So, What Is Affiliate Marketing?
“Affiliate marketing is a business model based on performance marketing.”
A company will pay commission to affiliates who deliver them leads.
Tell Me More!
If you’ve heard about affiliate marketing, you’ve heard the stories.
Yes, you can make a lot of money in affiliate marketing (read my affiliate marketing story here).
But there are a ton of ways to make money – why affiliate marketing?
For me, it’s simple.
Sure you can earn big money as a CEO, as a consultant, or an investment banker – but what’s the freedom like in those jobs?
You can’t pack up and take a trip to Japan for a month if you feel like it.
Also, how many years does it take to hit the big money in those careers?
I made my first $1m in my first year as an affiliate.
That’s not to say it’s easy, or that anyone can do it, I’m just telling you that it’s possible.
Let’s get started!
There are 3 main players in the game:
- The customer
- An advertiser (the offer owner)
- You – the affiliate
This is the end purchaser of the offer. We’ll get the to the customer in a second.
They want more customers, but they don’t want to spend their own money on marketing and sales teams.
The offer owner is willing to pay someone a commission for every customer or lead they can drive to the offer.
The Affiliate (A.K.A You)
This person (you) drives the customers and leads is the affiliate.
It’s a risk-free transaction for the product owner. They only pay out commissions if there is a sale.
Doesn’t this sound like a bad deal for the affiliate?
If the customers don’t buy the product, the affiliate doesn’t get paid, so why would the affiliate want to do this?
Once the affiliate figures out the best customers for an offer, they can send thousands of customers per day.
That’s why you hear of people making millions of dollars on the internet.
It’s like a puzzle, and once your figure it out, you can scale your success exponentially.
This means that the affiliate might lose a small amount of money testing different strategies… But they can make a fortune when they figure which strategy works.
Once they have the right strategy, they will send more and more traffic to an offer. Then the owner will start to pay a higher commission, and maybe give the affiliate exclusive access to promote the offer.
At this stage, the campaign almost runs by itself. The affiliate does maintenance work and small improvements to continually increase ROI.
This is where the business model starts snowballing – this is why you hear about affiliates making $1 million + in their first year.
There is HUGE scale.
How Does Affiliate Marketing Work In More Detail?
There’s a little more to it than this, but not much more.
I lied earlier.
There are really 5 parties in the scene, but I wanted to keep it simple at the start.
There’s also an affiliate network and a traffic source in the picture.
The Affiliate Network
Affiliate networks are companies that have a large range of offers all in one place. This makes it easy for affiliates to choose different offers (they only deal with one company).
It also makes it easy for offer owners (the offer owner only deals with a single company, not thousands of affiliates).
So as an affiliate, you would sign up with an affiliate network, and start promoting some of their offers. They set you up with your own affiliate link, and they will show you how to use their platform.
The Traffic Source
Traffic sources are where your customers are. You need to get people to send to your offer. You’ve probably heard of people doing SEO, or email marketing. That’s not what we do.
We buy traffic from companies like Facebook, native ad companies, and mobile traffic sources.
This means that as soon as we find a winning combination of offer and ad, we can turn on the traffic tap and make huge profits. It’s not like SEO where you have to wait months, or even years to see if your strategy works. We get instant results.
If you’re still confused, I’ve written an article affiliate marketing glossary of terms.
My Favorite Analogy of Affiliate Marketing
Imagine an encyclopaedia salesman (back when that was a thing).
He goes from door to door, trying to sell his encyclopaedias.
After a while he gets to know some of the triggers that make people buy.
He gets to know what to say, when to push for the sale, and how to get people to buy.
He starts to develop a formula, a script.
After he’s been doing the job for a few years and he’s really damn good, he knows that he can sell a set of encyclopaedias to 1 out of every 30 houses.
This is great – but there’s a BIG problem.
He can only visit so many houses per day.
No matter how fast he can walk and do his sales pitch, he’s limited to about 100 houses or so per day.
The only solution is to somehow replicate himself.
How could he do this?
- By training other salespeople with his techniques
- Starting a telemarketing campaign
- Get some billboards made up on the side of big highways
What’s the problem with all of these types of ideas?
They cost money!
A lot of money.
What’s his solution?
There are billions of people online every day.
It’s estimated that over $2.2 TRILLION dollars in sales was spent over the internet in 2016.
This is how millions of companies now drive sales.
They pay affiliate marketers to do drive sales and leads, because we’ve learned how to do it.
How To Get Started As An Affiliate Marketer
The crazy thing about affiliate marketing is that there’s no degree needed, no school can prepare you for it (going to college to learn digital marketing is a terrible idea BTW).
This is one of the last pure industries where you actually get paid based on the work you put in, and how good you are.
It’s nothing like investment banking where you need Ivy League connections, or Google internships where you have to have an IQ of 195 just to look inside the door.
It’s not like stock trading from home in your pyjamas where it’s pretty much luck, and you need $100k+ to make it work.
Anyone can get started in it today.
There are private forums for affiliate marketers like StackThatMoney where people are sharing success stories, case studies, and follow alongs showing how they’ve made money.