How To Make Money With Affiliate Marketing

Before you can earn money online by online marketing, you need to understand exactly how you make money with affiliate marketing and what you need to seriously consider before diving in to what is often sold as an “easy way to make money online”. Whether you are just starting out or are an experienced online marketer already, I have information to share for wherever you are up to now. Here’s what this article will cover in brief:

• What is affiliate marketing?
• What is an “affiliate”?
• What is an “affiliate program”?
• Signing up for an affiliate program
• Your “affiliate link” to earning
• Commission payments
• Payment systems

“Affiliate marketing” is a way of making money on the Internet that has been around for decades. This money making scheme turns ordinary people into millionaires like no other industry. If you are not selling your own products and offering affiliate programs to others, basically, affiliate marketing pays a person for selling someone else’s products or introducing someone to a third party’s goods or services, either on-line or off.

So, you are paid in commission when you send leads or customers to a merchant who sells goods and services. Many of the multi-nationals now have this as part of their marketing strategy. Direct marketing via affiliate programmes is big business. According to Marketing Sherpa: “Affiliate Marketing involves an estimated $14 billion in annual online sales”.

An “Affiliate” is the person who will make money by signing up with a company’s affiliate program and then they send paying customers to the seller. As the ‘product promoter’ you earn a fee, or commission for helping to sell a company’s products or services online.

Affiliates may also be known as: “associates,” “program partners,” or “publishers”. I go into JV’s in my extended Affiliate Marketing 101.

So how do you earn money as an affiliate? When you make a sale, the merchant pays you a percentage of the value of that sale.

Ebooks, down-loadable information reports or training programs, which offer valuable information to people are common products and services for sale in an online company’s affiliate program. Whoever refers you to them will have made a commission for your purchase of that information product.

Some affiliate ‘merchants’ pay you when you send them qualified leads. These product producers and publishers promote “offers” through CPA (Cost Per Action) Networks. More on this later.

Affiliate programs work well with social media marketing online, which means that a website can earn money for you as you sleep if you learn Web 2.0 marketing methods.

So how does this marketing system work to earn you money? Well, when you sign up for a merchant’s “affiliate program,” you become a member of that merchant’s ‘online sales force’. Obviously, it pays them to get as many people as possible promoting their product online as a cheap marketing system. Your ‘word of mouth’ recommendation online is likely to find a ready made ‘warm market’ for them; for this access to a bigger audience, they are willing to give you a cut of their profits. This can be as little as a few percentage points to as much as 90% in commission payment.

This compensates you for the time and money you spend advertising and promoting a company’s products, which they would otherwise be spending on billboards and overheads of a marketing employee’s wages, insurance, pension etc. They also benefit because you only get paid only if you generate sales or leads. No results, no pay! But hey, if you want to quit your day job and work from home, how else can you make money from your easy chair and doing what you enjoy (apart from some seedier industries perhaps!)

Signing up for an affiliate program is easy enough. You’ll need to apply – generally online, although, some companies still require paper applications. Some programs will offer direct deposit into an online merchant account, which you may be required to sign up to.

When you are signed up, the seller will give you a unique URL (web-page with a number identifying your account attached) to direct customers to, or similarly, they may give you a ‘link’ unique to you. Depending on how you are going to generate leads, will determine the system you will use.

‘Banners’ – small images which when clicked take you to a product seller site – for instance may link to the product seller via a URL with either your unique business name associated with it or a unique reference number, linked to your account with them. These are fun to play with and do some of the marketing heavy lifting for you by putting together images and ideas with clickable links.

Merchant sites issue affiliate IDs and affiliate links, plus link tracking and payment services, for thousands of merchants. You as the affiliate are brought together with the producer via their portal. These third-party merchant-affiliate link companies get paid for all these services by the product producer, which means it’s free for you, the affiliate, to sign up to.

Because they give you access to many different companies. This saves your time searching for all kinds of products, from many different merchants, in the myriad of niches; you can quickly access multiple programs in less time with one ID. The drawback, however, is that in all likelihood, the compensation system will not be very lucrative, so what you save in time in the short term, you can lose in the longer term in terms of earnings for efforts.

Here your banking and bookkeeping if you are a sole-proprietor are organised for you, should you choose to go this route.

That being said, book-keeping should not be an issue; you want to look at out-sourcing this aspect of your business anyway to free you up for the creative and strategic stuff, which is what will grow your business. You are a professional marketer and you want your time spent on this revenue producing activity, not on book-keeping!

So, assuming you have decided your target income, done your homework and have found the lucrative products you can get passionate about promoting. Next comes, the “affiliate agreement”. Make sure you understand WHAT you are signing up to, because if you violate their terms and conditions, the merchant can withhold payment, or even drop you from their affiliate program.

Your job is to put this link on a website, in an email, an article, a video, or even in a picture online; this is where your Web 2.0 training comes in. There are so many ways to promote, this has to be learnt seperately and is too big a topic to deal with here (in fact it is an on-going learning and training process for any marketer who wants to get this right and one you need to commit to right at the start).

The promotion and marketing is the skilled part of being an affiliate earner. You’ve got to get people to click on your link AND BUY. Curious Georges and Looky Loos are no good to your business partner or your bank account!

Get this marketing process right from step one and your visitor follows through your marketing system and makes a purchase, you will be paid a commission on that sale.

The merchant’s web-page must also do a good job of selling the person who clicks on your link, but it is your own system, creativity and skill that gets the potential buyer to click through in the first place.

For example, if you place the link on a website that includes your detailed review of the product, together with projecting the right approach, a visitor will be more inclined to buy. Do not believe any business partner if they try to tell you that their site will do all the selling for you! They are lying to you. Getting someone there in the first place is a job in itself!

So then how does the merchant know that you personally should be paid, and not someone else? Well, remember the link they gave you that you filed on your computer for safe keeping? This contains code which is unique to your account with them, so they can track where the sale was made from.

This code is a unique set of numbers or letters. It’s called your “affiliate ID.” The code identifies you — and only you — as the person who is responsible for the sale.

Ok well if you’ve stuck with me this far. Don’t worry if all of these detailed considerations seem a little over-whelming right now… Overwhelm is better than under-whelm after all, right?! The important thing is making good money online is about making your future earnings secure and set up well it is great fun!

You need to learn a little about the techy side of the system too, so now is probably as good a time as any to tell you how “cookies” help you to make sales too. These are tiny programs dropped into to a visitor’s web browser when they click your affiliate link. Cookies store information on a visitor’s computer for your benefit. The information dropped into their computer identifies you as the affiliate who drove them to the site belonging to the product seller.

Compensation Systems: (ie How You Get Paid)
Before signing up to give your time to any partner affiliate program, you need to think about your own goals. Seriously! What do you want to earn? What will this money buy you? What is the reason you are doing this in the first place? The answers need to be in the fore-front of your mind when committing your time and energy. Will your new business partner affiliate commissions get you closer to your goal?

With this in mind, let’s take a look at what’s on offer for affiliates.

Cost Per Action (CPA) or Pay Per Lead

This type of affiliate program pays a set fee for each qualified lead you send to the seller’s site through your affiliate link. The visitor has to take action to share their contact information with the merchant to be considered a “qualified lead” .

The MERCHANT decides who is “qualified prospect”. There are about 50 different Cost Per Action / Acquisition networks around who specialize in financial services programs; they are highly selective and offer lucrative returns for experienced marketers.

Pay Per Click (PPC). Contextual Advertising

Generally merchant partners don’t pay you when someone clicks your affiliate link, but when someone BUYS after clicking your affiliate link. Certain advertising programs do pay just for clicks however. Providing ad space on your web-site can make a small amount of money from each click on an ad; it all adds up.

Google AdSense is probably the most popular amongst affiliates of this kind of advertising. You show say 3 or 4 Google ads on your site, and when visitors click them, you receive a small percentage of the amount the advertisers pay Google.

Generally speaking, sending your visitors to a web page with contextual ads isn’t as profitable as commission-based sales, but it still offers another avenue to make you money! See my 101 on Affiliate Marketing for more details on the relative pros and cons of ad systems.

Pay-Per-Sale

Pay per sale is basically commissions for direct marketing; you get paid for sales made after the person you refer clicks through and buys.

Residual Income and Recurring Revenue

A favourite topic. In residual income programs, merchants pay you a recurring commission on subscriptions and monthly services. Direct Marketing, Network Marketing or MLM companies will pay you ‘residual earnings’ for other affiliates you sign up. Effectively, their marketing efforts carry on earning for you, whilst you are busy doing something else… Long-term, these back-end commissions are your biggest profits! Click here to find out how I learnt about what a difference residual income with the Get Paid Today system makes to your online success.

I would suggest you really do your homework here, as this is where you are really leveraging your efforts for maximum returns for minimal effort. Bear in mind, however, that you have to make a commitment to your own professional development as you are now in the realms of team building and coaching. If you like working with people and are a good communicator, you’ll have a ball building a potentially lucrative business.

Hybrid Programs

I left this until last, as this type of marketing combines elements of any of the above. Sometimes merchants combine different payment programs. For instance, differing rates per banner click or sales made after someone clicks. Some will also offer bonuses after you make a certain number of sales. Others offer a scale that pays higher commissions the more sales you make.

I haven’t tried this model personally. It’s tends to be used for physical products as opposed to for example digital information ones. Once more, commitment to improving your marketing professionalism is required. Consider this perhaps having mastered promoting commission-based products first.

COMMISSION PAYMENT SYSTEMS

The basics! There are basically two types of commissions:

SINGLE-TIER COMMISSIONS are straight commission payments made for your direct sales results. You get a percentage of the profit made by the seller per sale.

TWO-TIER COMMISSIONS pay as this implies, on two levels (although MLMs are set up on a similar basis). You benefit from your own sales, and you can make money on a percentage of sales made by new affiliates whom you refer to the affiliate program and who sign up.

So, the benefits are obvious here; even if you don’t make many direct sales, the affiliates who sign up under you will. There are sound business reasons for you to do so however, as anyone investing in a strong business, will want to see their ‘leader’ doing as they do too. With the right team support, you will earn automatic earnings for you as you get a percentage of your team’s sales who copy what you and your team are doing!

Two-tier programs are not so common; MLM’s are more common; Some say this is because of the complex tracking required. MLMs are not necessarily the holy grail of marketers either, however. If you happen to find a two-tier program in a niche that fits well with online marketing strategies, you might end up recruiting many second-tier affiliates through your articles, videos, forum postings or other social media postings. Those small second-tier commissions can add up!

To learn more about the potential disadvantages of some MLM business systems, I suggest you check out the increasingly infamous Coffee House Letter.

At the end of the day, your affiliate marketing needs to underpin a good business model, to keep revenue flowing whilst you build your main business on the back end.

As far as Payment Terms go, merchants can issue earnings payments whenever suits them, so it’s important to read the small print in your agreement when you sign up for an affiliate program to see if their terms suit you too.

Just remember that before you can get paid, generally speaking, your earnings may have to reach a pre-determined amount, although the good news is that not all systems are set up like this, also the earnings, once they begin to happen, will bring regular income.

There is so much more you will learn from learning to earn in the direct marketing industry. It is a steep learning curve for many as over 60% of online marketers are completely new to the industry! Right now it happens to be one of the most competitive industries you could choose to get involved in, and over 95% fail to survive their first year – but don’t let that put you off; there are reasons for peoples’ failure, the point is to invest in your marketing training to save yourself money and headache in the long run.

That being said, it is not only definitely the most rewarding thing I have ever done work-wise, I happen to know that the direct marketing industry truly is THE door for the ordinary person to walk through to become rich beyond their wildest expectations. The long-term rewards of sheer hard-work during the set up period and development in the first year or two make it all worth while in the long run… Making money whilst walking the dog in the hills where I live or whilst I sleep and knowing I have skills for life-long monthly earnings beyond the average surgeon’s annual salary… nothing can top that!

I have tried to cover the basics of affiliate marketing, but I have also left a lot of information for other articles. But if you want to learn more, be sure to check out my Affiliate Marketing 101 or fire me a question. I’d love to hear what others’ experiences are… (Did I mention that being part of a real community online is also one of the really fun parts of the direct marketing business? If you are at all over-whelmed and think that you need to learn the nuts and bolts of how to get the customers clicking on your links, then the best thing you can do right now, is actually invest in your marketing training.

So here’s my shameless plug. The best training bar none, that takes you by the hand through every step of the nuts and bolts of Web 2.0 social media marketing that I’ve galloped through here is Traffic Formula 2 by Mike Dillard and his team. The truth is,, there is nothing for free if it’s worth getting and this investment in your online marketing skills will be your best in terms of getting set up in such a way that the only way you can fail will be by not putting in the time!

Now go learn to earn more than you ever made in a day job in a month and what it really means to Be Do Have AND Have Fun! Check out my extended 101 article on the subject of affiliate marketing to get the step by step process of how to do this.

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