Affiliate Marketing is one of the hottest subjects of the web these days... but how does Affiliate Marketing work?
Sure, you've heard a lot about Affiliate Marketing and you may even know someone who makes money as an Affiliate Marketer, but you're STILL confused about how this stuff works!
OK, OK... relax. I'm going to explain this stuff as easily as I can. Are you with me? OK, let's go...
Affiliate Marketing is simply the art of selling products for a company. It's like being a Car Salesman who works on commission, except as a car salesman - you can't sell just any car (in most cases). You're stuck selling a specific brand (unless you're selling used cars).
As an Affiliate Marketer, you're given a special "link" (URL) that holds your "user identification" so that the company who supplies you the link can keep track of the sales you have referred to their site...
So, for instance, your Affiliate Link might look similar to: [http://merchantsite.net/affiliates/a.php?aid=8732&p=239]
Now I could explain what this link means - but that might be going too far off subject and it may only confuse you in the end. But notice the "aid=8732"? That stands for "AffiliateID" (Affiliate Identification) and when a user clicks on this link - that number is given what's called a "click" to the database. The database (simply a text file that holds a ton of information that we don't really care about right now...) saves that click information and adds up each one. It also (in most cases) saves the Website URL that the click came from... make sense?
Let's say that "Julie" clicks your link when she's on "somesite.com", right? When it's clicked - the link tells the Website Database to save the click for statistical purposes, along with the referring page (somesite.com) so you can see exactly where the link was placed at. This information (your stats) help you identify your best "campaigns" (we'll get to that in a moment).
I should explain part of the process in a little more details. You might have heard of a "cookie"... it's not something you eat - a Cookie (online) is a little file that saves little bits of information about you, the affiliate, as well as the user who clicked the link. For one - it saves your Affiliate ID # (8732, for this tutorial) onto Julie's computer, for later use. Most cookies last anywhere from 30 minutes, up to 30 years! The average is probably closer to 60 days, though. Most merchants tell you when their cookies expire.
Now, what is Julie decided to purchase a product from "merchantsite.net", the cookie that's saved on her machine is accessed by the Website and it knows that YOU were the referring Affiliate. This means that the database knows that Affiliate ID# 8732 has just made a sale, and it saves this information to the Affiliate Database so that you and the Merchant know exactly what's going on.
So, the flow is something like this:
Julie clicks the link -> the Website now inserts a cookie onto her Computer (your Affiliate ID is not saved for later use) -> Julie decides that she likes a certain product and makes a purchase -> The Database saves the sale transaction and points your ID to the purchase receipt -> you have now made a sale.
Does this make sense? I hope so!
There are many Affiliate Programs that you can join. Commission Junction is a service that gives some of the worlds Highest Quality brands the ability to market their Affiliate services to Affiliate Marketers, world wide. LinkShare and ShareASale are the same. There's also services such as ClickBank, as well.
When you sign up with a service such as Commission Junction, you can apply to one of these brand name Merchants to become an Affiliate. Companies such as Yahoo! have great products to promote and give their Affiliates some very enticing commissions.
Let's go over some of the basics of Affiliate "numbers", to help you better understand what they mean.
IMPRESSIONS = The number of times the link appeared on a page
CLICKS = The number of times your link was actually clicked
CTR = Click Thru Rate... the number of times your link was clicked, divided by the number of Impressions.
COMMISSION EARNINGS = This is the total amount of money you have made
SALES = The number of sales you have made
Now, you will also see that some Merchants provide "Pay Per Lead" commissions which pay you for each time someone signs up through a form the merchant provides.
Most Merchants use a Pay Per Sale method where, obviously, you are paid per each sale you have made. Some Merchants pay a flat rate (say $30.00 per sale), whereas some will pay you a percentage of the total sale (say 10% per total sale).
So, let's pretend that Julie purchased a $100.00 product from the Merchant Website whom you are an Affiliate with. Let's say that the Merchant pays you 15% of each sale... guess what? Julie's purchase just made you $15.00! Not bad.
I hope this Article explained the basics of Affiliate Marketing and how it works.