How Does Affiliate Marketing Work?

If you have ever wondered how all those sites that review and recommend various products, or those "Best such and such" sites that include product descriptions with "buy-now" links make their money, the answer is Affiliate Marketing.

There are hundreds and thousands of companies out there looking for assistance with selling their products. Buying advertising is not always financially viable, as you often have to pay in advance, or invest a large amount of money before you see the returns (if at all).

The solution many companies use is to instead offer a percentage of their sales (sometimes as high as 70%) to anybody who will promote their products for them.

Let's say I became an affiliate of "XYZ Product" which retails at $100. I might recommend it on my website, build an entire site around it, or find some other way to promote it. If anybody goes to the vendor site via my referral link (known as an affiliate link) and makes a purchase of XYZ Product, the company will pay me a predetermined percentage of that $100.

This method can be very profitable for both the affiliate and the company. The company after all is just giving up a percentage of their profits, but may have done no work whatsoever to promote it (except making a decent website on their end).

The affiliate on the other hand gets to partner up with a great product and doesn't have to worry about inventory, shipping, or any other details, they just send interested people to the product and then receive their commission. It's a win-win situation for all involved.

Affiliate links

When you join an affiliate program, you will be given a unique link that has your tracking ID in it. When somebody clicks on that link and is taken to the destination (the product purchase page), the tracking ID tells the vendor that it was your link that was clicked, and they will know to add any earned commissions to your account. This is an incredibly simple system to use and doesn't affect the customer at all.

Some affiliates might use a link shortener like goo.gl or bit.ly to either hide their affiliation, or simply make the link cleaner and shorter.

Negativity

In some circles, affiliate marketing has a negative connotation. That is because over the years there have been a lot of "badly behaved" affiliates who use spam, lies, and other misleading methods to trick people into purchasing products. They would also build up sites that were purely designed to get people to click their links, and many of the reason changes to Google search came about as a result of them being sick of affiliate sites.

This does not affect the "good" affiliate though. Real quality affiliates know that they need to provide a service, and offer top quality information in order to make a high volume of sales and make all their hard work worthwhile. To be perfectly honest, a lot of the driving force of the Internet comes from affiliate marketing, because it is one of the most lucrative and honest ways of making money online.

Affiliate marketing can be a very profitable way of earning a living if you stick to the ethos of providing quality information and services. It is not something you can walk into and make a fortune overnight with, but once the ropes are learned and you know what you are doing, fortunes can definitely be had.