Level: Basic / Newbies
In this article we'll look at How Affiliate Marketing Works.
We'll talk about Pay per action, Pay per sale, Pay per click and Bonuses.
We'll also discuss how to choose an affiliate network and the various types of promotions. It is important to understand each of them before deciding whether to participate in affiliate programs. We'll cover the pros and cons of each one. And we'll show you the best ways to make money with affiliate programs.
Pay per sale (PPS)
One of the most common forms of affiliate marketing is the pay per sale (PPS) structure.
The PPS structure is similar to a Revenue Share Structure. This model pays the affiliate a percentage of the price of each sale, usually anywhere from 1-75% depending on the type of product or service.
In other words, for every $100 sale, the affiliate receives up to $75 and the advertiser receives $25. It is the most common structure and it is preferred by many advertisers. An example of a beginner friendly affiliate network offering this price structure frequently is Clickbank.com.
Regardless of the type of affiliate marketing program you choose, be sure to measure your results.
When choosing an affiliate program, it is best to choose a niche first.
This allows you to reach a more targeted audience and build relationships more effectively.
For example, if you're a fashion blogger, you can choose to specialize in fashion for plus sizes, men's clothing, and even kid's clothing.
By narrowing your focus, you'll be able to reach the people who are most likely to act on your recommendations.
Another way to find a profitable affiliate program is to consider products that are in high demand and have a large number of customers.
You can also find affiliate programs by looking for companies that offer special discount codes or coupons. Many retailers offer special discounts and coupons for their products and some of these will also have their own affiliate programs set up.
Since people love discounts, these coupons can help you drive traffic to their online stores.
If you're a newbie to affiliate marketing, it's best to start with something that's familiar to you.
Or at least something you can enjoy writing about.
Because you will be writing.
A lot.
By using these types of marketing strategies, you can maximize your profits and grow your business in the long run.
To recap, the Pay-Per-Sale/RevShare model works well for both the advertiser and affiliate.
It works by linking a consumer to a merchant and you earn a commission simply by being the middle-man.
It's my favorite method to make money online, and it is how I started my affiliate- & online career back in 2002.
Basically, the advertiser pays the affiliate for each sale, and the affiliate receives a commission. This is a win-win situation for both parties.
It allows the affiliate to earn money without worrying about customer service or complaints.
The best part is, it's easy - and free - to get started.
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CONS:
Pay per action (PPA) / Cost per Action (CPA)
I remember waking up on the 1st of January 2016 to the sight of $563 being generated over-night (while I was partying, mind you!) thanks to some ads I ran on Bing for an affiliate program where I was paid on a per-lead basis.
That feeling was amazing, and you can experience it yourself.
Pay per action (PPA) / Cost per action (CPA) in affiliate marketing works by paying for actions.
They both mean more or less the same thing.
The advertiser pays an affiliate for a specific action, such as generating a lead or completing a purchase.
Just like the PPS model, the advertiser provides a tracking link - the affiliate link - which the affiliate uses to generate sales or leads.
The advertiser can track how successful an affiliate is and reward them for their efforts.
The commission is paid out based on a flat-fee model, in contrast to a percentage of the sales price.
The way this works is by paying out anywhere from a few cents all the way up to a $100+ per lead. Some offers even pay a 100% or more on the front-end price, knowing they will generate more on the back-end.
If you refer a sale of only $37, you can still be paid $97 for that action.
That's the beauty of the PPA/CPA method.
However, be aware that there are no back-end sales for you and no recurring income.
Also, if your leads don't convert on the back-end, prepare to be thrown out of the program.
While CPA advertising can be effective, you should never expect it to bring you huge profits as a beginner.
Instead, you should focus on generating leads and maximizing the return on investment.
As long as the traffic generated is high quality, you'll be rewarded handsomely for your efforts. But it's crucial to understand how the cost per action model works before you begin promoting it. This is important because without knowing what you walk into can get you burned.
Become familiar with this model and its terms and definitions and you’re off to a good start.
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Pay per click (PPC) / Display Ads
Hey, got a website with some traffic already?
Good for you!
Slap on some ads and start making a few bucks instantly.
PPC or Display Ads, are ads you place on your website from third-party networks.
The most familiar one is Google Adsense.
These are the ads you see on top of Google when you make a search.
The same ads can also be shown on your website.
Whenever someone clicks on one of the ads, you earn a percentage of what the advertiser pays.
To succeed with display advertising, create content on your website that could be a good fit for advertisers with money to spend.
Think lawyers for instance.
Why?
Because, like I said, you get a percentage of the click price.
If you have a website about mittens, you probably won't attract advertisers with too much cash to part with.
However, if you create content relevant for insurance companies or lawyers, you can make several dollars per click!
We're here to help you make better decisions in your new affiliate marketing career.
Alright, you can thank me later. 🙂
Adsterra is a good alternative to Adsense, even for the beginner. Adsterra offers a variety of ad formats and is one of the largest networks for PPC.
Adsterra also got a nice team of people to help you iron out the bumps in the road on your first journey through the display ad universe as well.
Pay per click affiliate marketing is a highly competitive field. As a result, it is important to choose a niche with an engaged audience. This will help you attract a large audience and earn high profits.
To create a lucrative income from PPC/Display Ads you must perform ongoing keyword research targeting thousands of targeted high-intent keywords.
With a little planning, you'll be able to find the profitable keyword niches before the competition does and rank well in the search engines.
If you need help with ranking, we are here for you.
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CONS:
Bonuses - The Bribe
A little bit of grease can sometimes get the wheels rolling a bit faster.
It's the same with bonuses and affiliate marketing.
By simply offering your website visitors a bribe for buying through your link can be an effective way to get some extra sales.
Affiliate bonuses help improve conversion rates and boost customer loyalty simultaneously.
Just be aware that the different affiliate networks have different rules on this. Bribing visitors to click on PPC ads is strictly forbidden!
Some of the most effective bonuses are packages of additional training materials, support and customer support services related to the main product.
In general, you don't need to create these offers or have expertise in the product to offer them. You can buy or find products online that you can re-brand and offer as something unique.
Let's say you try to sell work-out equipment. You can offer a guide on how to use the equipment or the "six best work-out routines for X product."
You can write them or create videos yourself, outsource it to someone on Fiverr or UpWork or use what is called Private Label Content (PLR) which gives you the right to re-brand existing e-books and videos.
There are also some common mistakes that people make when using bonuses.
To prevent such mistakes, here are some things that you should know about these products.
Bonuses in affiliate marketing are a great way to increase conversion rates and maximize your affiliate income.
Even if you don't have a product, offering additional incentives like a free eBook or an extra bonus can make your affiliate marketing efforts worthwhile.
However, you should keep in mind that many affiliates may already be promoting the same product, so you need to offer an irresistible bonus to lure them in.
If possible, keep the bonuses time-limited so that potential customers have an incentive to buy right away.
We’re all just humans.
And humans get easily distracted these days. 🙂
A well-designed bonus package can be extremely valuable for affiliates and will help you stand out from the competition. Providing bonuses that are relevant, valuable, and unique is an effective way to increase the amount of sales.
Establishing a relationship with your audience
Developing a rapport with your audience is an important part of an affiliate marketer's success.
The most successful affiliate marketers focus on a particular niche, which helps them to reach a more specific audience and build rapport.
For example, as a fashion blogger you may choose to focus on plus size fashion, men's fashion, or kids' fashion, as mentioned earlier. This will enable you to reach more targeted audiences who are more likely to react to what you have to offer.
Besides regular YouTube videos, Instagram videos and TikTok videos, one of the best ways to establish a relationship with your audience is to create a webinar.
The webinar format allows you to interact with your audience by showing them a product live, answering questions, and explaining the benefits of the product. At the end of the webinar, you can share your affiliate link with your audience.
This way, your audience will not feel obligated to buy anything during the core of the webinar. You simply provide free, relevant and interesting training and knowledge.
However, at the end of the webinar it is normal to have a time-sensitive offer. If you are just starting out, creating live hang-outs on YouTube also works very well. You don't need to sell anything, but it's a great way to create engagement and a loyal crowd who may purchase something down the line.
Another popular way to share affiliate links is through email lists.
Many marketers will create email lists of registered users and offer a small incentive for signing up.
These newsletters will contain affiliate links where the marketer can earn money each time a subscriber clicks on the link. This method is great for building an audience, but it may take time and money.
Establishing a relationship with your audience is a key part of an affiliate marketing success.
Conclusion
Hopefully, you learned a few things from this post. I have been doing affiliate marketing since the early 2000's and sometimes it is easy to forget that we all started somewhere.
Without the knowledge that we now take for granted.
I experience this first hand from time to time.
Especially, when I meet new people and I tell them I do search engine optimization (SEO) and affiliate marketing; I see their empty stares and their eyes tilting backwards before they either change the subject of the conversation or say something along the lines of "Uh, that sounds complicated."
It's easier to just tell them I sell drugs.