Affiliate Marketing – Everything You Need To Know

What is Affiliate Marketing?

Affiliate marketing is a marketing model where a company pays third parties for promoting its products. Essentially, an affiliate marketer is a ‘digital salesman’. A company does the hard work of creating a product or service and the entire support construct behind it; and an affiliate marketer promotes the product in exchange for a fee or commission. Typically, this commission is paid when a successful sale has been made, however it can be based on other criteria.


Affiliate marketing started way before the introduction of the Internet, but it has now grown to become one of the most popular (and extremely rewarding) ways of earning an income online. So, let’s delve into understanding affiliate marketing in more detail and how you can get started.

Why is Affiliate Marketing So Attractive?

Affiliate marketing is important for both the underlying company and the affiliate markets.
For a company, the benefits of running an affiliate marketing program include:

Increased Sales

Affiliate marketing is a powerful magnet to create awareness which increases sales and revenues. A company that applies an affiliate marketing strategy usually partners with publishers, bloggers, online businesspersons and influencers that indirectly act as its marketing team. Affiliate marketers often engage targeted or huge audiences and they can help a company not only to boost its sales but also to exponentially scale up its online business.

Pay is Based on Performance

Affiliate marketing is in essence a type of performance marketing. Unlike traditional marketing paths, a company implementing an affiliate marketing program gives payouts based on performance, rather than mere activity. An affiliate marketer is usually paid when a successful sale is made, and not when they perform marketing activities. For any company, this is a lower-risk, cost-efficient strategy; and additionally, they get to set the commission rates.

Social Proof

Consumers generally trust brand ambassadors; this is what is known as social proof. That is, it is the idea that customers are more readily willing to trust a product which is promoted or recommended by people or companies they know. This is extremely evident with social media influencers whose followers exhibit a higher level of trust when the person they follow endorses or promotes a product. When working with affiliate marketers, a company promotes its products to an audience that they can easily ‘trust’, and this can lead to more direct sales.

Select your ‘Marketing Team’

When a company launches an affiliate marketing program, affiliates apply to join up. They can select the right candidates or networks that they feel will meet their marketing, brand and sales goals. There are many affiliate networks and programs that keep themselves very exclusive by only approving applicants that meet their specific criteria.

Boost Promotions

With an affiliate program, companies can boost any new promotions or products, quickly and effectively. Whether it is an important date, such as Black Friday or Christmas, or simply a discounted clearing sale, experienced affiliate marketers will ensure that the necessary hype is created all around.

Why You Should Consider Becoming an Affiliate Marketer

For affiliate marketers, the program is a powerful way of creating an active and passive income stream.
Here is why it is an incredibly timeless opportunity:

More than 3 billion internet users

There are over 3 billion Internet users across the globe, and it can only grow from here. As more users get connected and access the ‘internet grip’, online shopping and services will only grow; and this will continue making affiliate marketing an attractive proposition for anyone that wants to start an online business.

A global marketplace

With affiliate marketing, the world is your marketplace. The internet ensures that anyone from any corner of the world can buy your product and contribute to the bottom line. A relatively new niche and the perfect example of an affiliate marketing opportunity is cryptocurrency trading. As this market continues to grow exponentially, the potential for affiliate marketers is limitless to tap into many existing markets such as CFD traders, FX traders, investors, etc. A powerful strategy for many affiliates is to cross-sell related products and services.

No warehousing, no inventory

As mentioned above, the company essentially has to do all the work regarding its product; your work is just promoting, no other hassles such as dealing with customer support or product development etc. Whether it is a physical product that needs shipping, or a digital product delivered in any manner, you are not involved in any manner after the lead has completed the required action. For example, as a crypto affiliate marketer, once one of your leads clicks on your link and signs up with a broker and starts to trade, you will be paid.

Money never sleeps

As a digital marketer, you do not have to ‘man’ your website to allow customers in. Customers can visit at any time and from any place, as well as make purchases at any time, and you will get paid, even when you are asleep.

Work at your convenience

Work whenever, wherever and however you desire. With affiliate marketing, you generate money with the flexibility and convenience that you set for yourself.

Low start-up costs

Because you do not produce, store or deliver products, affiliate marketing is a far cheaper business to start and maintain. As well, you can sell any product you want (no obligation to promote what you hate) and have the opportunity to scale it. While some people will claim that there are no costs, this is not true. Like any business you have to make some kind of investment including your time. While starting an online business can be achieved with a tiny budget in comparison to a “brick & mortar” store, it is highly recommended to have working capital.

Who Is Involved in an Affiliate Marketing Program?

To successfully conduct an affiliate marketing program, the following four parties are involved:

1. Affiliates

Also known as publishers, affiliates are the promoters of the product. Affiliates can be individuals or companies that help spread the word about the product. They can use varied strategies, such as blogging, videos, social media or any other relevant media. As stated above, affiliates do not own the products they promote and are not in charge of any other duties (such as shipping or customer service), besides promotion. They are paid when any sale is attributed to their efforts; and their earnings can range from a few hundred dollars to millions of dollars. Their payouts also depend on the structure of the affiliate program they sign up to.

2. Merchants

Also known as creators or retailers, merchants are the owners of the product that is to be promoted using an affiliate marketing program. Merchants can range from individual entrepreneurs to big companies that seek to leverage on the power of affiliate marketing to boost their brand awareness, provide social proof and increase sales. Merchants can utilise their own internal affiliate marketing program, or partner with an affiliate network to roll out a promotional campaign.

Merchants set the payout structure to affiliates and may also provide several marketing tools, such as website banners, text widgets, landing /splash pages for the effective promotion of its products. These marketing tools may be provided by the merchant themselves or by the affiliate program or network that manages the affiliate marketing.

3. Affiliate Network

An affiliate network is an intermediary between affiliates and merchants, basically providing management services for an affiliate marketing program. An affiliate network is beneficial to both the merchant and an affiliate, as it ensures proper tracking of affiliate sales and providing detailed reward statistics to both parties. For merchants, an affiliate network ensures that an affiliate marketing program is launched quickly and efficiently to reach a wide audience, especially if it is a niche industry where the network has experience in. An example of a niche affiliate network is Algo-Affiliates which specialises in the Crypto/Forex and finance space. For affiliates, a network can provide a huge pool of products to promote with ease. In some instances, affiliates have to pass through a network in order to join an affiliate marketing program. Another benefit of working with a network is tapping into their knowledge and experience which can cut down on time spent testing and optimizing. Almost always, an account manager is assigned to an affiliate, whose role is to help their affiliates achieve, so developing this relationship is highly beneficial.

4. Consumers

This is the party that completes or rather fuels the affiliate marketing system. It is consumers that buy the product created by the merchant, who in turn will reward the affiliate(s) that promoted it. Consumers are at the core of the affiliate marketing system and due focus should be placed on them by all the other parties. Consumers do not necessarily have to know that they are part of an affiliate program (some affiliates will disclose this, others will not). And they will not pay any extra amount for the product by choosing to buy through an affiliate, because any affiliate fee is already factored in by the merchant. Always remember, “The Customer is King”.

How Does Affiliate Marketing Work?

Affiliate marketing is a performance-based activity. As discussed above, an affiliate will promote a product to the consumer, and if a successful sale (or specific action is done), he/she will be paid by the merchant. The way the affiliate program tracks which affiliate referred a customer is through unique tracking links which the program provides the affiliate. These links often look like a URL with some unique numbers or characters that are associated to a specific affiliate. When a potential customer clicks on a link, whether it be a banner, button or text link, the affiliate tracking system registers this and assigns it to the affiliate. Then, depending on the earnings model and action required to trigger a commission that affiliate tracking platform monitors and manages this. As an affiliate, you will be given a login to this platform so you can track your performance and there are also often analytical tools so that you can analyse the performance of your marketing activities.

Here are some of the major earnings models used by affiliate marketing programs:

Pay Per Click (PPC)

In this model, an affiliate will get paid for clicks generated on a merchant’s advert. It does not matter whether a sale or even a lead was generated. In terms of revenues, this is not always an attractive model for a merchant, but it can be ideal when the target is to enhance brand recognition and visibility. Overall, the merchant assumes all the majority of the risk, and there have been concerns that the model can lead to some unethical marketing practices; a reason why it is not common nowadays.

Pay Per Action (PPA)

This is a more unambiguous payment model, where a merchant will only pay the affiliate when the consumer performs certain actions. The actions could be generating a lead (CPL Cost per Lead) such as filling a form. The most common models are CPA (Cost per Action) / CPS (Cost per Sale), and this is typically reliant on the lead then making a purchase, or any other specified actions. This is the most common model, and the most efficient one for both parties. For an efficient affiliate, this is more lucrative, while for a merchant, it can be a bit more expensive, but more impactful nonetheless. A merchant gets to pay for certainty, and an affiliate is generously rewarded for conversion.

When it comes to payouts, there are different structures. Some merchants pay weekly, fortnightly, monthly, or even quarterly. As an affiliate, you can choose a payment structure that aligns with your goals. For a merchant / program, it is important to not only choose a structure that will allow for appropriate measuring of your performance metrics, but also to choose the most suitable one for accelerating your affiliate efforts.

How to Start Affiliate Marketing

The first step to becoming a successful affiliate marketer is to develop a business plan. Like any other business, you need to make various decisions, set goals, create a plan of action and execute the various tasks.

The first task to perform in order to develop your plan is to do research into the various niches you may wish to focus on and identify the products and programs that will meet this criterion. Here are some of the key considerations:

Select a Niche

Select a specific audience that you intend to promote to. Ideally it should be an area you are passionate about or at least have good knowledge of. A good niche is one that is profitable, has affiliate or link opportunities, and preferably a fair amount of competition. Yes, competition is good. If there is no competition, it’s probably not a very lucrative opportunity. The cryptocurrency space is an excellent example.

Choose the Best Affiliate Programs

Take time to research affiliate programs, networks and merchants to deal with in your preferred niche. This is where your income will come from, so a thorough study of your options is very prudent. You will be examining factors like market saturation, commission rates, price competitiveness, payout method and timelines, performance tracking, marketing tools, and even terms and conditions. This will allow you to only consider the best programs according to your needs.

After researching the best affiliate programs, you will still need to sign up with them. It may be straightforward with some programs, but others may demand more from their prospective affiliates.

Check out the Affiliate Platform

A merchant can decide to develop an in-house affiliate program, or to go with an affiliate network, such as Algo-Affiliates. Irrespective which direction they choose, the affiliate tracking and management software is the heart of everything and if it doesn’t track properly or provide you with user-friendly functionality your marketing efforts may be wasted.

Marketing Materials

No matter your preferred platform, it should be ready with numerous creative marketing resources that will ensure successful marketing campaigns. Take a look to see if there are text links, banners, video materials, and any other marketing tool that will make it easier to promote more effectively.

Program Management

Like any business relationship you want to be working with a program that has a solid reputation and is there to assist you. An affiliate marketing program has many issues to deal with: from affiliate recruitment and performance monitoring to payout terms and on-going quality assurance. It is advisable to build a strong relationship with your appointed account manager. Networks like Algo-Affiliates are renowned in their niches and place a huge emphasis on working closely with their affiliates, because the more their affiliates achieve, the more they achieve.

Promote and Make Money

Congratulations on becoming an affiliate, but the hard work starts here. You now have to start your marketing campaigns to get your audience to buy products. If you do not have a website, you may want to develop one and drive traffic to it. There are various strategies to drive solid traffic to your site. One of the best ways to generate quality organic traffic is by creating excellent content that in turn will assist you in achieving search engine rankings. This can be in the form of blogging, product reviews and evergreen content. Other strategies may involve paid traffic on major sites, such as Facebook and Google, email list building, and niche upselling.

You will definitely need to creatively use various resources provided by the merchant or affiliate network, such as in-text links, banners, periodic discounts, giveaways or free trials, in order to run an effective campaign.

Final Word

Affiliate marketing is an effective and powerful marketing strategy in this digital age. When executed efficiently, it can lead to huge profits for both merchants and affiliates. Your time to step into the affiliate marketing arena is now, so sign up with a reputable affiliate marketing network, such as Algo-Affiliates, and start extracting every drop of value from your online traffic.

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