Affiliate Marketing: Exactly What it is and How it Works

Affiliate Marketing is a wonderful business relationship where an individual or company, large or small, agrees to pay you money based on a certain action that people you send to him take.

Let me give some examples:

Amazon.com has one of the biggest and longest-running affiliate programs.  They will pay you a commission based on what people buy when they come in through your links.  So, let’s say you make a website to promote a product. 

You get traffic to your website and send it to Amazon using your affiliate links.  Let’s say these people buy something.  You will make a commission on anything they buy that falls within Amazon’s rules.

Amazon’s commissions are low compared to many other affiliate programs, but some affiliates have found that the ease of selling physical goods at amazon (versus selling digital goods somewhere less well known) makes up for the low commission rates.

Let’s talk about selling digital goods somewhere less well known – there is a platform called clickbank.com where people sell digital e-books. An individual or company writes an e-book and puts it up for sale and for promotion in the clickbank marketplace. The individual or company is known as a vendor at clickbank. Each vendor can set their own commission rates and some set them as high as 75%.

On a $37 or $97 e-book, 75% is a lot. Commission is much higher, but conversion rates – meaning how many people click through your link and buy – can be much lower.

Besides Amazon goods and e-books, there are many other affiliate marketing options. Almost any topic you can imagine will have a related affiliate program of some sort.

Besides receiving a commission on physical goods and digital e-books, you can also promote CPA offers. CPA stands for cost per action.
The action can often be something simple like filling out a form, applying for something, giving out their e-mail address, or sometimes signing up for an offer.

So, the way this works is you would somehow get people to the offer and if they complete the offer you would get a set amount of money. Normally this money is low, like a dollar or two dollars, but with some offers it can be quite high.
There are medical offers where people sign up to receive a medical item in the mail and only pay shipping and handling, but then if they don’t cancel or send back the item their credit card will get charged for the full amount of the item. These offers often pay substantially better than one where the person would only give out their e-mail address. These offers may also have higher return and refund rates though.

Another method of affiliate marketing that many people participate in is Google AdSense. Google AdSense. If you create a website that gets a lot of traffic but you can’t really figure out what kind of ads or affiliate links you should put on it then AdSense may work for you.

You sign up for an AdSense account, and AdSense gives you a block of code. You paste this code into your website and where the code is AdSense will send ads.  AdSense will read the words on your page and decide what the page is about and send ads related to that.  When someone clicks on the ads you will make money. Some topics are worth more than others.  For example, travel can be worth more than recipes.

There is one more type of affiliate program that I would like to explain, although this one is not as common. It is pay per click. Let’s say you had a website, and you put a link on that website and the vendor would be willing to pay you a certain amount of money for every click that came through the link.  Vendors can pay as little as a penny to as much as $.15 or $.20 a click.

I hope this helps explain what affiliate marketing is and how it works. It’s not free money, but sometimes it can feel like it. You have no product and no customer service worries, and yet you can still get paid.