What Is Affiliate Marketing?

Affiliate marketing has many descriptions, yet all have the same meaning. Affiliate marketing is a huge business segment of the Internet. It is a cooperative effort between merchants and the affiliate website. For many years now, affiliate marketing has proven to be a cost-efficient, measurable method of delivering long-term results. It has become famous for Internet sites who are trying to make some extra or additional income for their site. Every day, people get interested to affiliate marketing and want to make money out of it. But in many cases, these new affiliates do not fully understand the affiliate world and make costly mistakes.

A common misconception about affiliate marketing is that it is all about selling; selling is an important activity of affiliate marketing and the central function of a business operation. A second misconception is that affiliate marketing is 100% dependent upon advertising. While the importance of advertising in marketing a product is not to be underestimated, the fact of the matter is that both advertising and selling are two pieces of a larger pie.
 

Affiliate marketing is also called performance marketing because no commissions are paid until a certain act is performed. That act may simply be clicking on a link or signing up for a report or newsletter. For the most part, commissions are earned when a product or service is sold. From the producers point of view affiliate marketing is a gold mine. An army of affiliates can be recruited to promote the producer’s product or service with no commissions being paid until a sale is made.

Affiliate marketing is typically being run by affiliate networks composed of affiliates (publishers) and merchants (producers). Each has its special role for Internet marketers. The affiliate network acts as a third party between the merchant and the associated affiliates. The network provides the technology to deliver the merchant’s campaigns and offers. The network also collects commission fees from the merchant and pays the affiliates.

Some merchants auto-approve all who apply to become affiliates while others check each individual website to make sure it meets certain criteria. Unfinished websites or websites under construction are rarely approved. Merchants also look for a website identity. The overall theme of a website will determine acceptance into many affiliate marketing programs. A site themed for Water Sports probably would not be approved for a credit card merchant.

Many years ago W. Clement Stone, founder of Consolidated Insurance Group, said the key to making big money was to use other people’s money. Essentially, that is what affiliate marketing offers website owners. Affiliates earn commissions by promoting other people’s products and services. They do not invest time, energy and money into producing a product or service. Their time, energy and money are invested in promotions.

Affiliate marketing is a great situation for both the merchant and the affiliate. By working together each can accomplish monetary goals. The merchant may have a goal of making one million sales using one thousand affiliates. Some affiliates will be far more successful than others because they have more knowledge about successful Internet marketing. Rather than each affiliate making one thousand sales, there is a very good chance that some will make 20,000 sales while others make only one or two.

Wise affiliate marketers will seek out merchants whose products or services closely match their website theme. While banner ads supplied by the merchant will catch the attention of some site visitors, savvy Internet marketers understand the value of writing in-depth articles about the product or service. Those same smart marketers know there are many, many ways to draw attention to their website and their marketing efforts.