In this page you can learn about affiliate programs: what they are, what you have to do to become an affiliate, how much it costs and where the money comes from.
There are also some other things about affiliate programs you can learn from our articles, like how to find profitable affiliate programs, tracking and how to make money from affiliate programs using AdWords™.
What an Affiliate Program Is & How It Works
Amazon.com was the first to promote the affiliate marketing strategy in 1996.
What Amazon does is pay each site that promotes its books, according to the number of visitors it sends.
The affiliate concept developed in time. It is based on performance, unlike traditional advertising, where the seller spends and risks considerably more than any other party in the process.
The affiliate scheme involves three parties:
- The seller (advertiser) site — the site that gives you the permission to promote its products (services). It pays you a commission for each sale that was driven by you.
- The affiliate (publisher) site — that's your site. You place affiliate links on it. Some of your visitors might click on them and eventually buy.
- The customer — is driven to the site of the merchant through affiliate links that reside on your site.
How to Become an Affiliate & How Much It Costs
Why should you become an affiliate? Because you can earn money quick, from sales and leads, without developing a product or service of your own.
To register as an affiliate, usually, you must simply fill in a form on a website. You are either instantly accepted or you have to wait for approval. It doesn't cost anything.
Where the money comes from
Theoretically, when using affiliate programs, you can get paid in several ways:
- Per click (referral) — this is where you get paid for each click that comes through your affiliate link.
- Per sale — you are paid a commission that varies by sales amount. You are not paid for the visitors that don't buy.
- Residual payments — the seller site applies a unique identifier to each customer that comes through your link. The customer might bookmark his site and come back, without using your website this time. However, that identifier tells the seller you were the initial sender, and you continue to receive your commissions each time that customer makes a purchase.
- Two tier commissions — you receive a percentage of the sales from any affiliates who join the affiliate program through you. This works on the principles of multilevel marketing.
Technically, the money will come:
- Directly from the seller site.
- Through affiliate networks (brokers) that also help you with money management and tracking services, in exchange of a commission.
Your job is to promote the product/service you've become an affiliate for. You have to use your own credibility and your own website traffic to sell the affiliate products. It's the simplest way to get paid for building and maintaining a website.
Affiliate Programs vs. Affiliate Networks
Affiliate networks, also called APPs, act as an intermediary link in the chain. They provide merchants with a simple technical solution to setup an affiliate program, as well as access to a large pool of publishers involved in affiliate business. On the other hand, it's very convenient for affiliates to manage more links from a single account.
So the affiliate network takes care of all your affiliate inventory. You are paid the comissions from all your affiliate “accounts” only once, monthly. However, if your monthly revenues don't rise to a minimum amount that the APP establishes, you get paid only when you reach that amount.
There are two ways you can go with affiliate programs:
- Earn small amounts from a lot of programs
- Focus on few but very profitable programs
In the first case, working through a network is recommended.
The largest APPs on the market are Commission Junction (CJ), Clickbank, Linkshare, and Performics (here's the whole list of Major Affiliate Networks). They usually work with large Internet sellers. For example, CJ works for eBay, Capital One, NextCard and The New York Times Home Delivery.
For more information about making money from Affiliate Networks, read Rosalind Gardner's The Super Affiliate Handbook. She's making $430,000/year from them, so she knows :).
If you choose not to work with APP's, probably the best strategy would be to find a few well paying programs so that you don't have to manage too many accounts.