Affiliate Marketing for Beginners: What You Need to Know

If you’ve ever came across Tim Ferris's iconic book on how to just work four hours per week, you’ve probably dreamed of sipping a Mojito on a beach while your money worked for you in the background. One of the main ideas he constantly talks about is the concept of passive income.

After all, having an income chart like this is the main goal of many online entrepreneurs:

For many entrepreneurs looking to build an online business or marketers looking to monetize their web traffic, affiliate marketing is often how they got started with generating income.

Affiliate marketing is one of the world’s most popular methods of generating passive income online, and it continues to grow. In fact, affiliate marketing spend is reported to increase to $8.2 billion by 2022 — up from $5.4 billion in 2017.

If you’re looking for a complete guide to affiliate marketing, read more to find out how you can promote products as an affiliate to create an additional source of income.What is affiliate marketing?

Affiliate marketing is a performance-based marketing tactic in which a retailer, typically an online one, rewards a website with a commission for each customer referred via the website’s promotional activities. The website, often called an affiliate, will only get paid when their promotion results in a transaction.

There are typically four parties involved in affiliate marketing:Affiliates: The promoters of the productProduct creators: The creators of the productNetworks: The networks managing the affiliatesConsumers: The end users of the product

You don’t always need a network to become an affiliate, but the other three parties (the affiliates, the product creators, and the consumers) form the core of an affiliate program.Who are the affiliates?

An affiliate, also known as a publisher, can be an individual or a company. Typically, these are other bloggers or content creators operating in the industry of the product they are creating.

They help promote the product or service by creating content like blog posts, videos, or other media.

They can also promote their content to get transactions by putting up ads, capturing search traffic from SEO, or building an email list.

When one of their visitors creates a transaction, which could be a purchase or submitting a lead form, the affiliate gets a commission. How much commission is structured depends on the affiliate program terms.Who are the merchants?

A merchant, also known as the product creator or advertiser, is typically the creator of the product or services. They offer revenue sharing and commissions to people or other companies (affiliates), which have a significant following on their brand.

The merchant can be a company like HubSpot, which offers a commission to every affiliate who’s able to get their visitors to make a purchase.

Or it can be an individual like Pat Flynn, who offers an affiliate program with his podcasts.

The merchants can be anyone from a solopreneur to a big company, as long as they are willing to pay their affiliates to help them gain a transaction.

Sometimes the merchant does not even have to be the product creator, as in the case of the Amazon Associates Program.Who are the affiliate networks?

An affiliate network acts as an intermediary between the merchants and their affiliates. In some cases, a network is not necessary, but some companies choose to work with a network to add a layer of trust.

The network manages the relationship and provides third-party checks and balances. Third-party checks can be important because they bring down fraud rates.

Some popular networks include ClickBank and ShareASale.

Some merchants choose to work with an affiliate network because they lack the time or resources to track, report, and manage payments to the affiliates. They might also choose to work with multiple affiliates or publishers within the affiliate network.Who are the consumers?

The consumers or customers are the ones who makes the transaction. They are the ones who purchase the product or submit the lead form in order for the affiliate to gain the commission.How does affiliate marketing work?

Affiliates are typically paid whenever a visitor creates a transaction, such as a click, form submission, or sale. Affiliate marketing is mostly performance-based, which means you only get paid as an affiliate if your visitor takes an action (versus just visits your site).

Let's say you owned a popular knitting blog that saw 100,000 hits per month, and a knitting supply company contacted you about promoting their needles and yarn on your website. As an affiliate, you'd place links to their products throughout your blog content. In this case, you'd receive affiliate income if a visitor landed on your blog and took an action — either a click, form submission, or purchase.

We'll talk more about getting paid in the next section. In the meantime, here are some common affiliate marketing models:

Pay-Per-Click (PPC): The affiliate gets paid for all clicks that were generated, regardless of whether a lead or sale happened. This is fairly rare since all the risk is on the product creator.

Pay-Per-Lead (PPL): The affiliate gets paid for every lead they generated. This could be an online form submission, trial creation, or any pre-purchase. This is a shared risk on both the merchant and the affiliate.

Pay-Per-Sale (PPS): The affiliate gets paid for every sale they generated. This is the most common model since all the risk is on the affiliate.

Need some examples? Check out our video on the top three ways you can use influencer marketing to grow your business.

Now, let's talk about how to get started with affiliate marketing.How to Start Affiliate MarketingChoose a platform and niche.Build an audience.Sign up for an affiliate program.Choose products to promote.Create remarkable content that promotes your affiliate products.Optimize and track.Get paid.

When it comes to affiliate marketing, most people think it's a process of earning a commission by promoting other people’s or company’s products.

While affiliate marketing can seem straightforward — just find a product you love, promote it, and earn a piece of profit with every sale you make — there are actually a few moving parts you need to a monitor.1. Choose a platform and niche.

To be an affiliate, you need to have influence. Establishing a website or blog that specializes in a niche is the best way to establish influence. Whether you focus on finance, personal health, business, or even cats, a niched blog or website will help you gain influence and build an audience.

Affiliate marketers build audiences through blogs (on WordPress or HubSpot),via newsletters, or even on YouTube or other social media channels.2. Build an audience.

A large, engaged audience is a highly valuable asset for any blog or website. Having people who read, view, and engage with your content can help you make affiliate income.

The best way to build an audience is to first establish who your target audience is, and you can find your target audience by researching competitors, monitoring your traffic, and conducting first-hand research by talking to subscribers and customers.

Once you establish this group, grow and cultivate your loyal online audience through targeted content and emails. Give your audience a reason to read and engage with your content, and they'll find a reason to purchase your recommended products, too.3. Sign up for an affiliate program.

The best way to get started with affiliate marketing is by signing up for an affiliate program like the Amazon Associates or HubSpot Affiliate Program. After signing up, you will get an affiliate link that contains a unique ID. You can then use this link in your content.

There are typically no upfront costs when it comes to joining an affiliate program, but your variable ongoing costs will depend on how you want to promote the products. If you choose to outsource content or run ads, those are costs that will come out of your pocket.4. Choose which products to promote.

Choosing the right product to promote, working with the right company, fostering relationships, and updating content are all core essentials of excelling at affiliate marketing.

According to Pat Flynn, one of the pioneers of creating passive income through providing value to his audience, there are two important rules when it comes to affiliate marketing:Only recommend products as an affiliate that you’re extremely very familiar with. If you are not confident in the product and do not feel it will help people, do not promote it.Never tell anyone to directly buy a product. Always recommend products based on your experience and in the context of what you’ve done.