As the saying goes, “there are a million ways to make a buck,” and affiliate marketing is one of them. You have probably heard something about it. That’s why you are here.
But how to start affiliate marketing?
Let’s have a look at the traditional roles of a third party that might come between the seller/manufacturer and the customer.
AGENCY vs AFFILIATE:
The Agent: My friend Sam has runs a wine wholesaling business for a long time. He buys wine from various makers and employs on-the-road sales people to sell his list of products to bars, liquor stores, pubs and restaurants. Sam has already analysed the marketplace has negotiated volume discounts with his suppliers, based on what he thinks he can sell. He has purchased the products, is waiting on the bill and hoping that his sales team will push products out the door before he has to pay for the goods. Sam is basically an agent.
The Affiliate: My friend Katie used to host Tupperware parties. Remember them? One of the main reasons that Tupperware, founded in 1948 in Orlando, FL, became so successful was their party plan. Sellers hosted gatherings of family and friends to show off their latest range of plastic containers, would take orders and send them in. They didn’t have to analyse their marketplace, or buy any inventory. (Katie told me the only decision she needed to make was how much wine to buy from Sam to ensure her guests were well lubricated and in the buying mood!!) Katie was more an affiliate than an agent.
THE BIG CHANGE
Because of the massive growth of online sales since everyone started buying PCs, Macs, smartphones and tablets, the sales scene has changed.
In 2016, e-commerce sales exceeded $US1.9 trillion. Have no fear! That number will increase this year, and next, given that many millions of products and many services are cheaper to purchase online than they are to buy in a store.
Sales has been, is, and always will be about:
- The Seller
- The Customer
Today, products can be physical (such as a bike or a book, which will be delivered by a courier or in the mail), or they can be digital (such an education course or computer software, delivered online).
Manufacturers can be the international giant making cars or tractors, or a work-at-home mom who writes an e-book. One of the advantages for the makers of digital products is that they only have to make one product, unlike the umbrella maker who needs to make thousands.
The seller can be the manufacturer, the agent or the affiliate.
The customer can now travel to a store, the mall or a market or else shop online and purchase with a few keystrokes.
AFFILIATE MARKETING 2017
If you are wondering whether affiliate marketing is here to stay, consider these nuggets:
- Affiliate marketing has never been bigger and by 2019, will grow to around $6 billion.
- The success of massive companies such as Apple, HP, Best Buy, Etsy has in part been built on the strength of their affiliate networks.
- The online affiliate marketplace has over 500 million products.
Yes, affiliate marketing is here to stay. It has grown every single year since 2002, and presents the best business opportunity of our age. Fewer people might be shopping in stores, but more are shopping online, as the figures reveal.
CASE IN POINT: AMAZON
One of the giants of affiliate marketing today is Amazon. You will see advertising for books, DVDs and all sorts of goods sold by Amazon on thousands of different websites.
You will find Amazon ads on this site, because I am an affiliate.
Amazon isn’t paying me or anyone else to advertise their products. Amazon Associates don’t earn anything when readers click on an ad.
However, if they buy a products through these ads, Amazon will recognize the affiliate ID in the order code and credit the affiliate’s account with a small percentage of the sale. It costs you no extra, but Amazon pays money to affiliates that it might have spent on advertising elsewhere.
There are those Amazon affiliates making a good living doing nothing else but selling products from this monolith. They are choosing the right products and ensuring their ad placements are seen by millions of people. (I’ll explain that in a future post.)
There are many other companies that run their own affiliate programs, offering you a slice of the pie if you can move their product for them. If you Google the name of the company or product and add “affiliate program” to the search, you will find plenty of examples.
There are several websites that specialise in online products. You might have heard of Clickbank, JVZoo and Warrior Forum.
Through these avenues and others, you can become a seller or an affiliate of digital material. The product might be an eBook or a super new WordPress plugin. Customers buy online with a credit card or PayPal and receive their product immediately through a download or an entry code.
If you are the seller, you will write or engineer a digital product and perhaps encourage affiliates to help sell it for you. You will incentivise them to jump on board to promote your product and pay them a commission for each sale.
As an affiliate, you will sell the products created by others and receive a commission on every sale. Commissions are usually very generous on these sales, but competition can be fierce, as some of the larger affiliates (who are usually sellers of their own products as well) have massive mailing lists, sometimes large advertising budgets (and offer bonuses that are sometimes not as good as they sound).
In addition, until you can prove to sellers that you have web traffic and customers and a proven record of sales, you might find it difficult to be approved. Some will, some won’t.
The advantages of affiliate marketing are obvious:
- You don’t need your own product
- You never need to buy or touch a product
- You don’t need to invoice the customer or seller, because it is all automated.
The seller has the advantage of being able to build a mailing list through access to all of the buyers who purchase through his/her affiliates.
The trick is to come up with a product that will have affiliates clambering after it. If they do, you know you are on a winner.
This article is the first in a series How to Start Affiliate Marketing. There are endless possibilities, but plenty of challenges too. If you are really keen to get your teeth into it, there is no better place to learn the ropes than Wealthy Affiliate. You can read more about that here. and you can join FREE to learn even more.
Here’s a sample lesson.