What is Affiliate Marketing & How Does It Work?
Affiliate marketing is one of the oldest forms of marketing wherein you refer someone to any online product and when that person buys the product based on your recommendation, you receive a commission.
The most common question I hear is related to how companies track the record of who is sending the traffic and making the sales. The simple answer is with a tracking URL (a unique link given to you by the affiliate company or product company).
This URL is used to keep track of all the traffic and sales you are making via your website or other promotional techniques. Many old-fashioned affiliate programs allow a buyer to add the email or referral details in an effort to account for affiliate sales, but this is certainly not the best way to track progress.
Here are some of the common terms associated with affiliate marketing:
- Affiliates: Publishers like you and me who are using affiliate program links to promote and make sales.
- Affiliate marketplace: There are many marketplaces like Shareasale, CJ, and Clickbank. These work as central databases for affiliate programs in different niches.
- Affiliate software: Software used by companies to create an affiliate program for their product.
- Affiliate link: Special tracking link offered by your affiliate program to track the progress of your affiliate promotion.
- Affiliate ID: Similar to the affiliate link, but many affiliate programs offer a unique ID which you can add to any page of the product site.
- Payment mode: Different affiliate programs offer different methods of payment.
- Example: Cheque, wire transfer, PayPal, and others.
- Affiliate Manager/OPM: Many companies have dedicated affiliate managers to help publishers earn more by giving them optimization tips.
- Commission percentage/amount: The amount or percentage you will be receiving in affiliate income from every sale.
- 2-tier affiliate marketing: This is a great way of making money from an affiliate program. With this method, you recommend that others join affiliate programs, and you receive a commission when a sub-affiliate makes a sale (similar to MLM or multi-level marketing). This income is also known as a sub-affiliate commission.
- Landing pages: A unique product sales or demo page used for the purpose of increasing sales. Most of the programs that you will be promoting have many landing pages, and you can run A/B testing to see which pages convert best for you.
- Custom affiliate income/account: Unlike a generic affiliate account, many companies offer custom affiliate income to people making the most affiliate sales for them.
- Link clocking: Most of the affiliate tracking links are ugly. Using a link clocking technique like URL shorteners, Thirsty Affiliates, etc., you can turn ugly links into links that can be read and understood by your readers.
- Custom coupons: Many programs allow affiliates to create custom coupons which are also used to track sales. Custom discount coupons help you to increase affiliate sales as well.