What is Affiliate Marketing?

by Brian on April 12, 2010

“What is affiliate marketing?”

Somebody asked this question on a forum the other day.

At first I had to chuckle a little, because they were thinking it was something like Network Marketing (which is a stupid way to market). But, it’s a valid question.

I’ve known about and have participated in affiliate marketing for years… It just makes sense… But, there was a time when I had no clue what it was.

The Internet is brand new in terms of technology… Marketing on the Internet is still in its infancy.

To put it into perspective, the way society communicates is changing and will always continue to evolve.

There have been 20 major advancements in technology over the past 250 years that have changed the way everyone in the world communicates.

1. Automobile in 1769 10. Computer in 1942
2. Train in 1797 11. Satellite in 1957
3. Internal Combustion Engine in 1807 12. Internet in 1969
4. Telegraph in 1837 13. Electronic Mail (Email) in 1971
5. Fax in 1842 14. Cell Phone in 1973
6. Telephone in 1856 15. Text Message in 1985
7. Radio in 1885 16. & 17. World Wide Web & Wi-Fi in 1991
8. Airplane in 1903 18. Smart Phone in 1993
9. Television in 1926 19. & 20. Social Networking and Affiliate Marketing in 1994

Although it’s been around for more than 30 years, only 57% of US households have access to the Internet.

Whereas, 99% of US households have television, with an average of 2.5 televisions per home…

What does that tell you?

It should tell you that there is still a lot of room for growth and a lot of money to be made from the Internet.

It should also tell you there are a lot of people who don’t understand the Internet.

What is Affiliate Marketing?

Affiliate Marketing is a form of Internet advertising that allows anyone to promote a product or service through websites or through other online advertising.

Affiliate Marketing is one of the best ways to monetize your site aside from selling your core product or service.

How much do affiliate programs pay?

It’s all across the board. I know of one affiliate program that sells an eBook for $19.95 and it pays you $40 if someone buys it. No BS there.

It’s because that eBook has an 80%+ conversion rate for the clients to buy future products with the average person spending over $1,000.

I know of another affiliate program that pays 1-3% of every sale. I know of yet another one that pays ½ a cent per click. Affiliate program compensation is literally all over the board.

One advantage is that affiliate marketing helps you establish rapport with your buyer. If someone buys something from your website, it means they trust your website.

If they trust your website, it means they are more likely to make a purchase based upon your recommendations… regardless if it’s your core product or a product you represent as an affiliate.

What are the Benefits of Affiliate Marketing?

  • It’s a great way to offer your visitors products that compliment the content on your website
  • It’s an excellent way to build multiple streams of income into your Internet business
  • You don’t need to have your own product… you can simply choose the best products or services already out there that offer affiliate programs
  • You aren’t responsible for manufacturing anything
  • You don’t have to manage inventory or ship products
  • You don’t even have to take orders or deal with customer service
  • There are affiliate marketers who make hundreds of thousands of dollars every month

What are the Disadvantages of Affiliate Marketing?

  • Not all affiliate programs are from good companies (do your due diligence and research on a company before you become an affiliate)
  • Some companies offering affiliate programs have been known not to pay and to “close up shop” without telling their affiliates (yes there are unscrupulous people in this world)
  • Some companies lie (yes, I know it’s hard to believe, but some people on the Internet lie) and make false claims about what their products or services can do. Obviously if you advertise that product and someone purchases it, and it doesn’t work like it was advertised, you will lose all credibility with that client… (Also, new laws are being sought to hold website owners responsible for false claims, even if it’s from an a third party company you represent as an affiliate)

As long as you are smart about your business when dealing with companies that offer affiliate-marketing programs, the pros definitely outweigh the cons.

Here’s an example of how affiliate marketing works:

Let’s say that you’ve created a cool site about Las Vegas. Hundreds of thousands of people search for information on all kinds of topics on Las Vegas every day… “Vegas casinos” or “Vegas shows” or “Vegas hotels” or “Vegas restaurants”, etc.

They find your site through Google… They read your pages, enjoy your content and check out your recommendations. And so…

They click your link to go to ShowTix.com to buy tickets to a show. If they purchase tickets through your affiliate link, you get paid a commission.

Next they click your link to Hotels.com and book a hotel room. You receive another commission.

Finally, they click your link to Amazon.com to buy a Las Vegas tour book and street map. You get paid a commission yet again!

Do you see how this could be a great way to build more streams of income from your website?

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