What is Affiliate Marketing and How It Works

 

 

Wealthy Affiliate  One of the best ways to make money online is through affiliate marketing. But what is affiliate marketing all about? I want to define for you what affiliate marketing is all about, who it is for, and what makes it work so well.

 

Amazon website

 

Some of the biggest and most well-known companies used affiliate marketing to make them what they are today. Amazon, Geico, AT&T, Best Buy, Microsoft, Dell Computers, Apple, just to name a few of the thousands of companies that used affiliate marketing to expand their reach to more people.

 

By these companies sharing some of the money the product sold for, they were able to get hundreds of people selling for them, instead of just a few salesman. This is the definition of one of the best selling models in the 21st century.

 

 

 

affiliate marketing

 

Wikipedia defines the word Affiliate Marketing as: Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network(that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as ‘the affiliate’), and the customer.

 

 

I will better explain the meaning by example. I am going to demonstrate how affiliate marketing is used by Amazon, which is one of the biggest players in online sales and in affiliate marketing.

 

Amazon showcases on their website pages just about every product that can be bought and sold through the mail. So Amazon offers an incentive to all people if they join their associate program. If accepted you become a publisher where you can advertise any product that Amazon sells.

 

What is Affiliate Marketing all about

 

Let us pretend you have a website and you display an Amazon product on your website. Amazon provides you with a link to their web page where the product can be purchased from. A web surfer happens to land on your website and gets interested in the product you are describing. If this web surfer clicks on your Amazon link, this link takes them to Amazon.com website. If this person buys the product, you get paid a “finders fee” for bringing the customer to Amazon.

 

what is affiliate marketing

 

 

>You as the publisher get paid a commission of between 4% and 9%, depending on the volume of traffic you send Amazon. This is what I call “easy money“. It doesn’t cost you anything, nada, zilch, to become an Amazon associate.

 

Amazon is not the only big business that offers affiliate programs to their members. Apple, Nike, Dell, BestBuy, just to name a few. The list goes on.

 

This is the most simple form of selling where the merchant is able to expand from beyond local territory to International, to the whole world! Let me show you another example of affiliate marketing that has created some very rich people.

 

 

Clickbank was one of the first digital warehouses to offer a platform for program merchants to sell their services to the public. Many digital programs, eBooks and various software is warehoused in different categories in the Clickbank directory.

 

 

clickbank

 

 

Any member (Vendor) of Clickbank has access to the thousands of programs, eBooks, and anything digital that can be downloaded. If they were to sell an item, they are awarded whatever the merchant has agreed to pay the vendor for selling the digital item.

 

The merchant sets a value on the digital product they produce to sell. Usually, the merchant pays a percentage of more than half of the total selling price to the vendor. The more the merchant awards the vendor for selling, naturally the more money the vendor can make, so this product will be advertised intensely by the vendor.

 

Clickbank has all kinds of tracking abilities of each product, the percentage of price of product to number of sales to volume sold, etc, etc.


At one time not too long ago Clickbank was the place to go to find a digital product to sell. Why? First of all, there is “no product”, it is just bytes of a digital file that can be loaded onto any computer. So there is no shipping cost, there are no inventory costs, there is no warehouse to store the inventory.

 

This was an excellent platform for both merchant and vendor because a merchant could literally have thousands of vendors selling the merchants product. If the product was a good product, then sales were easy.

 

The vendor made out well because people were buying the product. This was easy money for the vendor. The merchant was making money from the sales of the vendor, so obviously this was easy money for him too.

 

This is what Affiliate Marketing is all about! It is all about rewarding the seller of a product by the merchant.

 

Let me give you the reason why this is a win-win scenario for both merchant and vendor, or vendor and publisher, depending on your terminology.

 

Let us pretend for a moment that I just finished writing an eBook (book in digital format). Let us pretend that I want to sell this book and I set the value at $20.00.

 

I know that I will be competing against every book that is listed online, such as Amazon kindle, Barnes and Noble, not to mention every website that is selling an eBook of some sorts. Let us also pretend that I have lots of traffic to my website, so I am not too terribly worried about not getting anyone to see what I have to offer in an eBook.

 

I realize, however after researching online that I am competing with a lot of vendors that are all selling an eBook similar to mine. How do I market my eBook so that my book becomes a best seller over all the other books that are similar to mine?

 

By dropping my price? Remember I valued my book at $20.00.

 

By offering an affiliate to sell my book for $10.00 dollar commission I would net only $10.00 profit per book. But because I am willing to pay an affiliate $10.00 for their trouble to sell the book for me, I will sell more books per volume and make more money in the end.

 

So ideally I can sell hundreds of more books because I have more people and more platforms selling my book than just my one website. That is why by volume I will make more money. So 2000 books at $10.00 dollars will net me $ more than 500 books at $20.00. You do the math. (just for the record, that would be 2000 * 10 compared to 500 * 20). Get my point?

 

I hope that you can see the advantage in this system. It is a win-win for both the merchant and vendor. I hope you found this article informative and useful. If you know of someone that could benefit from this article and information, please share it with them.

 

If you would like to leave a comment or suggestion, I would really like to get your opinion, whether good or bad.

 

The best thing you can do today, right now, is to “Start Today” and get yourself a free website from “The best Affiliate Program” at Wealthy Affiliate.

To Your Success!

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