Affiliate marketing, what it is, how it works and how to earn money

Food, clothing, but also bills and detergents are some of the expenses that end up impacting the family budget. Unfortunately, managing to cover all the various expenses is not always easy. From here can arise the desire, quite common, to be able to at least supplement your salary with extra jobs. If possible, of course, the hope is to obtain enough income to be able to have a certain economic stability. Easier said than done.

Finding and carrying out an activity that brings in a lot of money, on the other hand, is certainly not child’s play. This, however, does not mean that it is impossible. There are various paths that can be taken to try to achieve your goals, such as affiliate marketing. But what is it, how does it work and above all how to earn money? Here is everything you need to know about it.

What is affiliate marketing (or affiliation): meaning and definition

Affiliate marketing, or affiliation, is a widely used tactic in order to increase sales and generally seek significant online income. In the end, it is a promotional activity that, generally, does not take into account the visibility that a newspaper or blog could give to a product, but is based on the direct sales that the affiliate manages to get the company.

Going into detail, as also explained on the Treccani website, it is a marketing tool that is based on commercial agreements. The latter:

"involves the publication of advertisements by an advertiser on an affiliate’s website, in exchange for compensation commensurate with the results. The affiliate is generally a publisher or the owner of a website willing to advertise the advertiser’s products and services (also called the affiliate) on their site. The affiliate’s remuneration is calculated on the basis of purchases or other actions performed by visitors sent to the advertiser’s website".

How affiliate marketing works

To understand how the affiliate marketing system works, it is necessary, first of all, to see who are the subjects that operate in this type of model.

• Affiliate or publisher. This is the subject who promotes the business on behalf of a company, using the various online advertising tools at their disposal. Typically these are newspapers, but also blogs and influencers. In particular, the affiliate can promote products and services on behalf of a company by using content marketing tools or by inserting an advertisement on their website or social account. A clear example is YouTubers who make videos while using technological devices, in order to promote them.
• Advertiser or retailer. This is the company, usually an e-commerce, that wants to promote its business. To this end, it can rely on an affiliate network or contact newspapers and bloggers to create a team of affiliates. Thanks to this strategy, the company can obtain a high response in terms of customer acquisition, at a very low cost.
• Consumers. Without people who buy products or services, it is not possible to keep affiliate marketing afloat. Consumers complete the cycle, without running risks. In fact, they are not obliged to buy something they do not want. If they decide to do so, however, they contribute to the success of the affiliate marketing strategy.

Affiliate marketing involves the use of a unique tracking link that guarantees the payment of a commission to the affiliate. When a user clicks on the affiliate link, a cookie is stored on the device. This file allows the company to recognize the referral and pay the amount due.

Types of affiliate marketing

There are several types of affiliate marketing to choose from.

• Not associated. In this case, unrelated affiliates promote products or services for companies with which they have no direct connection. Among the most well-known cases are pay-per-click advertising, which involves the presence of an advertising space on a web page and allows you to earn money by taking into account the number of people who click on the ads shown.
• Related. In this case, affiliates promote products or services that they cannot personally guarantee, but which turn out to be closely related to their content and therefore of interest to the target audience.
• Involved. Affiliates promote products or services that are closely related to their content and target audience. But not only that, these are products that they use personally and recommend because they are truly convinced of their quality.

How to earn money with affiliations

An affiliate marketing strategy sees an affiliate promote an affiliate link to their users, who can be visitors to a website, rather than a blog or followers of a social account. When the user clicks on the link and makes a purchase, this transaction is recorded and the affiliate receives a commission.

The commission percentages are different based on the product of interest. On average, they are around 5% of each sale for low-priced, high-volume products, such as pet food or skin care. You can get up to up to 20% for high-value affiliate programs, such as finance and software.

Some affiliates can also make custom deals, which can earn even higher percentages. There are also affiliate marketing programs that give a flat fee for each sale, rather than applying a percentage.

How do you get paid

But how do affiliates get paid? Well, the most popular solutions include the following.

• Based on the sale. That is, the company pays a percentage of the sales price of the product or service purchased by the customer thanks to the marketing activity carried out by the affiliate.
• Lead conversion. In this case, the affiliate receives compensation taking into account the conversion of leads. That is, the affiliate must convince their users to visit the seller’s site and perform a certain action, such as filling out a contact form, rather than signing up for a trial period or newsletter.
• Number of clicks. One of the main purposes of affiliate marketing is to generate traffic to certain sites, to try to convince users to click and perform certain actions. In order to encourage this mechanism, ad hoc strategies can be used, such as Pay-Per-Click programs. In practice, advertisers pay a commission every time an ad is clicked on the affiliate’s site or, as seen in the previous point, the seller acquires a lead in this way.

Available affiliate marketing platforms

The affiliate marketing market is constantly growing and there really is something for everyone. In fact, there are so many affiliate marketing platforms currently available. The most popular ones are undoubtedly the following.

• Amazon. Music, electronics, video games, clothing, watches, books and so on. There are so many products for sale on Amazon]that you can promote on your site and earn up to 12% through affiliate commissions for each eligible purchase or program. Each category, it should be noted, has its own percentages.
• eBay. There are several affiliate models to choose from, such as creating content on blogs, providing coupons to your visitors, rather than sending emails or sharing on social media. The percentages differ depending on the category of reference and can reach up to 4%.
• Awin. It is an affiliate network that brings together different programs of brands and companies from all over the world and from different sectors, such as shopping, but also finance and entertainment. Each company, in practice, has its own program and Awin collects and organizes everything, so that companies do not have to deal with it themselves. Commissions can exceed 50% and differ depending on the referral program.
• Shopify. It allows you to earn particularly interesting commissions, which can reach up to 150 USD for PRO plan referrals, taking into account the merchant’s location. Signing up for the program is free and allows you to monetize traffic to your site, earning a commission when a referral becomes a new Shopify merchant.
• Fiverr. This affiliate program offers various commission plans, such as the possibility of receiving a fixed fee for each acquisition, rather than a percentage or a mixed formula. The value of the commission, in this case too, differs depending on the category of reference.

These, of course, are just some of the affiliate marketing platforms available. The advice is to do a little research online in order to find the solution that best suits your needs. In fact, for every niche, it is possible to find a valid affiliate program. A clear example is Plus500, ideal for those who work in the world of cryptocurrencies and online trading.

How much can you earn with affiliate marketing?

It is not possible to establish in advance how much you can earn with affiliate marketing. This is because it depends on several factors, such as the number of users involved, the percentage of commission agreed upon and the category of reference. If all this were not enough, except for very high amounts, affiliate platforms generally do not set a maximum ceiling on commissions. Furthermore, nothing prevents a person from being part of multiple programs.

On average, however, it is estimated that in our country an affiliate manages to earn between 5 thousand and 10 thousand euros per month. Many, moreover, manage to earn even more than 20 thousand euros per month.

Going into detail, based on a survey carried out by Zippia, a site specialized in the world of work:

• 19% of affiliates earn less than 20 thousand dollars per year;
• 20% earn between 20 thousand and 80 thousand dollars per year;
• 25.5% earn between 81 thousand and 200 thousand dollars per year;
• 6% earn between 201 thousand and 400 thousand dollars per year;
• 10% earn between 401 thousand and a million dollars per year;
• 19.5% of affiliates earn more than a million dollars per year.

The advantages of affiliate marketing

Implementing an affiliate marketing strategy can bring with it several concrete advantages.

• Low initial costs. Starting an affiliate marketing strategy involves particularly low costs. These are essentially the costs of obtaining hosting, a domain and any image software or affiliate plugins to improve conversion.
• Unlimited earning potential. The more users you can direct to the company’s site, the greater the revenue will be.
• Flexibility. Unlike most jobs, affiliate marketing guarantees maximum flexibility. All you need is an internet connection and you can work at any time and from any corner of the planet Earth.
• Variety of products and services to promote. As already mentioned, it is possible to affiliate with multiple platforms and consequently offer your users different products or services that could attract their interest, potentially increasing your profit margins.
• You do not have to provide customer support. As an affiliate, you are not responsible for any problems users may encounter with the retailer’s products or services. The retailer will have to take care of everything and intervene where necessary.

Risks of affiliation

As often happens, despite the many advantages, you may often have to deal with some risks. In particular, if you opt for affiliate marketing, you may encounter some critical issues.

• Non-immediate results. Simply signing up to a platform is not enough to make money. You need to implement ad hoc strategies to push your users towards the retail company’s site, so that you can obtain the related commissions.
• Sudden changes. The web is constantly evolving and so are its contents. It can happen that an affiliate platform decides after some time to change the cards on the table, for example reducing the percentages of commissions. Even worse, it could close leaving you with nothing. It is therefore better to diversify to reduce the risks.
• Highly competitive sector. There are many sites that exploit affiliate marketing. In order to carve out a space for yourself, you must not imitate them, but rather try to differentiate yourself, proposing novelties.

Original article published on Money.it Italy. Original title: Affiliate marketing, cos’è, come funziona e come guadagnare