So imagine you’re in town with a friend one lunch time and you notice a ‘buy one get one free’ offer at Zest Cafe. You take advantage of the offer then head home. Later that afternoon you’re chatting with another friend who’s looking for somewhere to dine and so you share with them about the buy on get one free offer at Zest.

Your friend thanks you for letting them know and head’s off to Zest with their partner to take advantage of the offer. 

You’re happy because you’ve helped a friend, your friend’s happy because they’ve saved 50% on a meal and Zest cafe are happy because your referral resulted in a new customer and income for them.

Does this sound a familiar story to you?

Maybe you’ve even shared about such offers with your friends?

If so, you’ve effectively been acting as an affiliate marketer, albeit in a voluntary sense. So if you can do it in a voluntary sense, when not get paid for it?

If you’re interested, read on…

Affiliate marketing is an increasingly popular option to generate significant online revenue. 

The option provides benefits to both brands who engage the affiliate marketers and affiliate marketers themselves, In fact:

• 81% of brands and 84% of publishers leverage the power of affiliate marketing, a statistic that will continue to increase as affiliate marketing spending increases every year in the United States.

• There is a 10.1% increase in affiliate marketing spending in the United States each year, meaning that by 2020, that number will reach $6.8 billion.

• In 2018, content marketing costs were gauged to be 62% of traditional marketing schemes while simultaneously generating three times the leads of traditional methods. In fact, 16% of all orders made online can be attributed to the impact of affiliate marketing.

• In March of 2017, Amazon’s affiliate structure changed, offering rates of 1-10% of product revenue for creators, providing the opportunity for affiliates to dramatically increase their passive income based on the vertical they’re selling on.

• The affiliate marketing of Jason Stone, otherwise known as Millionaire Mentor, was responsible for as much as $7 million in retailer sales just in the months of June and July in 2017. 

So, What Is Affiliate Marketing?

Affiliate marketing is the process by which an affiliate earns a commission for marketing another person’s or company’s products or services. The affiliate simply searches for a product they enjoy, then promotes that product and earns a piece of the profit from each sale they make. The sales are tracked via affiliate links from one website to another.

l How Does Affiliate Marketing Work?

Because affiliate marketing works by spreading the responsibilities of product marketing and creation across parties, it manages to leverage the abilities of a variety of individuals for a more effective marketing strategy while providing contributors with a share of the profit. To make this work, three different parties must be involved:
    .    The Brand / Seller and product creators.
    .    The affiliate or advertiser.
    .    The consumer.

Let’s look at these three relationships in more detail below:

1. The Brand / Seller and product creators.
The seller (like Zest Cafe in our leading example), whether a solo entrepreneur or large enterprise, is a vendor, merchant, product creator, or retailer with a product to market. The product can be a physical object, like household goods, or a service like internet provision.
Also known as the brand, the seller does not need to be actively involved in the marketing, but they may also be the advertiser and profit from the revenue sharing associated with affiliate marketing.
For example, the seller could be an e-commerce merchant that started a drop-shipping business and wants to reach a new audience by paying affiliate websites to promote their products.

2. The affiliate or publisher.
Also known as a publisher, the affiliate can be either an individual or a company that markets the seller’s product in an engaging way to potential consumers. In other words, the affiliate promotes the product to the right consumers to enable a purchase to take place. If the consumer does make a purchase, the affiliate receives a portion of the revenue made.
Affiliates often have a very specific audience to whom they market, generally adhering to that audience’s interests. This creates a defined niche or personal brand that helps the affiliate attract consumers who will be most likely to act on the promotion.

3. The consumer.
Whether the consumer knows it or not, they (and their purchases) are the drivers of affiliate marketing. Affiliates share these products with them on social media, blogs, and websites.
When consumers buy the product, the seller and the affiliate share the profits. Sometimes the affiliate will choose to be upfront with the consumer by disclosing that they are receiving commission for the sales they make. Other times the consumer may be completely oblivious to the affiliate marketing infrastructure behind their purchase.
Either way, they will rarely pay more for the product purchased through affiliate marketing; the affiliate’s share of the profit is included in the retail price. The consumer will complete the purchase process and receive the product as normal, unaffected by the affiliate marketing system in which they are a significant part.

So we hope that gives you a taste of what affiliate marketing is and how it works. In our next blog, What is Affiliate Marketing Part 2, we’ll share how Affiliate Marketers can get paid.