According to a marketing industry report released in 2022, the affiliate marketing industry grew by 47% between 2018 and the end of 2021. This industry is slated to continue to grow, with recent projections predicting that the affiliate marketing industry is likely to grow from $13 billion in 2022 to $15.7 billion by 2023. In this guide, we’ll explore why affiliate marketing has become such a popular option for businesses and influencers, and how it can be used to create a mutually beneficial relationship.
Table of contents
- What is affiliate marketing?
- How does affiliate marketing work?
- The advantages and disadvantages of affiliate marketing
- What are the types of affiliate marketing?
- How do affiliates make money?
- What are the different types of affiliate programs?
- How do you start affiliate marketing?
- How do affiliate marketers get paid?
- Common channels for affiliate marketing
- Tips for affiliate marketing success
- How do you track affiliate marketing success?
- What are affiliate marketing mistakes to avoid?
- Real-life examples of affiliate marketing
- FAQs about affiliate marketing
- Unlock the full potential of affiliate marketing
What is affiliate marketing?
Affiliate marketing is when a business engages with an influencer or publisher to generate more sales using its already established network. Typically, the business’s products or services are promoted using an affiliate link in return for a paid commission.
Effective affiliate marketing rewards businesses and marketers by providing more:
- Quality leads
- Increased sales
- Improved traffic to your website
- Higher click-through rates
- And, downloads
How does affiliate marketing work?
Affiliate marketing is a relatively simple concept. The affiliate marketer refers their audience to a product or service by sharing it through social media, a website, or a blog post. Each time a user makes a purchase or some other call to action, then the affiliate marketer will earn a commission. The affiliate links track the conversion and sales from one website to the next.
For this affiliate network to come together successfully, three key parties are required:
Seller or product creators
The definition of seller in this framework is all-encompassing. It can include a vendor, merchant, content creator, product creator, or a business selling services as opposed to products.
An affiliate can be any individual or a company that is hired to promote the seller’s offering to its audiences in such a manner that is likely to generate a conversion. To that end, the affiliate and the seller have a common interest, as the affiliate won’t receive their commission without the conversion occurring.
It is common for the affiliate to have a very particular or niche audience that aligns with a customer base the business would like to market to.
The third part of the affiliate puzzle is the consumer themselves.
The consumer receives the link to the product or service via various digital channels. If the consumer takes action, the affiliate link will track the conversion and reward the affiliate partner accordingly.
Many countries have specific laws which detail how the affiliate marketer is to operate, including whether it needs to disclose its relationship with the specific business.
The advantages and disadvantages of affiliate marketing
Affiliate marketing may have obvious benefits. But like anything, it also has its pitfalls or its occasions where it would not be appropriate. Consider some of the different pros and cons of using an affiliate marketing program.
- Low Cost: Affiliate marketing technically won’t cost your business a dime until your affiliate partner converts a customer into a successful sale, and only then will they earn a commission, i.e. you only pay them once they’ve made you money upfront.
- Lower Risk: If your affiliate partner is unable to convert its audience into sales, you won’t lose much by way of cost or time given the affiliate would be doing the hard work upfront to prompt your product or service.
- Increased audience and brand awareness: If the affiliate marketer has put in the dedicated effort to build an audience or following, partnering with them will naturally give your business access to this audience and increase your brand awareness.
- Inconsistent or unreliable results: The use of an affiliate can create inconsistent results and may not follow a particular pattern. This makes it difficult to forecast revenue if your business is relying on the affiliate marketer to make sales.
- Risk to your brand and reputation: Whether you’re a budding small business or a large enterprise, you’ll have to be careful when considering affiliate marketing. Do your own research on the specific affiliate to ensure that the tactics they use are legitimate, well-received, and comply with the necessary rules.
- Reliance on the affiliate: As a customer purchases your goods or services through the affiliate, the customer may be less likely to become a repeat customer. This is unless, of course, the affiliate marketer continues to promote your business directly to that customer.
What are the types of affiliate marketing?
The type of affiliate marketing your business will look to use largely depends on the type of business you operate and the product or service you are trying to sell. Here we break down the affiliate marketing types so you can decide which one(s) is likely to suit your business needs.
The first type of affiliate marketing is known as the unattached business model, where the affiliate marketer has no direct affiliation with the product or service they are promoting. They may not have used the product themselves and are not qualified to make any statements about its use.
Using an unattached affiliate marketing model may make sense if the affiliate has a large following which can lead users to your site or social media. However, without that attachment in place, the quality of the leads or the rate of conversion may not be quite as reliable.
As the name implies, related affiliate marketing involves the affiliate marketer building a strong relationship with the audience that resonates with your product or service. This allows for effective promotion and expands the reach of your campaign. The successful affiliate marketer will likely have a large network of followers on platforms like YouTube, TikTok, or Instagram.
In this scenario, the affiliate marketer has already established themselves as a trusted source, meaning their followers are likely to take a product promotion more seriously.
The downside is that even if the affiliate marketer is a guru in their respective field, they do not have an attachment to your product or service. If something were to go unexpectedly awry, it could damage your reputation.
Involved affiliate marketing requires a much deeper attachment than the two types referred to above, as it entails the affiliate having firsthand experience with the product or service they are promoting.
You’ve most likely seen some of these affiliate marketing programs without realizing it. It’s entirely possible that the majority of videos and reels you see on social media analyzing and reviewing a product have been brought together as a result of an affiliate network.
If the affiliate has spent the time and energy building a rapport with its audience to be a credible authority on a particular subject, then their positive review of your offering will go a long way to generating sales.
How do affiliates make money?
Different affiliate marketing programs will use different payment models. Generally speaking, the marketer makes an affiliate commission on a converted sale.
The range of income an affiliate marketer can hope to attain can vary substantially. According to Payscale, the on-average annual salary of an affiliate marketer is upwards of $53,000. A number of affiliate marketers would earn well in excess of this figure.
What are the different types of affiliate programs?
If you’re considering using an affiliate link to promote your product or service, know that not all affiliate products are the same. And not all of them should be paid or compensated at the same rate either.
Below we break down the top five affiliate network types for you to determine which one best suits your business.
To create a successful search affiliate program, affiliates must develop organic content that incorporates relevant keywords that resonate with the specific audience. By doing so, affiliates can target high-value search phrases in the content they produce, driving a targeted flow of traffic straight to your doorstep.
Influencer affiliate programs
Influencers typically have large networks within their niche and have gained the trust and loyalty of their following. Giving your business access to the influencer’s following introduces your brand to an extended customer base you ordinarily will not be able to tap into yourself.
The influencer could be engaged to promote your product or service through a single post, create video reviews, or even create content that you can then use in your own advertising and marketing campaigns.
Affiliate programs on review sites
Reviews remain a reliable source of trust and confidence for any business looking to grow its sales. This is especially true for certain service-oriented businesses that have heavy competition like landscaping. Users typically like to compare competing businesses to see which one will provide the best experience.
Affiliate marketing built through review sites is useful if you can identify reliable sites which could help positively influence a customer’s buying decision. Most online commentators suggest that using an affiliate program on a review site can help mitigate or prevent buyer’s remorse.
Coupon or deal affiliate programs
Coupon affiliate programs work by providing a coupon code to users via your affiliate or by finding a piece of content via a search that was created by an affiliate and pulling the coupon code from there. Often, YouTube creators will include a sponsored feature in their videos and provide the coupon code there (or in their video description.) This will direct the purchaser straight to your site and in most cases apply the code at checkout.
Subscription-based affiliate programs
An affiliate program based on subscriptions compensates content creators for boosting sales via sign-ups for a paid subscription service. Promotion for subscription-based offerings typically comes in the form of an exclusive free trial that can only be accessed via the affiliate’s posts or videos.
If this results in a paid subscription that continues to be renewed, the affiliate marketer can receive an initial commission and possibly a recurring commission depending on the structure of the deal they have with the business.
How do you start affiliate marketing?
Having chosen the type of affiliate marketing you will engage with, next, we will walk you through the most crucial steps to get you started on your affiliate marketing journey.
Pick your platform and method
The first step is to identify a platform you want to promote your offering, whether it be social media or a personal website. Social media is always a popular choice, with billions of regular users who engage and interact through a number of groups and communities.
When selecting the appropriate platform(s), consider your target audience – more on this in a bit. For example, TikTok may not be a suitable place for an affiliate to market a business if the brand appeals to an older audience.
Then you’ll need to consider your method, for example, whether your affiliate will largely promote your business through long-form content like blogs and whitepapers or short-form like posts or reels.
Identify your niche and audience
In order to have a revenue-boosting affiliate marketing program, you need to identify your target audience. However, you cannot work out your target audience without first carving out your niche.
To properly determine your niche and audience, you’ll need to examine the shared interests between the business, the product or service, and the target demographic.
Once you know who your target audience is, you can begin to work with the influencer and tailor content that appeals to them. This will help build trust between the affiliate and their followers, which increases conversions.
Find your products
From the affiliate marketer’s perspective, they will want to hone in on a product that connects with their audience. If the affiliate marketer is unsure if your product or service is right for their audience, there are a number of affiliate marketplaces where they can confirm suitability, such as CJ Affiliate.
While large companies such as Amazon or Shopify already have established affiliate programs, it may be worth it to connect with an affiliate marketer directly to explore all opportunities. It may be more attractive to pursue the affiliate to sell your products on your own terms.
Evaluate and choose your first affiliate program
Putting the three steps above into action will help you create the most appropriate affiliate program for your situation. You don’t have to reinvent the wheel; take advantage of the numerous existing affiliate programs available as a starting point.
How do affiliate marketers get paid?
Affiliate marketers get paid in a number of different ways. The manner in which the affiliate will be paid may largely depend on the type of business you run and what you’re hoping to achieve. If what you’re really after is followers to subscribe to your email newsletter, blog, or other content, then your payment structure may not necessarily be the same as a business that engages an affiliate to lead direct sales of a particular product at a discounted price.
Below we talk through the four main ways affiliate marketers get paid.
The pay-per-sale structure is the most common type of affiliate income. With this method, your business would pay the affiliate a percentage of the product’s official sale price once the transaction has been completed. The determining factor is whether the transaction was directly initiated by a referral from the affiliate marketer or through the affiliate link.
The pay-per-lead model is less common but is used as a payment structure for affiliates. With the pay-per-lead model, the affiliate’s compensation is directly tied to the conversion of leads. That could entail a consumer filling out a form, signing up for a product demo, subscribing to a newsletter, or watching and completing a tutorial video.
Pay-per-click methods require the affiliate to direct the flow of web traffic from its own followers to your website. Similar to the pay-per-lead model, an affiliate gets paid each time a potential consumer clicks on their affiliate link and is redirected to your website. You can even apply a payment option that involves the affiliate receiving compensation on a 100 clicks basis.
For businesses that rely on consumers to install software or mobile app, the pay-per-install is a commonly used payment method. It rewards the affiliate marketer who directs an audience directly to your website, resulting in a successful download or installation.
Common channels for affiliate marketing
Here we break down the five main channels you will likely come across if you’re new to affiliate marketing.
As the name suggests, influencer marketing involves people or companies who are able to influence a large population through the online following they’ve built. Typically an influencer is a digital content creator online who uses social media to connect with their audience and can often be found on popular platforms such as Instagram, Facebook, or LinkedIn.
If you have a certain niche product to sell, an influencer who caters to that particular topic may be the right option for you. The influencer has already put in the effort to grow a following, engage their audience on a regular basis, and has established themselves as a trusted authority on a specific subject matter.
Like influencers, bloggers have access to a previously untapped following or market. Their unique audience can prove to be an unmatched opportunity for expanding your reach. The blogger may experience your product or service, write a review recommending your product, and as such, link its followers directly to your website to convert the follower into a sale.
The blogger’s success is likely to lie in search engine queries, i.e., when people search for keywords related to your product or service, the hope is that they will come across the blogger’s specific post about your product and eventually convert that query into revenue. The blogger is then rewarded for their influence in promoting your offering.
Paid search-focused microsites
A search-focused microsite is different from your company’s main website. It is typically advertised within a partner site or is promoted or sponsored in the listings of a search engine.
Microsites can be successful in leading conversions as they have the ability to be less convoluted than your company’s main website, which is likely to cover a range of issues and topics and promote a number of offerings.
By comparison, a microsite can be easier to navigate, can limit its content to a very specific purpose with a very specific call to action, and can be used to spread awareness or promote a specific message or campaign.
Email lists are here to stay for the foreseeable future and should not be discounted as an older marketing tactic that has lost its relevance. In fact, many affiliate marketers still use email lists to promote specific products or services and typically have built their email list followings over time.
Alternatively, your business may look at rewarding an affiliate each time they’re able to convert a potential consumer into a registered subscriber. This enables you to grow your own following and promote your products directly to each consumer.
Large media websites
Large media affiliate websites are proven to successfully increase a business’ exposure and improve sales and conversion rates over time. It’s because of their inherent design of generating a large volume of visitor traffic at any given time. Successful sites in this space include the Amazon affiliate program and eBay which are both great programs to join.
Tips for affiliate marketing success
Below we break down the top affiliate marketing tips to help you begin your journey toward a successful campaign.
Choose the right niche
An affiliate marketer needs to be careful about the chosen niche and should not otherwise try to cover a range of topics, products, or services. This may not benefit the affiliate nor the business hoping to engage. The affiliate should choose the niche that makes sense, enabling a trusted following.
A good-fit niche will allow for speaking with some authority on the topic and, ideally, is a niche that hasn’t already been oversaturated by other players in the market.
Research affiliate programs
There are a number of affiliate programs already in existence. Look into those programs and see what benefits and learnings your business can adopt from the outset. Consider the best type of research affiliate program for your business, taking into account whether or not your brand and reputation align with what is being proposed. There is a lot to consider before you launch into using one affiliate program over another.
Build a professional website or blog
Affiliate marketing doesn’t aim to cut corners on building relationships and trust. Instead, it focuses on creating partnerships that generate mutual benefits. Ultimately, you will still need to do the work to build an audience and your credibility so that customers are confident in your brand.
A great way to start building that trust is partnering with an affiliate that has a professional grade website or blog. The affiliate site should be equipped with high-quality content and the right imagery to be able to promote certain products within that website and include links or other calls to action to convert leads into sales for the business.
Produce quality content
Again, the steps you would typically take in any digital marketing strategy should not be overlooked. To establish credibility and trust, producing relevant and reliable content is key. Haphazardly directing your affiliate content with the expectation that your audience will click your links is a risky strategy. Instead, offer value by creating quality content that engages your readers and inspires them to return.
When creating content, think about your bread-and-butter target audience and what it would take for them to feel assured that your offering will solve the problems they are facing.
Implement SEO strategies
As hinted above, it’s not enough to generate content and spam it with links in the hope that (a) someone will find your content online and (b) be dependable enough to click on and finalize a sale.
Like all content, affiliate marketers must prioritize key SEO strategies to connect with relevant search queries and drive website traffic. This includes using local SEO techniques to ensure the right users find their way to the right website.
Leverage social media
It’s predicted that by 2027, almost six billion people will use social media worldwide. TikTok alone has over 1 billion active users, while Instagram hoovers around 1.4 billion. That’s a whole lot of scrolling.
And while billions of people may not be flocking to social media to learn about your specific product or service, the fact is a number of them will. And leveraging social media to promote your offering directly to them will give you access to markets you otherwise may never have been able to tap into.
Build an email list
Some online commentators swear by email marketing as one of the most effective tools in a marketer’s arsenal. As far as we can tell, email lists remain relevant and are not likely to go anywhere anytime soon. Tapping into an affiliate’s already sizable list saves you the time of having to start from scratch.
Optimize and analyze
While using several platforms at once provides more opportunities to share affiliate links, each one will require a separate optimization strategy and analysis. Consider how best to implement keyword optimization, how to improve the quality of the content, how best to engage with your audience’s interests, and what tools to use to track and measure your key metrics. Answering these answers and incorporating insights will help you maximize your affiliate marketing success.
Stay updated and adapt
Like most things in the digital marketing space, the best practices of a successful affiliate marketing strategy will change over time as technology advances and as strategies shift.
You can stay up-to-date by subscribing to expert blogs on these topics so you can monitor emerging trends and see what changes (whether technological or otherwise) are likely to take place so you can plan in advance.
Foster relationships and networking
Many successful affiliate marketers will tell you that relationships with the right business partners and networking opportunities can be invaluable. When your brand is referred to others, it’s a stamp of approval that also helps to boost credibility in the eyes of your target audience.
Try reaching out to fellow affiliates or entrepreneurs in the space, attending relevant industry events, and interacting on social media to establish connections and share best practices. Investing the time to build relationships with other professionals can pay dividends in terms of access to resources, referrals, and new ideas.
How do you track affiliate marketing success?
Tracking affiliate marketing success is important to understand the performance of your campaign. For this, you can use analytics tools like Google Analytics and Salesforce to track clicks, conversions, revenue, and other key metrics related to affiliate marketing. Additionally, you can use UTM tracking codes in your campaigns to keep tabs on specific links and their performance.
Finally, it’s important to conduct regular A/B testing on your landing pages and other content to further optimize for success. By following these strategies, you can build a successful affiliate marketing program that will bring value to both you and your affiliates.
What are affiliate marketing mistakes to avoid?
Affiliate marketing can be a great way to grow your business, but there are some potential pitfalls that businesses should avoid. First and foremost, it’s important to choose the right affiliates as partners — those who understand your brand and target audience and have a successful track record of driving sales for other businesses similar to yours.
Additionally, you should ensure all terms and conditions are outlined in writing before launching the program, which will help to protect both you and your affiliates from any potential disagreements down the line.
It’s also essential to provide detailed instructions on how to promote your product or service so that each affiliate understands what is expected of them. Finally, setting clear goals upfront will help ensure success by giving both parties something tangible to aim for.
Real-life examples of affiliate marketing
Below we discuss some real-life examples of affiliate marketing to give you a snapshot of what affiliate marketing can do for your business.
Pat Flynn – Smart Passive Income
Pat Flynn is a good example of an affiliate marketer who has done extremely well in this space. Take, for example, Pat Flynn’s YouTube video entitled “I Made Over $1,000,000 with These 5 Products” (Affiliate Marketing Tips.) In a nine-minute video, Pat establishes his credibility and builds trust. He proves his experience and knowledge by discussing podcasting and web hosting, two topics which he is very familiar with. If Pat was to discuss tools and equipment which were more obscure and less relatable to the work in which he does, his credibility could be undermined.
Wirecutter is a product review website which is owned by the New York Times. It regularly reviews thousands of products and discloses fairly early on that it gets paid commissions on products that are purchased through its links.
Wirecutter is a good example of an affiliate program that you can analyze and review out in the open and includes introductory blogs and FAQs for people to understand their practices and how the business model works.
Michelle Schroeder-Gardner – Making Sense of Cents
Michelle Schroeder-Gardner’s blog features reviews of products and services to convert readers into sales or subscribers to a particular business. Her blog also features discussions on different ways affiliate marketers can approach the market, including limiting their promotional platforms to simply running Facebook ads and targeting small businesses in the process.
Cupcake Project is an example of a niche site that promotes a specific product, cupcakes and other recipes, and has created a following of almost 1 million on Instagram in the process. The Cupcake Project makes no secret that it is an Amazon Associate and that it earns income from purchases made directly through the website.
The Points Guy
If you haven’t come across this marketer before, the Points Guy is an active travel blog that produces sponsored news and stories on travel and assists users in maximizing their air points potential. This involves regular reviews of credit cards that help consumers achieve that end. The Points Guy receives compensation directly from the credit card companies he promotes if that promotion leads to a conversion.
FAQs about affiliate marketing
To get started with affiliate marketing, identify your niche and target audience, identify the specific product or service you’ll be promoting, and then join an affiliate network.
Yes, but income can vary. The lowest Amazon affiliates tend to earn is around $16,500 to $26,000 annually, while its top earners can make a six-figure income per year.
Affiliate marketing can be extremely profitable for business owners. It lets them leverage the audience of their affiliates to drive sales. However, success depends on factors such as the quality of the product, the commission structure, and the effectiveness of the affiliate marketing program.
The golden rule of affiliate marketing is trust. Find a trustworthy and reliable affiliate marketer. If you’re an affiliate, ensure the product you are promoting is genuinely relatable to your audience.
Yes, the majority of affiliate networks are free to join. Commit to the time and resources to learn and grow your business and an affiliate partnership.
Yes, but your country is likely to have specific laws and regulations around affiliate marketing, including disclosure of the relationship between the affiliate and the seller.
Unlock the full potential of affiliate marketing
Affiliate marketing could be the missing link between where your business is operating now and where you’d like it to be in a few years. By following the key steps in this guide, you’ll be able to maximize your business growth potential through affiliate marketing while keeping your costs low, reducing risk, and all the while ensuring your brand and reputation maintain their integrity.