Affiliate Marketing Definition How does affiliate marketing work?! 

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Affiliate marketing is a marketing business that allow individuals to sell products that are not theirs and earn a commission.

Affiliate Marketing Definition: The basics of affiliate marketing

Affiliate marketing is a business partnership between individuals and companies, while companies use the services of those individuals as a self employees instead of hiring people to do the job.

The job is marketing, we know that 50% of any business is the marketing, and for low budget companies and small firms, marketing is a heavy burden. So instead of investing money on advertizing, or hiring sales people and marketers, and the results could not be predicted, they partner with individuals to sell their products and they pay those individual a percent of the product value as a commission, this percent can go between 10% up to 50% on the physical products and can get even higher up to 75% on the digital products.

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 Companies like Coca Cola for instance spend (it's better to say invest) million of dollars on advertizing and marketing, they calculate the advertizing cost to know the cost for 1 item, then they add the cost to the item price; it reach up to 50% of the item price. So when you are buying a Coca Cola you are paying for the name (advertizing) more than you are paying for the product itself.

Companies started in a new way of advertizing, taking advantage of the "word of mouth" effect, and more they have offered a commission to individuals who can an will promote their products.

But in this case they will pay the advertizing cost for each item after it had been sold, which mean more effective investment with guaranteed ROI, however they need to reach those individual and convince them to partner with the company first.

 How does affiliate marketing work? On the internet

When you join as an affiliate with any affiliate program, they will assign a code for you, it is an affiliate ID. Then they use a software to track sales from each different IDs. Some affiliate programs developed their own software, while others may use a third party software. This affiliate tracking software use cookies to identify each customer and which affiliate ID is responsible of bringing this customer to the merchant site.

After the customer purchase a product, the software will calculate the commission of the affiliate, and credit his affiliate account. each affiliate program need to provide it's affiliates with a back office where they can see statistics, sales and commissions.

There are hundreds of problems with this concept like the life-time of the cookie could be very short, or the visitor will bookmark the page and visit later, and in those cases sales could be made without knowing the affiliate responsible. Those problems could be solved only by the affiliate himself and the way he market.

Some affiliate programs gives you the opportunity to bring more affiliates to the program and earn a commission of their sales, it is called 2 tier affiliate programs, for each affiliate you refer they also will get their own affiliate ID, but their ID will be attached to yours so both you and your affiliate will earn a commission from the sale.

The different types of affiliate programs:

 There are several types of affiliate programs, depend on the merchant and his need of your promotion, some merchants need you to sell their products, others need you to sell and refer other affiliates, other merchant want you to bring them customers and they will make sales, and some wants you to drive traffic to their sites only.

Network and MLM

In this case your main job is to bring more affiliates and partners to the program, you will be (in most cases) a customer yourself then each customer you refer will also be an affiliate. It's called a downline of multi level affiliates and customers.

Two-Tier

Two-tier programs have two levels of pay out. Similar to the above MLM example except there is only two levels (you and any sub affiliates you sign up). It's not really called a down line, because with only one level, the matrix goes wide.

Also, generally the focus is no longer on the down line or opportunity, but more on the sale of the product. For instance, let's say that Sue signs up for the program who's product is cheese cakes. Sue is considered the first level (or first tier). Any sales that she makes, she earns a set commission of say 30%.

John comes along and decides he'd like the opportunity to earn money selling cheese cakes, so he signs up under Sue. He is considered Sue's sub affiliate (or second tier). If HE makes any sales, Sue would earn 15% of his sales.

So now, she not only can earn 30% from her own efforts, but also 15% of someone else's. It's very similar to the MLM concept, the main difference is often the focus isn't the opportunity in the program itself, but more about selling the product.

Pay Per Sale

Pay per sale is either commission based or a flat pay out per sale made. For instance, if you sell a $75 product, you can either get paid a certain percentage (like 30%) of the sale or a flat rate (like $25). There is no second level to earn additional income. Obviously the focus here is just selling the product.

Often affiliates will integrate this or the above two tier example into their existing sites.

Pay Per Click

Pay per click is simply getting paid for every click that you send the company. Let's say that ABC Company is paying 5 cents for every click their affiliates send them. You decide to add their link to your site. Anytime a visitor to your site clicks on the link, you would earn 5 cents.

There are pros and cons to this form of program. As the affiliate, you would need to filter quite a bit of traffic through the link before it would be considered lucrative. Folks who gain the most from this form of program is those who have high traffic sites.

Let say, for example, that you have a high traffic site. You have about 1 million visitors per month. Well, by simply adding a pay per click program to your site, you could easily make big money JUST from the traffic. Not counting the income you might already be making from other methods.

Pay Per Lead (or Co-Registration)

Pay per lead is the same thing as getting paid for the actions your visitors take. There are multiple programs available that will pay per subscriber, per free report requested, per registration etc.

As an example, I know a company that was paying $1 for every registration they received for their sweepstakes. All you, as the affiliate, would need to do is place it on your website. For every visitor that filled out the registration for the sweepstakes, you would get one dollar. Again, for best results, this program works great on high traffic sites or to large email lists.

What to look for in an Affiliate program?

To be an affiliate with any affiliate program is to be a business partner with the merchant, so as a business partner you need to be sure this business is a legitimate, sells legitimate products and pay you a fair commission for your efforts.

So the things you need to have in an affiliate programs are:

1.They must assign for you a secure back office, where you can find you account details, payment details and statistics for your efforts.

2. An affiliate agreement, a written agreement that suit you, and fit your business requirement from the company you will work with.

3. Privacy policy. They must have one, if not for you as an affiliate for people you will refer to the program and their product, it will be great also to have your own privacy policy at your own website.

4. Pay at most Monthly. The program need to pay you in time as soon as possible, you cannot afford being paid in a long period of time, so at least once per month will be good.

5. Easy contacts and quick response. The merchant need to have an easy only for affiliate contact form, and they need to be as fast as possible with their response, try them and see how effective their support for affiliates. They also need to have the same system with their customers.

6. Easy process of selling and payment. Some companies make the payment for their products too complicated, and customers will stop the purchase process at the middle, in this case it's your lost, you are making an effort to bring them a customer, and it will be silly to lose him over a payment process.

7. Related effective products, If you can try the product and test it will be a great way to honestly refer other to it. in the end customer referred by you will remember you, so either they will be thankful or will hate you for that .

Affiliate marketing definition, The big picture

As a $7 billion/year industry, affiliate marketing is by far the best ultimate online business opportunity, but only if it was treated as a business. The best example of affiliate marketing business is the SFI affiliate network which define exactly what is affiliate marketing and how does it works.

As a leader in this business SFI affiliate network, treat their affiliates as a businessmen, and opens for them all the possible potential business growing opportunities. Joining SFI affiliate network will do you no good at all, but working with it as an individual online business promoted from your own website will make you a huge check every and each month.

I graduated as a mechanical engineer after 4 years of hard study and a lot of money invested so I can enter the world of modern industry and work and make money. But after 3 years of trying this industry I quit because of the money I was making. With Affiliate marketing I am making 5 times that amount, so out of respect only it need to be treated as my engineer certificate.

Affiliate marketing is a great profitable business, but please treat it with respect, learn it and learn how to work with it. But be sure it will not cost 1% of the cost of learning an offline subject.

The ultimate way to learn affiliate marketing is by joining a successful affiliate community like Wealthy Affiliate where you can learn everything about affiliate marketing from successful affiliate, and connect with them in a personal level and learn from them, also Wealthy Affiliate offers great tools for affiliate to succeed in the affiliate marketing fast and easy.

So to be successful with affiliate marketing you need to have your own website, then building a traffic funnel to your website rather than straight to your affiliate links.

When you build an affiliate website of your own, and all your promotion strategies based on promoting this website, you will end up with a strong independent affiliate business, that is not related to an affiliate program nor to a company that could be out of the business after a while. You are planting your own tree and you are investing on your own tree, and the fruits will be only yours.

Start you affiliate business by joining Wealthy Affiliate now

You'll also find inside the report step-by-step tutorials that show you exactly how to set up your first automatic money machine - even if you're starting from scratch!

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