How Does Affiliate Marketing Work?

Affiliate marketing one of the more popular internet home businesses, but do you actually know how affiliate marketing works?

Let's take a look...

Affiliate marketing requires promoting other people's products for a commission.

Becoming an affiliate marketer requires signing up with an affiliate merchant (product owner) and actively promoting the affiliate merchants products. If the affiliate maketers successfully makes a sale a commission is paid.

But let's take a closer look.

As an affiliate marketer you first need to find affiliate products or services to promote and then complete a simple sign up form.

Signing up with an affiliate merchant or affiliate program is free and there is no obligation to promote the products, nor will you be penalized if you don't make sales, they may drop you from the program but there will be no penalties to you.

Most affiliate sign-up forms ask you for a few simple pieces of information. Things like your name, business name, website, business address (for payment info) email, phone, your EIN# (for tax purposes).

Affiliate managers may want to check out your business and your website first before approving you, however there are some affiliate managers that will approve you right away. It simply depends on the affiliate merchant.

Once you have been approved, you will be supplied with a personal link that is exclusive to you. This link contains your personal identification. This id is what the affiliate merchant will see on his sales report documenting the sales you have made so they know exactly how much to pay you in commissions.

Here's an example of what an affiliate link might look like:

http://merchantwebsite.net/affiliates/a.php?aid=345678&p=321

The 'aid' indicates your unique affiliate id #.

As an affiliate marketer you will need to capture the complete link and post it to your website. A good affiliate merchant will provide you with banners, articles, emails or small ads that contain your affiliate link as well. You are encouraged to place these on your website or in your emails. Any time someone clicks on the link and makes a purchase you will earn a commission.

How Cookies are Used to Track Affiliate Sales

Affiliate id's use cookie technology to help track your sales.A Cookie is a tiny file that saves bits of information about the affiliate, as well as the user who clicked the link. When a potential buyer clicks on your affiliate link, a cookie is placed on his/her computer for tracking purposes.

Here's an example of how cookies work:

1. John clicks on your affiliate link.

2. Your affiliate link takes John to the merchant’s website. A cookie has now just been placed on John's computer with your affiliate id.

3. If john decides to make a purchase on the merchant site, the cookie that was just saved on his computer is accessed by the merchant and he knows that you were the referring affiliate.

The beauty of using cookies is that if John decides to go back to the merchant site at some later date without going through your affiliate link, your cookie is still on John's computer, so if he makes a purchase at that time you will still get the credit.

Unfortunately with all the security software people have on the computers cookies often get deleted.  Deleted cookies won't keep you from earning commissions, it's just a handy feature for when people decide to purchase at a later time.

How You Earn Money with Affiliate Marketing

There are three ways to earn money with affiliate marketing:

Pay Per Click — Any time a potential customer leaves your affiliate website by "clicking" on your affiliate link that leads them to the merchant's website. Money is then deposited in your affiliate account. The amount of money deposited depends on the what's in the affiliate agreement.

Pay Per Lead — Any time a potential customer leaves your affiliate website by "clicking" on a link that leads them to a site where they must complete a registration form or register at the merchants website. Money is then deposited into your affiliate account. The amount of money deposited depends on what is in the affiliate agreement.

Pay Per Sale — Any time a potential customer leaves your affiliate website by "clicking" on a link that leads them to the merchant's site where they make a purchase. A percentage, or commission, is deposited into the affiliate's account depending on what's in the affiliate agreement.

Residual Income Programs

Whenever possible, look for affiliate programs that pay residually. These are affiliate programs that pay you month after month.

These types of programs come from promoting monthly subscription services like paid newsletters, hosting services, subscription training, etc. You will need to read the affiliate contract but typically a residual affiliate program will pay you a commission each month for as long as the subscriber maintains his/her subscription.

 
Deciphering the Affiliate Stats

After signing up with an affiliate program you will be given an administration link where you can log in and see your affiliate statistics. Here's some of the terminology that affiliate merchants provide you with regard to your affiliate statistics:

- IMPRESSIONS = # of times a page was viewed with your link on it.

- CLICKS = # of times your link was actually clicked on

- CTR = (Click Through Rate) # of times your link was clicked, divided by the number of Impressions.

- COMMISSIONS = The total amount of money you have made

- SALES = # of sales you made

Before signing up with any affiliate program always carefully read the merchant affiliate agreement. It's not exciting reading but it's important reading.

Not all affiliate programs have the same requirements and you certainly don't want any surprises when it comes to getting paid.

To find out more about how affiliate marketing works and how you can make a substantial living at it sign up the free affiliate marketing e-course