Affiliate marketing was first introduced in the year 1996 in Amazon and has now become one of the most celebrated and popular forms of marketing.

In simple words, affiliate marketing is a process of promoting a brand, company, business, organization, product or services using different ways and earning money in the form of commission. Anyone can start it any time however it requires some knowledge of internet marketing. Let’s have a look to a few stats related with affiliate marketing to have a better picture of how it’s becoming so popular.

Some numbers about Affiliate Marketing

  • 50% Affiliates earn less than $10,000 per year
  • 3.3% Affiliates earn more than $500,000 per year
  • 60% Affiliates work from home
  • 78% Affiliates still use SEO as their marketing strategy
  • 69% Affiliates promote Consumer-Based Products
  • 47% Affiliates promote less than 10 products

Parties involved in Affiliate Marketing are:

Merchant:

The company or brands that have a product and service to sell!

Affiliate:

The person who as an individual or a group is promoting the merchant’s products or services, and earning commission after sales!

Network:

The connecting link between the affiliate and the merchant, allowing affiliates to enter into the affiliate programs, and look after tools that are used to track and monitor sales & performance; generate reports, process payments, etc!

Customer:

The one who finally buys your product!

Important!

An in-depth research on the target market is very important to know needs, likes, dislikes, issues and other important information about your customer. In simple words you need to do a market research to identify and engage your potential customer. This is the way you can create content relevant enough to appeal them and give them a solution for what they need.

How Affiliate Marketing Works?

How Affiliate Marketing Works

Coming directly to the point, the people who like to work as an affiliate and have website or blog are usually given a link to the merchant’s products / services. Mostly it is direct link that can be placed on the website or blog. When your readers come on your blog they can click on those affiliate links which will direct them onto the merchant’s website where one can buy the product.

Here is the catch, now the affiliate links place a cookie on the customer’s computer which is valid for good number of days and if any purchase is made on the merchant’s website then commission will be paid to affiliates.

So, more is the number of readers coming to your blog or website, higher is the chances of increase in your commission.

Under affiliate program, affiliates are paid commission as per sales. Amazon also uses the same method which is known as PPS (pay-per-sale model). There are some other compensation methods as well, such as cost-per-click (CPC), cost-per-action (CPA), or a cost-per-mille/cost-per-thousand views (CPM) based compensation mechanism to pay the affiliates.

The PPS based method is very popular which involves the counting of sales at the end of the process after which the affiliate gets his or her commission.

Internet cookies play a very important role because it helps to track the movements of buyers so that sales can be attributed to each affiliate.
However!

Earning big fortune and making big bucks right at the start still isn’t a child’s play, and that it requires time, perseverance, right knowledge, right set of tools, a bit of entrepreneurial knack and business know-how to excel.