Affiliate marketing is an advertising model where influencers can earn a commission for promoting products and services by different brands. It’s a clever way for entrepreneurs and influencers to make the business grow the brand and simultaneously create an alternate stream of income.
Affiliate marketing has become a staple for eCommerce marketing – 81 percent of brands use the strategy, and as much as 16 percent of eCommerce sales worldwide are propelled through affiliate marketing. In the U.S. alone, affiliate marketing spending reached around $8 billion in 2022. About 40% of U.S. merchants state that affiliate programs are the top customer acquisition channel across industries. The inherent success of affiliate marketing lies in the fact that it takes little to no initial investment – advertisers pay only for what they get with its performance-based structure.
This affiliate marketing guide gives an in-depth look at how effective this marketing structure can be, the mechanics involved, and what trends marketers can look forward to in the next few years.
What is Affiliate Marketing?
Affiliate marketing involves an affiliate partner promoting a brand’s product or service on their platform. They earn a commission based on every sale associated with their promotion. The process uses an affiliate link that customers can click through. Once sales or other goals are completed through those links, the affiliate partner receives a payout for providing the specific result (e.g., sales, signup) to the eCommerce retailer.
The process is simple enough: partners promote and sell a brand’s stuff and gain a commission from it. What makes it popular is the high returns and the minimal startup costs. Brands typically require sales from their partners, but some affiliate marketing structures will also focus on results like high-quality leads, free-trial users, clicks, engagement, and downloads.
How Affiliate Marketing Works
Affiliate marketing makes use of unique affiliate links, which are given to different affiliate partners. When a customer or site visitor clicks on the affiliate link, their browser stores a cookie from the affiliate link. The cookie records which partner was able to generate sales or other results, and this will be the merchant’s basis for the commission.
With affiliate marketing, cookies have an expiration date. For example, a cookie may have a 60-day window. That means when a customer doesn’t buy the product immediately but decides to do so a week later, that sale still counts as a commission for the affiliate partner if the cookie is still active.
You may notice a disclaimer on some blogs that the article contains affiliate links, which is how the structure works. When you click on the affiliate link and make a purchase or download an app or any other result, the affiliate network records the transaction, the merchant confirms it, and the blogger is credited with the sale. The brand pays the affiliate commission at the end of each payment period (i.e., revenue sharing).
Affiliate Marketing Commission Rates
The commission rates for affiliate sales vary depending on the company and what they are promoting. The low end is about 5%, but some arrangements can earn you as much as 50%. There’s also an option where the earnings are at a flat-rate amount per sale instead of a percentage.
Here are some commission structures commonly utilized in affiliate marketing:
- Per Sale
This is the most popular payment model where affiliate partners get paid for each sale, download, and signup they generate for the brand.
- Pay Per Install
This structure pays the partner for every install generated from the website or social media traffic. Brands are not yet after sales, but more on promoting new mobile apps or software.
- Per Lead
In this model, the affiliate partner receives a commission for every lead introduced to the brand or merchant. This is a popular method because brands can utilize it for lead generation, sweepstakes, and other offers.
- Per Click
This pays the affiliate partner for every click on the link, done for brand awareness – no signups, no sales, just clicks. This is not a very common payout method for affiliate marketing because it pays regardless of whether a sale was completed or not. Simply clicking on the affiliate link gets the partner paid.
Types of Affiliate Marketing
Affiliate partners proliferate the online space, but not everyone has the same level of relationship with the product or service they are promoting. Here are three types of affiliate marketing being implemented today:
Unattached Affiliate Marketing
This type of affiliate marketing means you have no authority in the niche you are promoting. Unattached affiliate marketing does not require the partner to be an influencer in that product niche; you only have to run a pay-per-click advertising campaign using the affiliate link and help facilitate sales to earn a commission.
Unattached affiliate marketing is meant for marketers who may want to focus on volume and not necessarily on building relationships with a niche audience. It’s mainly for partners who wish to generate income without doing too much legwork concerning the product or service.
Related Affiliate Marketing
Related affiliate marketing refers to promoting products and services that you don’t use but are still related to your niche. A partner with a YouTube influencer or a popular blog can promote and recommend products even if they have not used them before. This is a step deeper than unattached marketing because the affiliate partner has a relevant community of audience who may be interested in the product.
A successful, related affiliate marketing program capitalizes on the built-up trust with the followers by recommending products based on what these clients might want instead of pushing something that won’t be interesting for the target audience.
Involved Affiliate Marketing
This type of affiliate marketing refers to partners who recommend and promote products they use and genuinely appreciate. This is an excellent way for influencers to earn extra income while being able to share a product or service they know would work for your audience.
Involved affiliate marketing focuses on authentic experience, not just advertising hype with expensive PPC ads. With this affiliate model, you are taking more time introducing the product’s features, sharing your experiences with it, and building credibility with your followers. In turn, audiences who trust your recommendations will be encouraged to buy the product.
Recent research about affiliate marketing trends points to a combination of affiliate and loyalty marketing. The eCommerce brands turn to influencers, brand ambassadors, and publishers who have authority in each industry. They will headline rewards and incentives to reduce churn rates and retain existing customers.
What Are the Best Affiliate Marketing Channels?
Affiliate marketing takes place in different channels and can make the sale in several ways. Of course, some marketing channels may bring in more results than others, depending on who the target niche is and how the merchant or brand wants to scale the affiliate program. Here are the best avenues to start affiliate marketing:
Bloggers can facilitate all types of affiliate marketing, be it unattached, related, or involved. Once their articles rank in search engine results, they drive organic traffic to the affiliate links included in the blog. From product reviews, how-tos, and educational content to tutorials, blogging can continuously promote an affiliate product without being too obvious in promoting it for the sale.
Influencers capture the involved affiliate marketing type so well because they have the authority and sway over their online community. Social media platforms like TikTok, Instagram, and YouTube enable influencers to discuss affiliate brands during their live feed, product reviews, comparisons, and more.
There are automatic links to products used or seen on video content – which can make customer clicks and eventual sales as seamless as ever. As for video dialogues about the product or service, brands can provide influencers with coupons to offer their best deals and stimulate purchases. Podcasters on YouTube, for instance, can insert a short clip about the affiliate brand and provide a coupon or discount code for viewers.
One of the most enduring forms of marketing is still relevant today, and it’s understandable why: the ROI on email marketing is huge, reaching as much as $36 for every $1 spent!
Affiliate marketing applies to email marketing as well because affiliate links can be included in email newsletters. Of course, you cannot bombard your email list with obvious sales-y content in every email, but sending a promotional message or a discount code for every three evergreen emails could increase customer engagement and conversion.
Mass Media Sites
Mass media, or large media sites, still bring in a lot of traffic daily. These sites could improve brand social proof because they provide product reviews among different products, most of which are affiliate merchants. Brand promotions in banners or in-page mentions will make the affiliate link easily clickable by the site’s online visitors.
Why Do Affiliate Marketing?
Stats on affiliate marketing show it’s on an upward trajectory, and there are several reasons why the model works:
Easy to Start
For brands and partners alike, affiliate marketing takes less effort than other forms of promotion. Especially for affiliate partners, your side of the equation will simply involve selling the product to your followers. Sometimes you don’t have to be too familiar with the product!
Affiliate partners do not have to expend energy (and resources) on harder tasks like buying the product to sell, networking, and completing the sale for each potential customer. Your online space does the groundwork of broadening awareness about the product and showing the affiliate link for sale.
Affiliate marketing won’t require spending on unmet demands both on the part of the merchant and the partner. Brands only pay commission to partners who are able to make the sale or meet the other conditions for the payout (e.g., app download, website clicks). Affiliate marketers, too, do not have to think about membership fees or put in money upfront to buy products before selling them. They only need to create relevant content that can promote the affiliate brand.
Your only job is marketing and promoting the products to your followers. Of course, partners will initially need to invest time and creative resources in creating traffic. Still, once your digital following is established, your affiliate link can continue to deliver a steady paycheck. Even if the brand does not work out for you, other options will always exist.
Affiliate marketing’s nature keeps the endorsement ties low-risk for both the brand and the partner. It works pretty much the same for merchants – if they no longer want an affiliate partner to promote the products, they could cut the ties accordingly.
Affiliate marketing programs can scale the brand’s exposure as well as the partner’s income without any extra investment or help. By introducing the products to a relevant niche audience, a partner can campaign for that product while the existing digital work continues. The affiliate revenue essentially brings in passive income in the background. Another scalable feature is that marketers can add as many affiliate links on their social media or website as they want. There are an endless number of products and services ready for an affiliate program.
Do note that everything about affiliate marketing and its channels (especially influencer marketing) gains success through trust. Vetting products well and providing a more involved style of affiliate marketing takes a lot of work but is a more worthwhile strategy to convert audiences.
How to Start with Affiliate Marketing
Find a niche (and stay up to date)
Want to start building an audience primed for affiliate marketing? Focus on what you know or are interested in. If you’re into fitness, you could begin evaluating products that are genuinely interesting to you. This is a time-consuming endeavor, and it won’t guarantee fast or ample commissions at the get-go, but once you have established a loyal following, you can cultivate that niche. Affiliate marketing tools are available to provide insight and analytics about your audience to keep in touch with what content they respond to best.
Choose your channel
So you have decided on a niche—the next point to consider is which marketing channel to focus on. Many people are intimidated by the idea of affiliate marketing, but it doesn’t have to be difficult. A good place for beginner affiliate partners is blogging because you can write about products and get paid commission on any purchases made from your links in exchange for sending traffic the brand’s way. It might take some time before this becomes an established income source, but again, if this is your chosen niche, it would not feel too burdensome to use the product or give your genuine insights about it.
YouTube and Instagram are among the most popular channels for affiliate programs because both allow for video content. Video is a powerful marketing tool because an overwhelming number of online users prefer videos to text. Not every video mention or product review will create conversion, but these channels lay the foundation for your affiliate marketing campaign that could include different brands and services.
Identify the products you want to promote
If you already have an audience following on social media, then choosing the right products and services is the next step. There are several ways to do this, from directly contacting the brand owner (usually for small-scale businesses) and asking if they offer a program, visiting the brand website to make inquiries, or joining affiliate program marketplaces that list products and services from different brands.
Again, the trick is to partner with good brands that your audience will find enticing or useful. You also must consider the terms of service in the fine print. If you are unsure about their rates, distribution, and other arrangements, you may want to go another route.
Offer quality content (with a genuine angle)
Affiliate marketing gains traction through trust. It’s what makes sales conversions. Therefore, it’s vital to keep your content personal. Whether you are doing a product review, a tutorial, product comparisons, and other types of delivery, sharing your candid opinion makes the marketing more authentic and convincing. The more open you are with a product’s good and not-so-good features, the more your audience will feel they can trust your opinion.
Content should also vary—you could record an unboxing, an actual tutorial using the software, and product comparisons for makeup—the choices are endless. What’s important is that it should be a natural lead-in to a viewer trying the product themselves.
Optimize your distribution
Creating content is time-consuming, so maximize its exposure whenever possible. You can share the content on your blog, socials, and live events. If you have a subscriber list, you can create an email marketing campaign to send links periodically.
Affiliate Marketing Done Right
Affiliate marketing has dominated the eCommerce industry because it offers an effective but low-risk way of promoting products and services.
Everyone can participate in affiliate marketing; it is one of the most sustainable methods for generating passive income and for brands to increase their leads and conversion. The main investment here is the time and effort to build credibility with an audience. Once you have their trust, they will likely work with you in promoting their products instead of paying a hefty fee for traditional advertising.