What is Affiliate Marketing?

At one point we’ve all thought about starting our own business.

What would it mean to own your own business? You’re in control of your own destiny.

It could mean a life of more.

  • More money.
  • More freedom.
  • More time.
  • More choices.
what is affiliate marketing?

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But then “reality hits.” Why doesn’t everyone have a business?

  • “I don’t have the money to start a business”
  • “I don’t have the time. I already have a job and other responsibilities”
  • “I don’t have any good ideas”
how does affiliate marketing work?

Have any of these thoughts prevented you from starting a business before?

I was in that same scenario back in 2008.

I was about to graduate from Georgia Tech, but I wasn’t too thrilled about entering the workforce. .

I remember thinking, “People only get two weeks vacation a year? That’s it?” That’s not enough time for me to travel the world and accomplish all my other goals.”

That’s when I started looking for ways to make money. I needed a side hustle. There are not a lot of options when you’re 22 years old and don’t have any super useful skills.

I ended up making some cash by buying items on sale in “real life” and reselling them for a profit on eBay. The bad news is I got banned a few months later.

But that experience ignited something in me.

I realized that I could make money on the internet, and I loved it.

I needed to find a different industry since eBay didn’t like me anymore.

What do you do when you don’t know something? You google it!

So I googled…

how affiliate marketing works

Eventually, I discovered an industry called affiliate marketing. People were claiming to make $50,000+ online at home.

I was skeptical because it sounded too good to be true.

I didn’t know anyone in the industry. In the back of my mind, I wondered if this was all a scam to sell me $27 eBooks.

I was asking myself “What is affiliate marketing?”…

But I decided to go “all in” with this affiliate marketing industry. Why? Because I didn’t have any other options.

  • I wanted to be a millionaire one day.
  • I wanted to travel the world.
  • I wanted to be my own boss.

I knew countless people like me were making money off the internet. If other people could figure it out, then so could I.

What is Affiliate Marketing?

Definition: Affiliate marketing is when you get paid a commission for promoting products / services for other companies.

Here’s an analogy to explain it better:

A few decades ago there were salesmen that went “door to door.” They’d have a product and go around neighborhoods selling their goods.

I consider them the first generation of affiliate marketers.

Imagine if you were a knife salesman.

You’d go around your neighborhood and sell kitchen knives. The knives cost the customer $100, and you get a $20 commission for each set of knives you sell.

There are many departments of running a business.

In this case, you only focus on the marketing & selling.

The knife company does customer service, creates the product, does product research, etc.

You’re making great money, without a lot of the headaches.

You’re not an employee of the knife company – you’re an independent contractor.

You set your own hours and work at your own schedule.

What’s in it for the knife company?

Imagine if…

Each knife costs $30 to make Knives sells for $100 Salesman gets $20 commission

The knife company gets $50 in profit for each sale made…risk free.

What happens if the salesman walks around for a week and doesn’t get any sales?

It doesn’t cost the knife company owner anything.

It’s a smart strategy for the company.

Now do you see the appeal of affiliate marketing for companies? It’s a way for them to easily expand their market and customer base, without taking on that much risk.

You get customers for them that they might never have gotten without you.

If the knife company also has information about the customer, they can tell you. Now it’s up to you to go and find those potential customers, and refer them back to the knife company. Maybe they didn’t buy the knives at the start, but now the knife company has some contact details for leads now.

They can call, mail, and email him to sell other products like cutting boards, knife sharpeners, and pots.

But how is this good for you as a knife salesman?

Let me explain it from the affiliate point of view…

Why Affiliate Marketing is Better Than Door to Door For Sales

I’ve never had anyone try to sell me an item door to door besides Girl Scout cookies. The door to door model is dead because it’s inefficient compared to mailing or the internet.

The spirit of these salesmen has evolved into affiliate marketers.

The difference is we have it 1,000,000x better than they ever had it.

Your income is not limited to your time.

You don’t have to go door to door to sell.

You can build a website, and campaign, and it’ll make money for you while you sleep. Websites don’t get exhausted from walking around all day 🙂

It’s 11am right now – my campaigns are bringing in money as I write this content for you.

Our selling is not limited to our area.

Suppose it’s the 1960’s and you live in Georgia. Your selling area is limited to where you live.

With the power of the internet, you can make money in countries you’ve never been to before. This is powerful because some countries are much easier to make money in.

I live in New York City right now, and I just got a sale from Tunisia. I’ve never been anywhere near Tunisia.

We don’t have to work for only one company.

There are no contracts.

Switching to another company is as simple as logging into a website (affiliate network), and grabbing a link.

What happens if you decide you wanna take a month off? Then take a month off. You don’t have to ask anyone for permission.

Who’s Involved in Affiliate Marketing?

There are 5 parties involved in a typical affiliate campaign.

1The Affiliate also known as the “Publisher”

This is you.

You’re the middleman. You’re the person connecting the customer to the product or service.

You’re creating the marketing funnel that includes the ads, landing pages, and whatever additional means necessary to persuade the customer into making a purchase or signing up.

Your job is to:

  1. Find products to promote (Offers)
  2. Find potential customers (Traffic Sources)
  3. Create marketing material (Ads, Landing Pages, etc.)
  4. Optimize (Test different parts of the campaign) until it becomes profitable

2The Affiliate Network

Affiliate networks (usually referred to as “networks”) are “marketplaces” for offers. Offers refer to the “products” or “services” that companies are trying to sell.

Networks serve as the middleman between affiliates and the product/service owner.

You can log into an affiliate network and find hundreds (sometimes thousands) of offers to promote.

A typical affiliate network will have offers in a variety of verticals including:

  • Dating
  • Mobile
  • Gaming
  • Insurance
  • Competitions
  • Weight loss products
  • And hundreds more verticals…

Upon joining an affiliate network, you’re assigned an “affiliate manager” (commonly referred to as an “AM”). This is your contact person. Their job is to help you with any issues you have with campaigns, and to recommend new offers to promote.

Affiliate networks are optional. You can always work direct with the advertiser or merchant. Sometimes they have their own internal affiliate program that you can sign up with directly.

But it’s easier to go through an affiliate network when you’re starting.

We’ll cover affiliate networks in more detail in a later module.

3The Advertiser

This is the company that owns the offer. Every company has a marketing team, but affiliate marketing is a way for them to get more sales with low risk.

The advertiser only pays when the affiliate sends a conversion.

I know some companies who don’t have a marketing department and rely 100% on affiliate marketers for sales.

They focus on their strengths, and they outsource the marketing to guys like us.

The companies range from dating, to gaming, to transport etc.

There are so many offers out there.

4The Traffic Source

This is where your potential customers come from.

You build a website that advertises your products…you need a way to get people to visit your website.

Most websites out there sell “ads” on their sites.

How do you think Facebook and Google sustain themselves?

There are two types of traffic sources out there.

Direct

You can purchase banners directly from the site itself. Example: Purchasing directly from TMZ.com or Facebook.com Here’s an example:

Ad Network

Ad networks are a “marketplace” for a bunch of different websites. It wouldn’t make sense for a smaller blog to deal with advertisers all day, so they work with a network. Example: Taboola is a network full of individual websites.

5The Customer

This is the person who ultimately buys the product or service from you the affiliate.

Your job is to understand the customer and to persuade them to convert.

Remember your job is to make their lives better.

The ultimate affiliate marketer is someone who can create a win / win situation for all parties involved.

  • You profit.
  • The traffic source, affiliate network, and advertiser make money.
  • And the customer gets connected to a product or service that benefits them.

How does this all work on a technological level?

How does the advertiser know who to pay?

Don’t worry too much about it.

It’s 2017 and tracking technology is sophisticated, but easy to use.

Here’s a quick overview of how the process works:

You get a unique tracking link for each offer from an affiliate network. You’ll get paid if anyone purchases using that link.

You put this link into your tracking software. Everything gets taken care of inside the tracking software (I’ve got a step-by-step guide later to show you how to set everything up).

The Benefits of Affiliate Marketing

  • You can make a lot of money.

    I made over 7-figures in profit my first year, and I have days where I make over 5-figures profit.
    I’m not here to sell you the dream. I’m here to tell you that this is real.

  • You can make money while you sleep.

    Once you have a profitable campaign it can make money for you 24 / 7.
    You can even build employees and systems to take over everything.

  • It’s simple to get started.

    All you need is a computer, internet, and some money to spend on traffic.
    You don’t have to hire employees or rent office space.

  • There are no commitments or contracts.

    Don’t want to promote the offer anymore? Then stop. Want to go on vacation for 3 months? You can pause the campaign and go.

  • It’s the best direct marketing training in the world.

    Many people use affiliate marketing as a stepping stone towards new opportunities. Affiliate marketing is business training on steroids.

The Downsides of Affiliate Marketing

There are some downsides to affiliate marketing. I don’t want to portray it as a perfect industry.

1. You’re Not Building any Assets

We connect the customers and the advertisers together. The advertisers keep the data, and build relationships with the customers. We only get paid that one time.

You’re not going to have an “exit” and no one’s going to buy your business.

Affiliate marketing is a great business for generating tons of cash and building skill sets. Most people view affiliate marketing as a stepping stone onto other things.

2. Campaigns Can be Unstable Sometimes

You could be making $10,000 one week, and make nothing the next.

Here are some reasons why:

  • The offer you were promoting went down.
  • New rules and regulations occur that restrict how you promote or what you can promote.
  • Another affiliate steals some of your campaign ideas and competes against you with it. Some people don’t like unstableness, and rather go for something like “passive income.”

Here’s how I view it:

“It’s all about how much money you walk away with.”

Would you rather make $1,000,000 a year that’s up and down, or would you rather make a stable $5k a month from passive income?

$1,000,000 a year vs $60,000 a year.

Don’t let the allure of “passive income” blind you from making a ton of money.

3. Some Campaigns Can be Unethical / Shady

Affiliate marketing doesn’t have the best reputation.

Affiliate marketers have been behind some dirty campaigns.

Since affiliate marketers are paid on a commission basis, they’re going to try to squeeze as much profit as possible.

Affiliate marketing is just a platform. You can promote legitimate campaigns like Amazon products, Teespring, or Shopify ecommerce, or you can promote dirtier campaigns.

There’s a ton of money to be made in all types of affiliate marketing so the choice is up to you and how you choose to promote your campaigns.

My advice is to check with your affiliate managers and advertisers to see what’s allowed.

4. There is a Big Learning Curve

Affiliate marketing isn’t as easy to learn compared to other ways to make money online.

The biggest reason is you have to spend actual money to buy traffic.

There’s a psychological principle called risk aversion. Basically, it hurts more to lose $100, than the pleasure of making $100. We’re programmed to avoid risk.

The other reason is there aren’t too many good resources to learn. I’m hoping to change that with this guide, and other AFFcelerator courses.

Are You Ready?

How do you feel now?

Are you excited? Do you feel overwhelmed?

It’s ok, those are natural feelings. I hope you feel excited and you’re ready to kick ass.

In the next module, I’m going to answer some of the most common newbie questions in affiliate marketing.

Key Takeaways

Affiliate marketing is a way to make money on the internet by promoting products for other companies.

There are 5 parties involved in affiliate marketing: the affiliate marketer, the affiliate network, the traffic source, the advertiser, and the customer

The benefits of affiliate marketing include being location independent, there are low barriers to entry, and it’s great direct response training.

The downsides of affiliate marketing include a large learning curve, there can be unethical campaigns sometimes, and the money can be feast or famine.

Next Actions

1. Read The Rise of Ngo. This is the story of how I got started in affiliate marketing.

2. Read Wikipedia’s definition of affiliate marketing.