What is Affiliate Marketing in 2021?
What is Affiliate Marketing?
Marketers (Affiliates) are paid based on the results that they drive for companies (partners). As an affiliate, you are responsible for helping a company promote its goods or services. The company is responsible for tracking the traffic (potential customers) and paying you based on the traffic that you can bring. Affiliate Marketing is one of the most widely used forms of marketing because of its simplicity.
How Affiliate Marketing Works
Affiliate marketing works well because it’s simple and the company doesn’t have to pay marketers out of pocket. Instead, the affiliates help the companies make money and are then paid out of their profit margin. Companies don’t have to worry about paying underperforming marketers an hourly wage or a salary. & Marketers don’t have to worry about being underpaid while overperforming. Affiliate marketing when done correctly is a win/win for both companies as well as marketers.
Is Affiliate Marketing Profitable?
There’s a lot of money that gets paid out to affiliates each day. Depending on the company you are partnered with there are a few different types of commission structures for affiliates to be paid. The idea is still the same, affiliate marketers help companies earn money and then those companies pay the marketers out of the profits they were able to bring in. However, there are a few different options for how you are paid as an affiliate marketer.
What is Pay Per Click Affiliate Marketing?
Firstly, there is pay per click.
Pretty self-explanatory, affiliates are paid a flat rate for every click they can generate. Each click is counted for every new potential customer that visits the landing page for long enough for it to load. Companies that offer this payment structure to affiliates track the IP addresses of the visitors who click their affiliate’s links so they can be sure you’re bringing them good potential customers and not just spam clicking the link they’ve given you to promote.
What is Pay Per Action Affiliate Marketing?
Second, we have pay per action.
Pay per action is a very common affiliate commission structure, affiliates are paid each time someone they referred completes an action. This action can be anything from filling out a lead form (for example first name, last name, and phone number), to buying a product or service, creating an account, or maybe even just downloading an app.
These commissions are typically either a flat rate or a percentage of the sale.
Which Affiliate Marketing is the Best?
Finally and typically the best we have recurring commissions. Recurring commissions are offered when companies are trying to sell a monthly or yearly service rather than a physical good. A recurring commission structure means affiliates can be paid more than once per customer. Every time the customer pays their bill, the affiliate who referred them gets paid a commission (typically a percentage of their bill).
Recurring Commission Example
When Netflix and Hulu first came out they created an affiliate program with a recurring commission structure. Some affiliates who partnered with them early on could potentially still be earning monthly commissions from people they signed up years ago.
I prefer recurring commission structures because I only promote legitimate services that provide value. If the service I’m promoting legitimately provides value to the customer then the customer isn’t going to mind paying their bill each time it comes due because it’s a service that helps them.
What is a Multi-Tiered Affiliate Program?
There are also multi-tiered affiliate programs. Multi-tiered affiliate programs can be done correctly in theory, however, they do resemble a pyramid scheme so you must do your research and make sure the company you want to promote is legitimate, especially if they offer a multi-tiered commission structure. Multi-tiered commission structures simply mean that not only will you be paid for bringing in new customers, but you can also be paid a commission for bringing in new affiliates.
Flat Rate Multi-Tiered Affiliate Program Example
$10 For Every Customer Who Signs Up For Service
$100 For Every Affiliate You Refer Who Successfully Refers 5 Customers Their First Month
Or sometimes you’re paid a percentage of their earnings for either their first year or the lifetime of the affiliate, I’ve seen both.
Percentage Based Multi-Tiered Affiliate Program Example
10% of everything your affiliates makes for their first year
10% of everything your affiliate makes for the lifetime of their partnership
Where to Start Affiliate Marketing?
Now you’re probably wondering, how do people become affiliate marketers?
Believe it or not, MOST companies have affiliate programs. The first thing I do when I want to see if a company has an affiliate program is, go to their homepage and scroll down to the very bottom. If they have an open affiliate program 9 out of 10 times you will see a link in their footer titled “Affiliate Program” or “Affiliates” if not they may have an email address listed to contact for “marketing”.
Sometimes instead of posting their affiliate program publicly on their website, some companies will partner with “Networks” to list their affiliate marketing opportunities to marketers actively looking for affiliate marketing partnership opportunities.
Be Sure To Check This Out!
Be Sure To Check This Out!
What is an Affiliate Network?
An “affiliate network” is a website that connects companies looking for affiliates with marketers who are looking for affiliate opportunities. When you create an account on a network it will ask you if you are a company looking to generate traffic for your business or if you are a marketer looking for open partnership opportunities. A little tip I have for affiliates searching for opportunities on a network is this: after finding an affiliate opportunity you may be interested in, double-check the bottom of the company’s homepage to make sure they don’t have an even better payment plan listed publicly.
Are Affiliate Networks Safe?
You may remember, some companies offer multi-tiered commission structures, meaning those affiliates are also paid for bringing on more affiliates. This can get a little unethical on networks sometimes because occasionally affiliates will pretend they are the company itself and then create a listing for an affiliate opportunity that pays less than what they are receiving. Essentially, be careful of middlemen trying to pose as the company that pays them. Because 100% of the time these middlemen aren’t going to give you what you deserve.
Example of What to Watch Out For
John joins CompanyA’s affiliate program that pays him $10 a signup.
John then heads over to a less regulated network and signs up pretending to be CompanyA.
He then creates a listing that says “Hey we are CompanyA and we are looking for marketers, marketers will be paid $7.50 for every signup”
Now when affiliates from the network promote this offer John receives $10 for each signup from Company A, he then pockets $2.50 for each signup and sends the remaining $7.50 to the affiliates doing the marketing work.
Networks can be a great thing for both companies and affiliate marketers, just make sure you’re getting your entire share of the pie from the company you are partnered with.
Finally, Is Affiliate Marketing Legit?
Yes, as you can see affiliate marketing is a very legitimate form of marketing that can be incredibly beneficial to both companies and marketers. It is important however to do your research before promoting any company. You want to be sure that the company you partner with is legitimate and truly capable of providing value to its target audience.