Affiliate Marketing Is Referral Marketing
Affiliate marketing is simply "referral marketing". You, the affiliate, earn money by recommending products and services to others. When they buy those items, you earn a percentage of that sale. Yes, affiliate marketing is about you recommending products and services to your website visitors or your clients or your e-mail list. You make money (commission) when they buy.
Affiliate marketing is a proven money-making model you can focus on for your business and is still, the number one way for aspiring Internet entrepreneurs to get started. Why? Because:
1. There's no inventory expense
2. No hassles with payment processors
3. No extra time spent on processing refunds or returns
These are carried out by the affiliate program owner. Your job is to recommend the products to your website visitors and cash your money when they buy. But you still get to practice all the essential marketing skills that will bring success in any other business you pursue.
For instance, let's say you see a new book that is very hot right now being sold online and the owner (the merchant) accepts affiliates to help him market this product. What you can do is to register as an affiliate on the affiliate program website and you will be given a special link called affiliate link that will lead people to that website when they click on it. It will have your ID (affiliate ID) embedded in it so that the affiliate software that controls the whole affiliate program will know that you are the one who referred the visitor to the website.
You job is to set up a website (e.g. a blog) and talk about how much you love it, what the benefits are for getting the book and how it will change your visitors life just as it has changed yours, etc. You then end with the link for them to click (your affiliate link) to get to the sales page. When your visitor gets to the website selling the book and buys, you would earn a percentage of the price of the product. This could range from 10% to 75% depending on the affiliate program and the type of product – physical or digital product. The affiliate program will pay you commission for advertising for them and bringing them a sale. You get a percentage of that money that they may not have otherwise gotten. It's very similar to being a Real Estate Agent. They receive a percentage of the sale of a house by helping to facilitate that sale. They bring a buyer and seller together so that they both end up happy. This type of affiliate marketing program just described is called pay-per-sale (PPS) affiliate marketing. There are three types of affiliate marketing programs and these are discussed in the next section.
Types of Affiliate Marketing Programs
There are three types of profitable Affiliate Marketing models: Pay-Per-Sale (PPS), Pay-Per-Lead (PPL) and Pay-Per-Click (PPC). The first thing to understand about affiliate marketing is that it is a “pay per action” model. However, the meaning of “action” is defined in a couple of different ways. An action can be:
1. The sale of a product
2. The generation of a new lead (potential customers)
3. The clicking through of a link (e.g. Google AdSense ads link)
So, in other words, affiliates get compensated based on referring either customers or potential customers. The action that the visitor takes is either to buy something, or to fill out a form providing their contact information (becoming a 'lead') or clicking on a link (e.g. an advert). Let's delve into each type of affiliate marketing so that you can decide which best fits your income goals and interests.
1. Pay-Per-Sale Affiliate Marketing
Pay-per-sale Affiliate marketing is what most people think of when they talk of affiliate marketing. You, the affiliate, are tasked with sending traffic (website visitors) to the merchant website in order to help the merchant acquire new customers. Whenever one of the visitors you refer buys a product from that merchant, you are credited with the sale and you receive a commission. This is where your profits come from.
There are literally thousands of affiliate programs out there. Each program is unique in terms of how much is paid out per sale, and how much support the merchant gives to its affiliates. The mistake most beginners make is that they join every affiliate program that looks good to them, without considering whether that program will truly 'fit' with their marketing plan.
2. Pay-Per-Lead Affiliate Marketing
Under this model, you generate commission by generating leads. Rather than referring people directly to a product, you refer them to product information. Let me give you some examples to clarify this:
Common Types of Pay-Per-Lead Offers:
- Refer a prospect to mortgage Refinance Company, where he fills out a form to get pre-qualifying information about potential loans.
- Refer a prospect to Health Company offering free vitamin samples in exchange for filling out contact form.
- Refer a prospect to a trial version of a product or service.
You see, the prospect is not making a purchase in any of these cases. Instead, he's getting 'freebies'. The freebie might be a sample of a product, a trial or just an information request. In any case, you get paid for generating that lead. Now, you must be careful in the types of pay-per-lead program you promote. Always make sure that your merchant collects lead information ethically and unobtrusively. This means that your prospect shouldn't have to take too many steps in order to get what he wants. Filling out a simple form or two is the most it should take. The better the offers and the easier they are to complete, the more you'll build a reputation for quality, and for protecting prospects' privacy.
3. Pay-per-Click Affiliate Marketing
Unlike the previous two affiliate marketing models, pay-per-click affiliate marketing is actually the simplest but incentives for your visitors to click on the links are more difficult to provide. Most advertising programs (such as Google AdSense) fall under this category. There are many ways of selling advertising space on a blog or website but some of the different advertising options include:
- AdSense (www.google.com/adsense) and YPN (www.publisher.yahoo.com) are very popular with bloggers or many website owners and are probably the most common income streams being used by them today.
- Others are Adbrite.com, Tesxt-link-ads.com, Adify.com, AdMarketplace.com, AdsMarket.com, Avantlink.com, Doclix.com, Pulse360.com, etc.
These programs scan the content of your site to assertion what its topic is and attempt to put contextually relevant ads (i.e. adverts) both text and image onto your site. They are generally simple to use and involve pasting some code into your blog or website templates. Payment is on a ‘per click’ basis (referred to as CPC or ‘cost per click’ ads). That is, you are only paid when someone (your site visitor) clicks on those adverts on your site. Contextual ads suit sites that have a particular niche topic, especially if it has some sort of commercial angle (i.e. it has products and services associated with it). They are not so good with ‘general’ type website (i.e. many topics) and/or political/spiritual blogs which argue just one side of a case (this confuses AdSense).
In my next post, I will give the blueprint for making quick affiliate sale. Keep a date with us.
