What is affiliate marketing?
Affiliate marketing is a modern internet marketing technique that consists of performing marketing activities, paid for in a "per effect" model.
There are 4 roles in affiliate marketing:
- Advertiser.- a seller who presents his product or service
- Publisher - blogger, influencer or site owner who promotes Advertiser's products or services using available promotional materials
- User - a person visiting Publishers' portals and making purchases through promotional materials available on a Publisher's website
- Affiliation network - a system associating Advertisers and Publishers. The affiliate network makes promotional materials from Advertisers available to Publishers.
Going back to the definition, affiliate marketing consists in presenting products or services of an Advertiser to Users by a Publisher. If a user makes a purchase, the Publisher receives a commission. In this way, the Advertiser motivates the Publishers with commission remuneration. On the other hand, for a Publisher, that is an owner of a website, it is a way to monetize his/her own website and make profits.
Billing models in affiliate marketing
We distinguish five settlement models between an Advertiser and a Publisher.
- CPL (Cost-per-lead) - payment of the commission follows after the user performs a specified action, most often it is filling in a contact form.
- CPS (Cost-per-sale) - payment of the commission follows after making a purchase by a user, the model most often used in e-commerce, in which a user makes a purchase of a particular product.
- CPC (Cost-per-click) - a model based on the payment of commission "per click" made by the user. It is used in e-mail marketing, where the Advertiser pays a commission for a click/creation of an e-mail.
- CPA (Cost-per-action) - Publisher, in this model receives a commission for performing a specific action by the user, most often it refers to downloading an application or game.
- Hybrid (CPL + CPS) - The advertiser pays a commission for leaving contact details and completing a sale, the model most often used in financial products such as cash loans, credits or insurance.
Affiliate marketing is used by more and more Advertisers present on the Internet, mainly because it is a relatively low cost of promotion for them. For Publishers, however, the rates are very attractive, and below are a few examples:
- CPS - 5% from the value of a cash loan, with a loan of 50000$ it is 2500 $ of commission for the Publisher
- CPL - 16 $ for filling in the contact form for a fast loan, in which the customer receives a phone call from the Call Center
- CPS - 12% from the value of the basket, without the costs of delivery for purchases in the Internet shop
- CPA - 3 $ for downloading the mobile application to the phone by the user
- CPL + CPS - 15 $ + 200 $ for filling in the contact form for the insurer and purchasing an insurance policy.
These are sample rates offered by advertisers in the bluepartner affiliate network. However, the diversity is very high and depends on the industry in which an Advertiser operates. The most common settlement models are CPL (Cost-per-lead) and CPS (Cost-per-sale).
Affiliate marketing from the user's side
Affiliate marketing has many forms of promotion. On the basis of their own experience, advertisers offer publishers the most attractive forms of advertising, such as advertising banners, mailings or direct links to specific products or services (Deeplinks).
Publishers use individual forms of advertising according to their own needs and the nature of their site. Most often these will be direct links, e.g. in comparison websites, or advertising banners. All advertising forms at the end of the path lead to the same URL address of the Advertiser. The address that is substituted for the banner or direct link has an additional parameter that allows identification of the Publisher by the Affiliate Network. An affiliate link may look like the following:
The reason why an additional parameter is placed in the link is that the Advertiser needs to know to whom to pay commission for a given purchase or other predetermined action.
How to work in affiliate marketing?
We already know the billing models and roles in affiliate marketing, now it's time to present the most popular ways of operating in affiliate marketing.
The most common action of Publishers is to use their own website to promote products or services that are thematically related. A publisher running a financial blog analyses the offer of personal accounts and presents the best offers to the user (inserting his own affiliate link) in the form of a ranking or list. A blogger running a Facebook Fanpage on the subject of current fashion trends presents clothing proposals together with a link directing to a shop. The owner of a Youtube channel presents a new online game available on the market with a link, where the user can download a free version.
These are just a few examples of how you can use the potential of your audience to monetise your affiliate marketing activities.
The user, or content recipient, clicks on a link that takes them to a landing page and there they make a purchase. The publisher receives a commission for this.
Publishers generate traffic to their website by means of SEO, i.e. positioning in the Google search engine, or SEM, i.e. paid promotion in Google Ads or Facebook Ads.
However, the greatest sales power has an already created group of recipients participating in a hobbyist-run website, where the publisher shares his passion and, at the same time, monetises the website with actions in affiliate marketing. Other possibilities for activities are:
- Running comparison websites for financial, insurance or telecommunications offers
- Running campaigns in social networks and Google Ads
- Email marketing activities
- Creation of video productions with embedded links
- And much more...
Can you make money from affiliate marketing?
Pat Flynn of Smart Passive Income made over $2 million through affiliate marketing in 2017. John Lee Dumas of Entrepreneurs on Fire made over $25k in June 2020 alone. Michal Szafranski sold more than 100 thousand books through affiliation.
Publishers at bluepartner.eu systematically generate more than 100 thousand GBP per month in revenue.
Earning from affiliate marketing is very easy, but it requires a lot of commitment at the beginning.