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How Affiliate Marketing Works

Affiliate Marketing 101

Let’s say you have a website, and you have a decent amount of traffic to it.

It can be any type of website. Perhaps you have a blog where you write about arts and crafts, or you’re an outdoorsy type of person who writes about their travels.

Maybe you have a news website, or you have an Instagram account with thousands of followers, or a YouTube channel with many subscribers.

referzone - affiliate marketing-how it works

Whatever the case may be, your audience is valuable. Online stores will pay you to promote their products to your audience. There you have it, it’s advertising!

We’ve all watched TV and had to wait through commercial breaks, right? That’s how TV networks make money, first and foremost. They have an audience, and stores pay to have their products appear during the commercial breaks.

So you’ve got the audience, now what?

If you’re trying to monetize your content, there are generally two types of advertising available to you:

1.Display Ads 2. Affiliate Marketing

display ads and affiliate marketing

Display Ads are more like traditional advertising. You make space for advertisements on your website, merchants make real-time bids to display their ads, and you get paid. The more traffic you have on your site, the more people see the ad, and the more you get paid.

Think about how much money it costs to air a commercial during the Super Bowl. The same applies to online display ads.

Affiliate Marketing works a little differently. In this form of advertising, you yourself act as a spokesperson for the product.

Let’s go back to the example where you have a blog where you write about your outdoor adventures. If you have a particular pair of hiking boots that you enjoy wearing, you could write a post about how awesome they are and why you like them so much. Further, you don’t get paid based on the number of people that see the ad, rather you get paid a commission on any sales that you influence with your content.

“Wait, so you only get paid for sales? How is that better?” You might ask.

Affiliate commissions tend to be much more lucrative than display ads. It’s very common to see commission rates anywhere from 10 to 20 percent of the sale amount. Display Ads typically pay a far lower rate since the revenue is not performance-based.

On the flip side, let’s say you’ve just started your online store and you’re hoping to get your products in front of an audience. Affiliate marketing is often a great way to reach new customers, especially when you’re just starting out.

As mentioned above, affiliate is inherently a performance based marketing channel, meaning you only have to pay for advertising that has already produced a tangible return on investment.

Affiliates, those publishers that are promoting your products, typically have built trust with their audiences. If they say your products are good, their followers are likely to believe them. This is just as valuable for established brands as it is for newcomers.

So how exactly does this all happen?

Of course, a technically savvy merchant could create all the tracking that would be required to manage an affiliate program. Some certainly do, but it can be very resource intensive.

Affiliate marketing networks are platforms that solve this problem. They provide the tracking and handle the payments between merchants and affiliates. Since they have many merchants and affiliates, networks also act as a marketplace of sorts, where merchants can seek out new affiliates and vice versa.

Affiliate marketing is a great channel to leverage in order to increase your earnings either as a merchant selling products or as a publisher looking to monetize your content. It’s often used in tandem with other methods, such as Display Ads, email marketing, etc.

There can be a learning curve, however. It’s a more accessible channel than others, that’s for sure, but there’s still a lot to know in order to be successful.

At ReferZone, we share our knowledge that we’ve built from several years inside the industry. Check out our blog for helpful tips and tricks to get you on your way to accelerating your revenue!