Understanding Affiliate Marketing

January 27, 2009

You’ve probably heard or read the term “affiliate marketing” many times online, but do you know what affiliate marketing is?

Affiliate marketing is simply an agreement between you and a merchant in which you help promote the merchant’s product for a share of the profits of each sale.  You can promote the products a variety of ways, but the links that take potential customers to the merchant’s website are coded to notify him or her that the customer came from your efforts, and you’re paid whatever the agreed upon percentage of the sale might be. If that sounds simple, maybe even too good to be true, consider this: Because of its simplicity, affiliate marketing is one of the top ways to make money online.

There are different types of affiliate marketing programs:

Affiliate marketing Pay-Per-Click
In this marketing model, when a potential customer clicks on your link to the merchant’s website, you earn money.

Affiliate Marketing Pay-Per-Lead
In this marketing model, each time a potential customer clicks on your link and then registers at the affiliate website, you get paid.

Affiliate marketing Pay-Per-Sale
In this the most common marketing model, when someone clicks on your link and makes a purchase at the merchant’s website, you get paid a percentage of those profits as your commission.

Many people who want to make money online try to take a traditional store model and transfer it to a website.  This involves:

• handling physical products
• storing them somewhere until they’re purchased
• shipping them once they’re purchased
• having expensive merchant accounts to enable you to accept credit cards
• paying hosting fees for a business website account
• many more expenses and hassles.

And just because you set up a store online, doesn’t mean you’ll succeed.  You have to promote it to bring in new business and you have to do it correctly to target the right people.  Online stores, with their ease of set up, fail at a high rate because many people don’t understand all the things they need to do to succeed.

But affiliate marketing requires none of that hassle.  You don’t even necessarily have to have a website in order to make money affiliate marketing.  By posting advertisements online or writing articles you can use your links to direct people to the product you’re marketing and make money that way. Of course, if you already have a website, then placing an ad to the products is an easy way to get people to click and purchase, and shouldn’t be overlooked.

Not only does affiliate marketing benefit you by earning you profits for products you don’t have to handle, store, pay for or ship, but it’s good for the merchant, too.  They get free advertising from you, and increased sales that make it well worth the commission paid to you. Affiliate marketing is a great, easy way for anyone to make extra money online.

Posted in Affiliate Marketing