What Is Affiliate Marketing: A Step-by-Step Guide To Making Passive Income
Ever wondered what is affiliate marketing?
Today we are going to answer this question for you and show you why we think affiliate marketing is an income stream worth mastering.
As we believe affiliate marketing is one of the truly passive income streams on the internet.
Ever since hearing all about passive income for the first time, many of us have made it our goal.
One can only dream of waking up after a long sleep to find that we made an extra boatload of $$$ overnight.
So let’s explore how this can be achieved and dreams are being turned into reality.
Affiliate marketing is the preferred entry point into passive income for many marketers.
Because in essence, all's you have to do is promote someone else’s product and if you do it successfully you get to take home a commission.
You don’t need to invest any time, energy or cash into sourcing, creating, holding or shipping products!
There are plenty of success stories, too.
In 2016, around 9% of affiliate marketers made over $50,000 each.
In this bumper article, we are going to show you just how affiliate marketing works, who uses it – and how you can get started.
Affiliate Marketing Definition
A quick Google search will define affiliate marketing as follows:
“A marketing arrangement by which an online retailer pays commission to an external website for traffic or sales generated from its referrals.”
What is Affiliate Marketing?
Affiliate marketing is essentially a legitimate revenue sharing model where money made from a sale is split between the merchant and the marketer.
You can look at it like this:
A merchant has a great product but needs help to market the product.
So he hires an affiliate marketer – you – to do the marketing for him.
The affiliate marketer usually markets the product through content published on a website.
Although, affiliates often also use email marketing, webinars, Youtube, Facebook, Pinterest or Instagram to promote products.
Anywhere where a marketer can get an opportunity to capture a browser's attention can be a potential affiliate marketing opportunity.
Each time the marketer is successful and makes a sale through their efforts, he or she is rewarded with a cut of the commission.
Both parties are happy, and because you don’t need to source the products or complete customer service yourself, you’re free to focus on the marketing side of things.
Although, a handy tip that most affiliate marketers don’t realize is that they can often create their own version of the product they market if they desire.
For example, if it is a physical product you could private label the product or if it is digital such as a course, you create your own course to sell.
This way you can keep 100% of the revenue for yourself.
After all, if you have successfully been making affiliate sales then you will have found the right target customers.
But this is a more advanced topic for another day.
Why People Do Affiliate Marketing
Affiliate Marketing Gives You A Chance To Earn A Side Income
The primary reason people are motivated to give affiliate marketing a go is because affiliate marketing gives you a genuine chance at earning a side and even a passive income.
But don’t get us wrong.
You still need to put in the work initially and lay the right strong foundations.
This is usually in the form of creating quality valuable content that serves your market's needs and helps your target market solve their problem.
But more on this later.
Affiliate Marketing Allows Your Own Your Own Business
Affiliate marketing gives you the chance to make a passive income or cash on the side to supplement your full-time wage.
However, it can also allow you to quit your job and become your own boss.
For many, this is key.
Who among us doesn’t dream of setting your own hours and working as much or as little as we want?
This is the good life!
Over time, your affiliate marketing career can grow into a proper business where you can start to hire people.
Believe it or not, all aspects of the affiliate marketing business model can be outsourced to other people.
From developing and running a website to content creation and production.
Affiliate Marketing Is An Extremely Low-Cost Business Model
Affiliate marketing has an extremely low-cost entry point.
When you first launch an affiliate marketing business, you don’t need a ton of money.
All that’s needed is cash for a website, domain name, web hosting and a content management or blogging system like WordPress.
Sound like Jargon?
We will explain what this is later on.
Using web hosting providers like Bluehost you can literally start your business with a monthly subscription for USD 3.95.
This is not bad for starting your first business.
As mentioned previously, Affiliate marketing is also great because there is no sourcing of products, storage costs or returns.
Since you’re selling other people’s products they handle all the customer service and fulfillment for you.
Although, as a word of caution if you don’t want the customer to return their product and you to lose your sales commission you are best off ensuring you partner with a quality merchant.
Affiliate Marketing Allows For Maximum Flexibility
Flexibility is another key reason why people do affiliate marketing.
This is system allows you to create digital content such as podcasts, videos, reviews, emails or blog posts when and where it suits you.
Affiliate marketing also lets you create a better work/life balance that suits you.
When you become an affiliate marketer, you can essentially become a digital nomad who can work wherever you want.
This is often a key selling point of the passive income laptop lifestyle.
If you want to take off and live in another city in another part of the world for a while, affiliate marketing allows you to do that.
You just need an internet connection.
Who Tend To Be Affiliates?
Successful affiliate marketers are people that first and foremost have a desire to genuinely help and serve their audience with quality solutions for their problems.
As you might have guessed having an audience or traffic is a key component for affiliate marketing.
You need to have an audience that trusts you and believes you are credible and have their best interests at heart before they will purchase products through you.
As a result, a lot of successful affiliate marketers are people that are able to consistently generate content (usually digital) for their audiences.
These types of people include:
2. Youtubers; and
All the above marketers, essentially create different forms of content from videos, to pictures or blog posts to serve their audience's needs.
It’s important to note that to be successful at affiliate marketing you don’t have to be rich or famous.
You just need to be able to solve your audience’s problems with a quality solution i.e. the product/solution you are marketing.
This could be in the form of an informative video or blog post that solves your audiences problems.
One other big dirty hidden secret is that you don’t even need to produce the content yourself!
You can simply create a website and outsource the content production to an expert (known as a content writer or get someone to create you a video).
However, a successful affiliate marketer needs to be aware of what makes for good content that engages and informs their audience.
You also need to be aware of what your target audiences wants and needs are, and how to address them.
Affiliates are marketers who are digitally savvy.
You don’t need to be at the center of the action with a full-blown business that creates or ships products.
You just need to become an expert at finding audiences with problems and solving their needs.
How Affiliate Marketing Works
The best way to explain affiliate marketing is by imagining a real-life scenario:
Step 1 – Affiliate Marketer Finds A Product To Solve Their Audiences Problem
Let’s imagine that an affiliate finds a merchant affiliate program for a product or service that suits their website niche (a niche is simply an area of expertise or focus).
The product or service must also provides a solution to a problem their target audience tends to encounter.
Step 2 – Affiliate Marketer Creates Some Content
The affiliate marketer starts to write/video/podcast about the product/service related content onto their website.
Each time they mention the merchant's products/service, they add an affiliate link whereby a user can make a purchase through.
So far, so good.
Step 3 – Customer Commences Searching For Product/Service Related Information
A common scenario would be:
Enter the customer, Andy.
Andy is searching for product comparison or review content about a product she wishes to buy.
Andy performs a search in Google and comes across a blog post or a Youtube demonstration etc created by you, the affiliate.
After reading/listening/watching your review Andy decides that this product is for her
Step 4 – Customer Clicks On Affiliate Link
Andy clicks on your affiliate link and a cookie is dropped onto her laptop recording that she came to the merchant’s website as a result of clicking your list.
Step 5 – Customer Makes A Purchase
Liking what she sees on the website, she decides to make a purchase.
As she does so, the merchant spots a the affiliate cookie on Andy’s laptop.
Step 6 – Merchant Credits You With A Sale And Pays You Commission
The cookie informs the merchant the Andy came to the website via your link.
You have now made your first sale.
The merchant then logs a credit for this sale as per the initial affiliate agreement.
This process repeats itself over the course of a month.
At month end, the merchant sends payment to the affiliate for all the sales that were made.
In a nutshell, this is how the affiliate marketing model works.
That said, there are sometimes more parties involved than just the merchant and the marketer.
The Parties Involved In Affiliate Marketing
This is the seller with the business who has a product (digital or physical).
A merchant could be any business you can think of, from small online entrepreneurs to bigger corporations like Amazon.
Literally anyone who has a product can be a merchant who launches an affiliate program.
This is you (also known as the Affiliate) who promotes and markets the products to customers in a bid to generate more sales.
A marketer might use a blog to promote the product, and each time a sale is made as a direct result of that blog, the marketer takes home a cut.
Essentially, a marketer must use their skills to market products that aren’t theirs to new customers in order to generate more leads and sales for a company that have no other involvement with.
A crucial part of the affiliate system, there is no affiliate system without the customer.
The consumer is who you the marketer targets, and there are multiple channels (Instagram, Youtube, Websites, Facebook etc) open to you to target.
Sometimes instead of going through the hassle of self-administering an affiliate program i.e. determining what is a valid referral and how much to pay each marketer merchants will outsource this to an affiliate network.
ClickBank is an example of an affiliate network.
The other way is for a merchant to self-administer a program through their own website.
You just need to check and see if they offer an affiliate program.
Sometimes this is also called a “Partner programs”.
Then you just have to directly register without going through a network (this process is decided by the merchant).
How to Be Successful at Affiliate Marketing Explained
Of course, it’s one thing knowing how affiliate marketing works – and quite another making it work successfully.
Some affiliates make over $50,000 a month, but others struggle to make a start.
So what separates the two?
As with anything, it comes down to knowledge of the game, doing the right things – and having patience.
In this section, we’ll take a look at how to be successful with affiliate marketing:
1. Pick the Right Niche
The right niche is a profitable niche.
This is key because if you handicap yourself with the wrong niche, you won’t sell enough products to make it worth your while.
Characteristics of a good niche include:
A Popular Concept
A niche has to be popular i.e. there needs to be sufficient traffic or a big enough audience for you to be able to monetize and generate a profit successfully.
Longevity: Not Too Broad & Not Too Narrow
Your niche needs to have longevity i.e. selling finger spinners may not be a good website or youtube channel to create.
However, a relaxation or de-stressing niche could be sufficiently broad enough to enable you to find multiple topics to blog about and products to target and market to your audience.
Having A Personal Interest
It also helps if you already happen to love or have an interest in the niche, but this isn’t a necessity.
This will help you keep motivated to keep creating content
What matters most is that products in your niche sell.
Tools & Tips To Identify A Niche
There are a few ways to identify the right niche:
First, take a look at data from online marketplaces, such as Ali Express or Etsy.
Search for products in your niche that you could market and see how popular they are.
If multiple items are currently enjoying more than a hundred orders than it could be indicative of desirability/popularity and high demand.
On the other hand, if it’s been around for a while and has less than 20 orders, these may indicate a lack of customer interest or demand.
You can also use Google Keyword Planner to find out how popular a niche is.
This is a useful tool that lets you type a keyword into its search field.
Using this tool you can analyze search volume to see how many people are searching for that term per month.
10,000 searches per month are acceptable for a super core niche, but a more general niche needs to have at least 100,000 searches per month for it to be sustainable for you as an affiliate marketer.
Is Your Niche Evergreen Or A Trend?
A trend is something that comes and goes and is generally only good for short-term profits at best, evergreen niches are here to stay and are therefore more valuable to you.
Trends don’t need to be altogether discounted, but the great thing about an evergreen niche is that you can still jump on trends.
For example, if you’re promoting American sportswear, your trends will include the Stanley Cup and the Super Bowl.
You can use Google trends to see how your chosen niche is trending.
The last thing to take into consideration when picking your niche is the amount of competition.
This is a bit of a double-sided coin because a niche needs to have some existing competition but not too much.
If it has none, is is most likely a niche that has been avoided for a reason or hard to sell.
If it has too much it may be too hard to compete against other marketers/business with more resources.
Another pro tip is to find a niche that has products that are either subscription products/services or products/services that are of sufficiently high value.
Most affiliate commissions tend to range from 25%-50%.
Generally speaking, you will tend to do the same amount of work to get a customer buying a USD 2 product as you will for a USD 100 product.
So what would you rather 50% of $2 or 50% of $100 per sale?
As you can imagine it is wise to try and make sure your niche is not all comprised of low-value items.
2. Always Give Value And Create Valuable Content
I can’t stress this enough.
Your sole focus needs to be about providing quality solutions, serving your customer and helping your target audience.
Don’t look at your customer as a dollar sign.
Speaking from experience you need to be looking to genuinely serve and help your customer otherwise you will lose their trust and they will see through your bullsh*t and move on to never return.
So here’s how you can do this:
Super High-Value Content
Good affiliate marketing that results in sales starts with awesome content.
You need to create a website that gives users a reason to come visit your site.
This is usually done by creating content that offers real value and truly helps your audience.
Consequently, this type of content is usually the type of content that really resonates and will be loved by your audience.
As a result, this type of content is the type that users end up spending a lot of time engaging with and viewing.
As a result, this type of content is also loved by Google.
The more in-depth and comprehensive your content is, the better chance it should have of answering search queries questions.
Currently detailed, targetted content is tending to rank high on Google.
We believe that quality and not quantity is the secret to attaining that coveted page one spot one Google ranking.
Once you’re ranked on the first page people will naturally start to view your content and if it helps them take action towards a sale.
As a general rule, the more value you give to people for FREE, the more they will trust you.
Over time, your site visitors will convert into sales or leads such as email addresses from which you can then also email market to.
The great thing about search engines like Google is that they exist for the sole purpose of connecting people with problems to answers and solutions.
In order to be able to get your content found by users looking for solutions to their problems there are two main ways:
This is where you can pay for some form of advertising such as Google Adwords or Facebook/Instagram/Youtube Ads etc and pay to have your content placed in front of users or at the top of search engines.
Free/Organic Traffic: This is a process whereby users come to your website through free means.
The main ways are through directly heading to your website or through a process known as Search Engine Optimisation or “SEO”.
In essence, SEO is about creating super high-quality content so that a search engine's algorithm believes your content is going to best answer a user's search query.
As mentioned previously, Search Engine's use a lot of different metrics to decide how to best rank articles ranging from time spent on the page to other websites linking to this content.
3. Revenue Formula = Internet Traffic With a Problem + Credible Solution To Their Problem
As just touched on, the great thing about Google is that it puts you in touch with users who have a problem.
On Google, each time a user searches for something, they’re looking for an answer to a specific problem or question.
If you’ve got the answer to that problem and your users’ actions demonstrate that you have the answer to the problem your search engine ranking will go up.
When it comes to generating the right traffic, you have to know exactly what questions people in your niche are asking, how they’re asking them (what language they’re using in search engines) and what their intent is behind the question.
Then you can begin to create content based around these keywords.
Understanding user intent, on the other hand, is all about understanding where someone is in the buying journey.
Once you know this, you can then deliver content that meets your audience exactly where they’re at in the buying process.
For example, there are 3 different types of intent:
A customer is searching for a specific product
A customer wants to do some research (comparison articles work well for these users)
A customer wants to make a purchase
You can use keyword research tools to help you understand user intent more.
Once you know the relevant keywords, you can present your content in such a way that it solves your audience’s problems.
For example, content targeted to keywords “Where to buy a Rolex” would be different to “what watches are in fashion”.
In the first example, you could talk about the benefits of buying online such as Amazon and getting delivery to your door without moving versus going in-store and trying on the watch.
Whereas in the later search term you would perhaps be more focused on doing a comparison of what celebrities seem to be wearing and how they are pairing each watch with an outfit.
How to Set-up Affiliate Marketing Systems
From the picture above, courtesy of Slice Digital you can see that Starting life as an affiliate marketer can occur in multiple ways.
The nuts and bolts of the system is that you need to develop a two-part process:
1 – You need to be able to consistently locate an audience that has a problem or a need that requires solving; and
2 – You need to have a solution that meets your audience's needs that also allows you to gain profit when a sale is made.
Below we are going to outline some common methods of creating affiliate marketing content and strategies:
Starting to Review Products in Your Niche
The great thing about being an affiliate marketer is that you don’t need to spend time searching for product ideas. Instead, you can dive straight into writing reviews.
And this is essentially all you need to do in terms of the bulk of your content – write engaging and informative reviews that educate people about the in’s and out’s of a product.
Comparison reviews work especially well, and if you’re not an amazing writer you can either learn how to write better reviews (it isn’t the hardest job in the world) or hire a writer.
You can also include video demonstrations of how the product works for extra punch.
The main thing is to pack your reviews with lots of research and focus on adding as much value as possible. This will improve your rankings and it will help you build a strong relationship with your site visitors.
If you’re reviews are short, poorly written and researched, people will sense you’re an affiliate looking to make some fast cash and bounce off your video or webpage.
Be objective and honest with your reviews and highlight any shortcomings of a product to gain trust.
While you ultimately want people to buy the product if customers know they can trust they will keep coming back to your website in future.
Building an Email List
Email marketing complements your affiliate marketing efforts.
Look at it like this: If you offer site visitors a free gift in exchange for their email address (it could be an eBook, a cheat sheet and so on), you can grow your email list. Over time, you can grow it so much that you’ve got lots of customers that you can email with more affiliate products.
ConvertKit is a great tool to help you build and manage your list, and it also lets you segment your list so that you target different customers with different offers. This is a good idea because once you start putting the right offers in front of the right customers, your conversions will only grow.
Email lists are where the sales are for affiliate marketers but you don’t want to cause them to unsubscribe by bombarding them with too many offers.
The trick is to keep them engaged with regular emails but to mix your emails up.
Promote your products but don’t forget to send emails that add value to their lives, and which are focused on educating them about your products.
Build a Website
There are many options open to you here, from the drag-and-drop Wix, to the more popular Content Management System WordPress.
WordPress is always a solid option because it’s got a huge community of users who are on-hand to help you out if you run into a problem. It’s also home to thousands of plugins and themes.
Wix, on the other hand, is a bit more basic but it’s ideal for beginners and it’s still possible to create an awesome website.
Whichever builder you use, you need to pick a domain name that’s relevant and which is simple and easy to remember. Then, work out your hosting plan (Wix will host your site for you, but WordPress won’t), before focusing on what we discussed earlier:
Revenue Formula = Internet Traffic With a Problem + Credible Solution To Their Problem
This website is now your baby – indeed, it’s your whole business. As such, it needs to be cared for.
So focus on your SEO. This means making your website presentable and easy to use and navigate. Don’t make the buying process hard for people.
Make sure that your site speed is good, too. A slow loading website is a major reason people bail out before they’ve even seen your great products.
Optimise your website for mobile, too. Research shows that mobile users are often in the mood to buy, so you need to make sure your website loads fast on mobile and looks good. Otherwise, they’ll bail out and you’ll lose conversions.
Using Live Webinars to Educate your Audience and Make Sales
It’s one thing trying to engage people with a blog post, and another engaging them with a live presentation.
That’s what a webinar is – it’s you talking live to your customers about your products.
It’s a simple process, too, and there’s no need to spend loads of cash on lights and cameras.
All you need is a landing page with a sign-up form.
Then, you need to remind people that your webinar is coming up while building a buzz around it.
You can even use a totally free tool like Google Hangouts to host your webinar.
What should you do during your webinar? A few things:
1.Talk about the products features
2.Talk about how the product is used
3.Talk about the products benefits
The aim is to engage, inform and educate people, and you need to sound as enthusiastic as you can about each product. People need to be as pumped as you about it!
At the end of the webinar, point to your affiliate link – don’t forget to do this!
Growing your Affiliate Business with Facebook/Google Advertising
Paid marketing is generally where you pay a fixed fee each time someone clicks your ad that’s displayed at the top of for example Google for a particular search query.
It basically means that you advertise for a specific keyword and get ranked up the top of a search engine (or with Facebook an ad gets put in their feed).
From there users get directed to your website in the hope they will like your solution and buy or give you their email address.
To this end, you need to target keywords that are related to not your product itself, but to learning about it.
For example, if you’ve got a webinar coming up, you would target a keyword related to your product or niche and launch an advertising campaign to encourage more sign ups.
Paid advertising makes your website more visible, and for this reason it’s a great idea.
Affiliate marketing, then, is all about taking someone else’s products and marketing them. Each time your marketing results in a sale, you take home a cut.
It’s a fantastic entry point into passive income that’s low cost, flexible, and largely hassle-free.
Especially if you’re already familiar with content marketing, affiliate marketing is easy to transition into once you’ve picked your niche and products.
To do this you need to work out a strong value-orientated content marketing strategy that adds A LOT OF VALUE. I can’t stress this enough.
Content that is aimed at driving high quality traffic to your website.
To double down, create an email list, host a webinar and launch a PPC campaign.
All in all, if you've ever dreamt of making money while you sleep, affiliate marketing is a great place to start.
It will take effort and work from you, but it’s one of those things – once you’ve put in that initial blood, sweat and tears, things start to get a bit easier as fruit is borne.
So if you want to get started becoming an affiliate marketer we recommend you create your own website.
By far the cheapest and cost-effective provider is Bluehost who can set you up with your very own website hosting and fully customizable content management system: WordPress.
Start your affiliate website today using Bluehost for as little as USD 3.95 per month including a 30-DAY Money Back Guarantee!