How Affiliate Marketing Works (2022 Update!)
Since you’ve found this page, you have obviously heard about affiliate marketing, but you might not know exactly how it works. You are probably being overloaded with information, but at the same time, have lots of questions.
If we’re being honest, there’s no way this article will teach you how to become an affiliate marketer. In this guide, I will cover the basics if you’re brand new to affiliate marketing and are still learning about it.
However, if you have the basics down, and you’re ready to try your luck at affiliate marketing, you’ve gotta take action. Researching on this or that website or piecing together what you need ot learn on YouTube is certainly possible, but there is a better and faster way to learn.
My recommendation is to give the training at Wealthy Affiliate a try. You can sign up for free to try it out without entering any credit card info. When you are all signed up, you will have a very structured way of learning what you need to know when you need to know it, all in one place, with a community of others to share ideas with and ongoing live training sessions every week. Signing up for Wealthy Affiliate will greatly increase your chances of actually making money online.
With that out of the way, let’s cover the basics and go over how affiliate marketing works.
How The Affiliate Marketing Business Model Works
As you can see from the diagram above, the actual business model for an affiliate marketer is rather simple. It works like this…
Find a great product or service that offers an affiliate program.
Send potential customers to the website of that product or service using a special tracking link.
If that potential customer ends up making a purchase, you receive a percentage commission on the sale!
While the business model is simple, new affiliate marketers quickly find out that sending ready-to-buy visitors to the website of a product or service you are promoting is actually pretty tough!
Sure, some people get lucky and find a way to use paid advertising and still net a profit. But most new affiliate marketers find that after their paid advertising expenses, they never profit a dime. Actually, paid advertising such as using Google Adwords can quickly run your bank account dry.
Check out this video below from The Lazy Ass Stoner. He has a fantastic explanation that anyone can understand in this video.
VIDEO: Affiliate Marketing For Dummies
https://youtu.be/bedxiZXtxKo
How Affiliate Marketers Get Paid
Most companies offer direct deposit, PayPal, or physical checks to pay affiliates. The majority of affiliate marketers are paid a percentage commission for every product the sell. In the majority of cases, there is a threshold that must be met, usually $100. In my experience, most companies pay their affiliates monthly.
But be careful! They will not take taxes out of your commissions. You must do this yourself. Many new affiliate marketers get into financial trouble because they underestimate how much they have to pay in taxes.
Getting paid as an affiliate marketer is usually easy. These companies don’t have to pay you anything until you’ve already made them a profit. That’s a dream form of marketing for most companies. They will pay you what you’re owed, and they will be happy to pay it.
How To Find Affiliate Marketing Programs
There are many different ways to find affiliate marketing programs. Let’s say you want to start a site on dog toys. You can simply go to google and search for Dog Toys Affiliate Program. As you can see, there are numerous results:
You can do this for just about any niche and you’ll almost always find pages of results showing you numerous companies you can work with.
There are also special affiliate networks that offer programs from thousands of companies. Some of those networks include:
ClickBank.com
ShareASale.com
CJ
Flex Offers
Rakuten Marketing
…Any MANY more
And of course, most large companies have affiliate programs, too. Just a few examples:
Amazon
Walmart
PetCo
Uber
eBay
Target
Tesla
Home Depot
Apple
Alibaba
Hotels.com
Enterprise Rent-A-Car
…and MANY MANY more!
As you can see, you can start a website in just about any industry, and as long as you can get enough people to your site, you will have ways to monetize the site to make money through any number of revenue sources. If you build a site that brings value and sends business, you will have these companies fighting with each other to get your referrals. That’s some job security!
The Barriers To Entry For Affiliate Marketing
Affiliate marketing is more than just having a website and sharing links. Affiliate marketing is a business. A real, actual, legitimate business. When you start selling affiliate products and services, you’ll be considered an independent contractor. You are not an employee. You own your own company and will be treated as such.
Any legitimate business, whether it is online or offline, has barriers to entry. For example, starting a new sports team franchise is pretty much impossible. Not only are the financial requirements out of reach for just about everyone, but you can’t just create a team and be accepted into the big leagues. The barrier to entry for starting a sports team is so high, nobody even tries, and rightfully so. Here is a quick video to help further explain what a barrier to entry is:
VIDEO: Barriers To Entry Explained In 1 Minute
https://youtu.be/Jx8fEumsbQo
Not all businesses have impossible barriers to entry. Opening a restaurant, for example, is doable. Even if you don’t have the money to open a restaurant, you can take out a loan, do competitive research, and realistically turn a profit with a good business plan.
So, what is the barrier to entry for affiliate marketing? Well, it certainly isn’t money. You can start an affiliate marketing business for very cheap or even for free. You don’t need infrastructure, employees, complicated equipment, customer service, storage, shipping and receiving, or any of the other headaches of most traditional companies. Just about anyone can start an affiliate marketing business from anywhere with an internet connect.
But affiliate marketing does still have barriers to entry. The biggest barriers to entry are commitment, and patience. You see, it takes time to build up an affiliate marketing business. Building a website can be achieved in a single day, but creating enough content to get people onto your site takes months. You will be required to work for free, for 6 to 12 months, with only the possibility of making money from all that invested time and effort.
With so many people I’ve mentored, the vast majority of new affiliate marketers start off strong, but as the months go by, they lose interest from the lack of sales. Very few, it seems, have the tenacity and patients to ever get to the point where they make a single penny.
Benefits Of Affiliate Marketing
While affiliate marketing can be very lucrative, most people don’t get into affiliate marketing to get rich (although that would be a nice thing too!). Most people get into affiliate marketing for all the other benefits it provides.
Unlike most other businesses you might want to start, with affiliate marketing, you can work from home or anywhere else with an internet connection. Heck, I traveled the country building my business!
You also don’t need a lot of upfront capital. Affiliate marketing takes very little money to get started and you don’t need any specialized training, certifications, or degrees. The VAST majority of successful affiliate marketers are self-taught and had no idea how to build a website when they first started, myself included.
Affiliate marketing is also easily scalable and most, if not all of your business can eventually be outsourced. I’ll get into more of that later on in this guide.
