What is Affiliate Marketing Really?
In a nutshell, affiliate marketing is the business model that will allow you to sell products online (both physical and digital) that other people have created.
Your compensation for this would be an “affiliate commission”, which is usually a percentage on the “final sale”.
Affiliate commissions vary from one industry to another with affiliate commissions in the physical product industry ranging from 5 to 20% and for digital products being anywhere from 10% up to even 70% and more.
Affiliate marketing is a performance-based marketing tactic in which a retailer, typically an online one, rewards a website with a commission for each customer referred via the website’s promotional activities. The website, often called an affiliate, will only get paid when their promotion results in a transaction.
As an affiliate, you are typically paid whenever your visitor creates a transaction. The transaction could be anything from a click, lead form submission, or a sale. In the majority of cases, affiliate marketing is performance-based, which means you only get paid as an affiliate if your visitor takes action.
Here are some common affiliate marketing models:
Pay-Per-Click (PPC): The affiliate gets paid for all clicks that were generated, regardless of whether a lead or sale happened. This is fairly rare since all the risk is on the product creator.
Pay-Per-Lead (PPL): The affiliate gets paid for every lead they generated. This could be an online form submission, trial creation, or any pre-purchase. This is a shared risk on both the merchant and the affiliate.
Pay-Per-Sale (PPS): The affiliate gets paid for every sale they generated. This is the most common model since all the risk is on the affiliate.
There are typically four parties involved in affiliate marketing:
- The affiliates– the promoters of the product
- The product creators– the creators of the product
- The networks– the networks managing the affiliates
- The consumers– the end-users of the product
Affiliate marketing is not a new thing in the digital marketing universe, but it keeps getting bigger and more important year after year.
According to the report, affiliate marketing grows at a steady 60% rate since 2015, with the industry projected to climb up to almost $7 billion next year.
Such a tremendous increase is possible because over 80% of brands rely on affiliate programs when promoting their products and services.
If you are running some sort of online business, you should definitely join the game and learn the basics of affiliate marketing.