What is Affiliate Marketing?

People make money online one of two ways: selling their own stuff, or selling someone else’s. Affiliate marketing refers to the latter option.

There are two parties involved in affiliate marketing: the creator and the affiliate. The creator can be a jewelry company that crafts high-end necklaces, or a thought leader who records online courses. The affiliate is an entirely separate entity — from a single Mommy blogger to a multinational retailer — who then takes these products and sells them to online customers. Affiliates can make anything from hundreds to tens of millions a month in commission, depending on the scale of their operation and the size of the ticket they’re selling.

How Affiliate Marketing Works

  1. Establish trust before you sell

    Mommy bloggers are the classic affiliate marketing example. A Mommy blogger who reviews items can then link to recommended items in their copy — receiving a commission every time a purchase is made off the back of their link. Before consumers will purchase off the back of these recommendations, however, they need to trust the source. Bloggers establish trust when they give thorough, honest product reviews — not thinly veiled promotions.

  2. Be transparent — or be convincing

    Some affiliates openly admit they're pushing a product— others disguise the fact . Morality aside, these are two different approaches, and require two different strategies to be successful. Affiliate marketers are bound to fail, however, when they are not transparent about their selling tactics — and customers find out.

  3. Build real partnerships

    Affiliates are most effective when they believe in the product they're selling. Creators should focus on building genuine partnerships with their affiliates, not short-term, transactional relationships. This further incentivizes affiliates to push the product in its best possible light.

Why Affiliate Marketing Matters

  1. It minimizes ad waste

    Companies don't like spending money for nothing. Unlike other forms of marketing, affiliate marketing only costs cash when it generates sales. The true cost of affiliate marketing, therefore, is the time and energy it takes to manage partnerships (which is non-trivial).

  2. It stimulates word of mouth

    Affiliate bloggers are just customers with a platform. The most common model of affiliate marketing involves sending bloggers a free product or service, and having them write a review that links back to a product purchase page.

    This is an artificial transaction in the sense real customers won't get the product for free. However, affiliate marketing does simulate word of mouth in the sense bloggers are giving their peers straightforward feedback.

  3. It boosts SEO

    Affiliates have to link back to the product they're selling to get a commission. These backlinks are valuable in two ways. First, they facilitate purchase. Second, they tell Google your site is a relevant player in your space — — lawnmowers, clothes, children's toys, etc

    Companies often ignore the second benefit, and miss out on a valuable SEO opportunity by failing to check if their affiliate's links are do-follow, and couched in SEO optimized anchor text.