ClickBank

Then there’s ClickBank. ClickBank offers 6 million distinct Digital Products and annually reaches over 200 million people.

Thus, it’s a great choice for affiliate marketers who want to lean into advertising/promoting digital products rather than physical ones.

More importantly, affiliate marketers benefit from a potentially high commission rate (sometimes up to 75% per click or sale).

In this way, affiliate marketers can enjoy a consistent source of recurring income if they build up an audience and marketing network for this program.

How Much Do Affiliate Marketers Make?

Average affiliate marketer salaries are very difficult to pin down due to the nature of the industry and its inherent variability.

According to Payscale, the average affiliate marketer makes approximately $53,000 per year.

However, the highest-paid and most successful affiliate marketers make over $70,000 a year.

Superstar (and highly successful/fortunate) affiliate marketers make over six figures, but this is the exception rather than the norm.

Therefore, aspiring affiliate marketers should keep this in mind if they hope to get rich quickly or make a fast buck off mass-produced listicles or product round-ups.

Examples of Successful Affiliate Marketers

Wirecutter is one of the most successful affiliate marketing companies of all time.

As a quasi-journalistic site, it regularly lists top gear, gadgets, and tech stuff for its target audience.

Among its many partners include Office Depot, Home Depot, and Amazon.

Consumer Search is another great example.

This affiliate review website is all about breaking down home products for prospective buyers.

It’s a very trusted affiliate marketer overall, with around 1.2 million visitors monthly.

Then there’s Money Saving Expert: a UK-based consumer site focused on affiliate marketing independent of direct company fees.

That means the site reviews products and makes recommendations based on what it really believes, earning it a significant amount of reader trust and goodwill in the process.

How to Become an Affiliate Merchant

Anyone can become an affiliate merchant with the right plan and dedication. But if you really want to succeed, you’ll need to take certain steps to ensure you build an audience that trusts you and leads to consistent passive income.

Define Your Target Audience

Firstly, aspiring affiliate merchants should define their target audiences.

A target audience is a unique demographic or collection of people most likely to buy what you sell.

For example, an auto repair shop’s target audience includes car owners.

By defining a target audience, you’ll be better able to craft content that speaks to them and that converts them into customers for your partnered advertisers.

Find a Product to Promote

Next, you’ll need to find a product or service to promote consistently.

This should be related to your target audience.

For example, if your target audience includes parents between the ages of 25 and 45, the ideal products for your affiliate marketing campaigns include toys, children’s clothes, and so on.

Test Your Idea

Once you’ve considered and settled on a target audience and product category to promote, test your idea by beginning with some soft affiliate campaigns.

Join an affiliate program or two, then write a few blog posts for those campaigns.

See where you stand after a few months, and be prepared to adjust your idea.

Scale Your Idea and Promote the Affiliate Offer You Found

If your initial efforts are successful, start to scale up by writing more blog posts, expanding into social media, or creating video content.

Continue to promote the affiliate offers you find, keeping track of what works and what doesn’t.

For example, if your audience responds more to video content on YouTube than written blog posts, it’s a good idea to pivot more into the video content creation side of things.

Re-Invest Back Into Other Websites and Expand

As you make money, don’t rest on your laurels. Instead, re-invest that money back into your websites and affiliate marketing business.

Plan to expand for future success and consistent passive income generation.

Tips for Successful Affiliate Marketing

While anyone can become an affiliate marketer, only some are good enough to truly succeed in this industry.

Luckily, there are many ways in which you can be successful at affiliate marketing.

Here are some tips to keep in mind as you launch your first campaigns.

Create Great Content

Firstly, never compromise on content quality.

Creating great content is the number one way you can draw people to your affiliate marketing brand and convince them to click on your affiliate links.

Great content includes:

• High-quality, well-written blog posts (that don’t seem to be flat-out advertisements for your partners)
• Excellent video content
• Engaging social media posts that bring real value to those who view them

Get Your Target Audience Correct

Secondly, endeavor to fully understand your target audience.

This allows you to advertise to the people most likely to buy from your partners in the first place.

If you don’t get your target audience correct from the get-go, you’ll advertise to the wrong people throughout your affiliate marketing campaigns and waste your time and money.

Go Beyond Product Reviews

While most affiliate marketing focuses on product reviews or recommendations, you don’t have to stick with this basic system.

Instead, you may benefit from going beyond product reviews and offering additional value to your consumers, like:

• Breakdowns of complex topics in your industry
• Service reviews
• Discussion posts about products and how they work
• Deep-dive papers about major industry ideas
• And more

Network with Others at Affiliate Summits

Lastly, don’t hesitate to get out there and network with other affiliate marketers at affiliate summits.

As mentioned above, these business-oriented meetings allow you to connect with other affiliate marketers and form affiliate networks.

Frequently Asked Questions

Conclusion

Affiliate marketing is an engaging and accessible online business model.

Through affiliate marketing, you advertise or promote products on behalf of other companies.

When done well, affiliate marketing can generate lots of passive income and grant you true financial freedom.

Have more questions, want to know more about how affiliate marketing works, or need tips on monetizing your existing blog?

Leave a comment and ask us to show you how you can maximize affiliate marketing for your personal goals!