Affiliate Marketing Explained
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Why Affiliate Marketing Isn't a Bad Thing
I feel it necessary to explain this point to anyone that thinks affiliate marketing is a scam or involves underhand tactics to try and get people to buy stuff. In a nutshell it is simply the act of promoting a product or service to a possible customer or client.
Which is exactly what happens when you walk into a typical high street shop but more on that in a bit.
What is affiliate marketing?
Let's say I am an affiliate for Amazon. I review products (succinctly and honestly by the way). I use an affiliate link within that review to promote that product to others. If someone purchases through that link, they don't pay more for that product but I get a small commission.
Note: In some cases the customer may get a special deal by buying through that affiliate link. For example, I may give away a free eBook to that customer as a thank you.
Affiliate marketing is a way for Amazon (and/or the product owner) to thank me for promoting their product. We all win.
This works for any product in existence if they have an affiliate program.
My own product
I once created, produced and sold my own set of training DVD's on how to make a living photographing weddings. They were selling for around £200 on release.
The costs involved for me to advertise and get the word out about my product were huge and ate way too much into my profit margins.
By leveraging other people in the photography industry, I was able to reach thousands, if not millions more people worldwide than I would through my own efforts.
My affiliates would review the product and promote it through their:
As a thank you, I paid them a healthy commission for each sale (30%).
High street shopping
Affiliate marketing is no different to shopping on the high street.
Let's say you walk into Debenhams (or Wal-Mart etc) and buy some Jeans made by Levi's. The store didn't make those jeans, the store don't own those jeans, Debenhams are simply stocking, promoting and selling those jeans on behalf of Levi's.
Once the cost price has been taken into account, Debenhams make a small profit on the sale of those jeans. This is the best way for Levi's to promote their jeans and get them seen everywhere.
It is the same when you go to a trusted site like Amazon. They don't create and/or own most of the products listed. They are just the middleman offering an incredible marketing service to merchants.
No stock required
Affiliate marketing is in effect, the same process. However, the beauty of affiliate marketing is that you don't need to hold any stock. All you do is promote the product and let the merchant take care of everything else.
In my case, I would receive notification of a DVD sale made by one of my affiliates (in Australia for example), I would package and send the DVD to the buyer and then I would pay the affiliate their 30% commission at the end of the month.
It is like me standing outside a high street store and saying to passer's by:
"Hey, check out this store, they have a fantastic sale on right now".
If they go in and buy something, the store pays me a commission for getting them that customer.
I like to think that in most cases, affiliate marketing is a bit more refined. However, there are unscrupulous internet marketers out there (like any business) that abuse affiliate marketing.
If you aim to become an affiliate marketer, please do it the right way and don't spam people.
Affiliate marketers
If you come across a website that is promoting a product, please understand that the person promoting that product has probably spent a lot of money (and time):
I do a lot of product reviews for many different things. Sometimes I buy the product and sometimes they get sent to me to review.
Because my ethos is built around honesty, integrity and helpfulness, I don't always accept poor products for review. I only tend to promote products that I like, would use or think my readers would find useful.
As an example, I recently received a $40 microphone to review. Now I didn't pay for that microphone but in most cases with cheaper products, I do get to keep the product.
However, the review took me about 2 days to test, write, film, edit, upload and complete. When you break that down, I effectively received $40 for about 14 hours work. That works out at about $2.85 per hour!
The risk for me is that I may or may not receive affiliate commissions for selling that product via the review on my website. Even if I do, I will only receive about $2 per sale.
So what is in it for me?
Well, for one I get traffic to my site. I would like to think that once a visitor has read my review, they may well visit other pages on that site.
If they do, they may well decide to buy another product, join my mailing list in exchange for free training or something or share the site with others.
Affiliate marketing is a fickle business and can be tough for marketers but rest assured that in the majority of cases it is completely legitimate. It is simply business.
If you are new to affiliate marketing and would like to know more about possibly getting involved, check out out Wealthy Affiliate review.
Author: Nick
Nick has been internet marketing since 2005 and has sold over £2million worth of his own and other people's products all over the world. He also won the "Entrepreneur of the Year" award for South and West Dorset in 2011 and loves teaching others how to succeed.
