Affiliate Marketing 101: What Is Affiliate Marketing?

Posted by Pete - 19/12/08 at 02:12:27 pm

This post came about as the result of a friend wanting to know a little about how to get started in affiliate marketing. However, rather than just sending him an email, I figured it’d be more useful for me to write this up as a post, where it’ll be publically available.

Now let me make one thing clear before I start; yes I have made a tidy amount from affiliate stuff in the past, but no, I’m not currently active (running Searchlight is my priority at the moment). With that out of the way, I suppose the first question is…

What Is Affiliate Marketing?

Affiliate marketing is where Company A has a product that Company B promotes, and is paid upon fulfilment of certain conditions (we’ll come to that later). The advantages and disadvantages are faily simple…

Advantages

Company A gets free marketing
Company A gets access to customers they wouldn’t otherwise get, via Company B’s existing assets
Company B doesn’t need a product to make money
If Company B already has a website or mailing list in an area, they can monetise it further

Disadvantages

Company A doesn’t have complete control over the affiliates
Most affiliates won’t make any money for them. Not a problem per se, but it’s annoying
Company A doesn’t get 100% of the money they’d make normally, and can lose money if the affiliates are too good
Company B doesn’t get 100% of the profit on a sale that they made
Company B could use Company A’s product test a market, then leave and become a competitor

How Much Can I Make?

Quite a lot. Just look at Jeremy Shoemaker. However, whilst there are some super affiliates out there who make huge sums, the chances are you probably won’t. Most people don’t have the dedication, or the necessary skills to be able to make a living. So my advice would be, if you’re planning to get into this, accept from the outset that this is not going to make you a millionairre overnight.

That said, if you work at it, learn from people who do it well, and don’t give up, you can make a (very) tidy income off it.

How Do I Get Paid?

There are three main models in affiliate marketing, known as CPA, CPS and CPL. Let’s take a look at what each one is and what it means:

CPA: Cost Per Action. This is where you’re paid upon the customer taking a certain action. This might be a lead, or a sale, or some other form of action.
CPS: Cost Per Sale. Where you’re paid for each sale that you make. Obviously.
CPL: Cost Per Lead. Where you’re paid per lead you generate. Also kinda obvious.

How Do I Get Started?

I’ll cover that in a second post, which will be up at the beginning of January. Until then, I hope you have a very merry Christmas.