What is an Affiliate Sale

How Affiliate Marketing Works: The Great Guide

What is Affiliate Marketing? - A definition

Affiliate Marketing describes the collaboration of sales partners with the aim of selling products and making money. Affiliates advertise products from manufacturers or retailers and receive a commission in return. Put simply, affiliates help to sell third-party products. Incidentally, this definition explains affiliate marketing using the example of products, but the principle also works equally for services.

What does Affiliate, Advertiser & Co. mean?

Strictly speaking, the word means Affiliate initially only partner. So when it comes to the question “What is an affiliate?” Two parties in affiliate marketing may be the correct answer. It therefore depends on the context whether the advertising or the selling sales partner is meant. In everyday use, however, is more common of one Affiliate when it comes to someone who advertises a third-party product and earns commission-dependent money if the deal is successful. Another word for affiliate is publisher, as advertising content is published independently for a target group. Opposed to this is the player who wants to sell their own product. The manufacturer can also be a dealer, i.e. a merchant. In affiliate marketing, this player is also called an advertiser.

What are affiliate networks?

In addition to the parties described above, there can also be a third player. In case you've been wondering what an affiliate marketing network is, here's the answer. Affiliate networks are platforms on which affiliates and advertisers can register and find each other. Affiliate networks act as an intermediary between the two parties and handle all payment matters. Belboon and affilinet can be named as popular affiliate networks.

The classification in online marketing

Affiliate marketing is a component of online marketing. Even if a clear categorization of the areas is hardly possible, affiliate marketing can still be subordinated as a measure or instrument of performance marketing. Characteristic is the exact measurability and the flow of financial resources when a precisely defined action occurs. But more on that later when it comes to how you can make money with affiliate marketing.

How does affiliate marketing work?

In order to be able to sell a product, a seller naturally needs potential customers. Unlike in stationary retail, however, these do not pass the shop by accident. Thus, a major challenge in e-commerce is first to draw the attention of potential customers to the offer. Through various online marketing measures, such as search engine marketing, shop operators can ensure that people become aware of their online shop, visit it and, in the best case, become customers. Affiliate marketing is a measure by means of which a seller pursues another sales channel without having to take care of the necessary traffic on the website himself. Because this is what the affiliate does.

This is exactly how affiliate marketing works

To make the whole thing more understandable, let's look at an example of affiliate marketing. First of all, six steps are relevant, which are also shown on our infographic.

  1. Include advertising: Suppose you are a passionate gardener and share your knowledge about it on a blog. If you are writing an article about pruning roses, you could also recommend suitable products in your text. So it could be said: "I've been using the rose scissors from XY best for years."
  2. Click on advertisement: Then you set a link to the product page of the advertiser for whom you would like to advertise in this case with the designation “rose scissors from XY”. As soon as a user reads your blog post and is interested in the rose shears, he clicks on your link to take a closer look at the product.
  3. Forward visitors: By clicking on the affiliate link, your blog reader will become a user on the website of your sales partner and you have successfully generated traffic for the advertiser. In most cases, you will not yet receive any compensation for this.
  4. Visitor buys: In order for you to be able to earn money with affiliate marketing, the visitor usually has to purchase something. So only when the customer buys the secateurs via your link will you receive a commission for it. You can find out what requirements for a payout exist, especially with the Amazon Partner Program, below in the article.
  5. Pay purchase: The next important step is paying the customer. The purchase can be traced via an ID in the forwarding.
  6. Receive remuneration: Last but not least, you will receive your commission. Provided the application went through an independent partner program, such as Amazon PartnerNet, you will settle the payment matters directly with the advertiser. This is different when there is an affiliate network between you and the advertiser.

Advantages and Disadvantages of Affiliate Marketing

Affiliate marketing can have many advantages as well as disadvantages. For a better overview, we have summarized them once.

advantages

  • No advertising costs
  • Integration of banners and links does not require any prior technical knowledge
  • Setting up a partner program is straightforward
  • Targeted customer approach

disadvantage

  • Big competition from many affiliates
  • Search engine optimization has become more complex
  • Traffic becomes harder to generate
  • Little relevant affiliates

Make money with affiliate marketing

Blog and website operators have many options for those who want to earn money on the Internet. Earning money with advertising is particularly well suited for this. The prerequisite for this, however, is that you ensure enough traffic on your own website. How much money you can earn with affiliate marketing depends on the flow of visitors to your site. The greater the flow of visitors to your website, the more interesting it is for potential advertisers and the more money you can earn with affiliate marketing. Basically, it is worthwhile to start affiliate marketing in 2020 as well. According to the Affiliate Marketing Trend Report from the marketing agency xpose360, 61% of affiliates expect sales growth.

We have already explained to you the exact process of how you can generate income with affiliate marketing. Here is the short version again:

If you advertise an advertiser's products and thereby generate a sale, you will receive a commission. The links are provided with a code so that it can be determined via which affiliate a sale was made. In addition, when users click on affiliate links, cookies are set. In this way, precise tracking can take place and a staggered sale can also be assigned.

The most common compensation models in affiliate marketing

Now we have established that there is a commission for a successful sale. This is also the rule in affiliate marketing. However, as is generally the case in performance marketing, there are also other cases in which remuneration is possible.

  • PPS: Pay per Sale (also CPS: Cost per Sale): With this form of remuneration, the affiliate only receives a commission when a customer has actually bought a product via his affiliate link.
  • PPL: Pay per lead (also CPL: Cost per Lead): With this billing method, the advertiser only incurs costs if a previously determined action has been successfully carried out. This action can be, for example, registering for the newsletter, ordering a catalog or filling out a form. Unlike the PPS remuneration, this billing model does not require a sale to take place.
  • PPC: Pay per Click (also CPC: Cost per Click): With the PPC billing model, the affiliate already receives remuneration as soon as only one interested party clicks on his affiliate link or on his advertisement. This form of remuneration is often calculated as a thousand contact price.

Three requirements for affiliate marketing

With affiliate marketing you can build up a good additional source of income next to your employee relationship or next to your business. In the following we explain to you which requirements you should meet in order to be able to earn money as an affiliate. We also provide you with a few affiliate marketing tips.

Use the right platform (s)

First of all, you need a platform on which you can place your advertising content and affiliate links. The best way to do this is to have your own website or blog. It is also possible to do affiliate marketing via YouTube, Facebook or Instagram. However, it should be noted that you are always subject to the provisions of the social media channel. If you want to start with affiliate marketing via Facebook, Instagram, Youtube and Co., you should therefore deal with the provisions of the respective platform. On Facebook, for example, users are not allowed to share their affiliate links on third-party pages or posts. If you don't have your own website yet, it makes sense to create one. Here you are the owner and therefore more independent.

Our tip: Focus on your own website, but don't spread affiliate links exclusively on this one. Also integrate your social media channels, especially if you have more reach on YouTube or Instagram than a visitor to your own website.

Generate reach

If you don't have a range yet, it is important to build it up. In the event that you already have traffic on your website or followers on Instagram, it is always important to work on expanding your reach. Because: The more people you reach with your content, the more potential customers you can generate for an advertiser and accordingly more money you earn with affiliate marketing. Even if your goal is not to sell your own products, your goal is to generate customers. Knowledge in the area of ​​new customer acquisition is therefore worthwhile.

Build trust

Affiliate marketing is also known as referral marketing. People buy something through your affiliate link if they are convinced of your content and trust your statements. As a result, it is crucial to your success as an affiliate that your readers and followers can trust you. It is helpful, but not absolutely necessary, if you represent a certain amount of expertise to the outside world. This can be done, for example, through well-prepared content with added value, so that your product recommendations seem rather irrelevant.

Affiliate Marketing Start: The Right Advertisement Choice

In order to start with affiliate marketing and actually earn money, you now need products that you can advertise. You can also network with suitable advertisers. You can do this either through independent in-house partner programs or by joining an affiliate network.

Affiliate networks

Affiliate marketing can be a hassle for both businesses and publishers. Accordingly, there are parties who want to minimize the technical or bureaucratic effort. This is where affiliate networks come into play.

The difference between affiliate networks and in-house partner programs is that as a publisher you only have to register once with affiliate networks. Then you have access to numerous partner programs from different areas. Another advantage for you is that all invoices for all advertised partner programs run through one account. So you always have your income at a glance. Affiliate networks also take care of the technical basis of the tracking and thus a correct allocation of the commission. Registration and participation in affiliate networks is often free of charge for publishers. However, your earnings can be reduced as commissions within the framework of networks can be lower for you.

In-house affiliate programs

In addition to affiliate networks, there is another way of doing affiliate marketing. With so-called in-house partner programs. With the in-house partner program, the merchant, or the company that wants to operate the partner program, implements it himself. Registration for the partner program and support then take place on the company's website.

There are now a lot of companies that offer an affiliate program. Manufacturers or retailers do not always communicate this. It is therefore worth asking companies directly if you want to advertise a specific product in a targeted manner.

Popular in-house affiliate programs

Auxmoney and Tarifcheck24 can be named as popular in-house partner programs. If you have your own blog or website, you can register immediately with the auxmoney affiliate program and earn money with it and secure a fixed additional income. To do this, you can simply integrate conversion-optimized text links or advertising banners from the partner program into your website.

Brief introduction to auxmoney

Auxmoney also offers an opportunity to earn money for affiliates who do not yet have their own website or blog. You can also recommend auxmoney on social networks such as Facebook or Twitter. In order to advertise auxmoney on social networks, you can either post your personal affiliate link or even post entire banners, which you will find under advertising material "Banners, Graphics & Links" after a successful login. With the auxmoney partner program, the 8,500 participating affiliates already earned an average of 285 euros per month in 2014.

Brief introduction to the tariff check

The tariff check partner program is also well suited for affiliate marketing and scores with extremely high commissions, individual advice and innovatively designed advertising material. The main topics of the partner program are insurance and finance. Tarifcheck24 lets you choose whether you want to advertise its site via your website, via social media or via email marketing. Tarifcheck provides you with the necessary advertising material free of charge. 25 euros for a lead and 50 euros and more for a sale are not uncommon here.

Amazon PartnerNet

With the Amazon partner program, affiliates have the opportunity to advertise the items offered there, e.g. via text links, banners or the like and thus receive a commission of up to 10%. The prerequisite for this, however, is that you operate your own website. Incidentally, there is PartnerNet in the associated knowledge center at Amazon.

Advantages of the Amazon partner program:

  • With a wide range of several million different products, the partner program offers products that are suitable for every affiliate for their website.

  • Due to its reliability and punctuality, Amazon enjoys great trust from its customers, which is why the buying threshold for potential buyers is lower and your chance of making money with affiliate marketing is correspondingly greater.

  • If a customer is referred, the affiliate receives a commission on the entire shopping cart and not just on the product that he has advertised. This applies even if the customer ultimately does not buy the product that was advertised via an affiliate link, but opts for other products. So you can

  • Amazon pays the advertising cost reimbursement reliably and on time. You can choose one of three different payment methods (by bank transfer, check or using an Amazon gift voucher).

Disadvantages of the Amazon partner program:

  • For some product categories (TVs, smartphones, tablets or PS4 consoles) there is an extremely low commission of 1%.

  • If the customer purchases a product on Amazon after a session (24 hours after having accessed a product from Amazon via the affiliate link), the affiliate no longer receives any commission.

  • In addition, there is a risk with the Amazon partner program that the link not only no longer applies after 24 hours, but that it is also overwritten by others. The principle of "last cookie wins" applies. For example, if a user becomes aware of a product through your content and clicks on it, a little later on xyz, and then buys, then xyz receives the commission.

How can you participate in the Amazon PartnerNet?

In order to participate in Amazon's PartnerNet program and earn money with affiliate marketing, all you need to do is register for free or submit your application to participate in the program. This application will then be checked by Amazon, which may take a few days. After the check, you will be informed whether Amazon approved the application or whether it was rejected.

For example, the application can be rejected if Amazon's conditions of participation are not met. This is the case, among other things, if Amazon determines that your website is not suitable for the affiliate program. Websites that, for example, advertise products with sexual or violence-related content or for the implementation of illegal activities are classified as unsuitable.

If you already have an Amazon account, you can easily log in with your access data. Otherwise you have to create an account first, but it only takes a few minutes. Click here for registration.

For the registration process, your account data and information about your website, e.g. about key topics and visitor behavior, are required.

It is important to determine the desired payment method in good time. To do this, simply click on the "Set payment method now" button.
After you have agreed to the conditions of participation, you have to wait and be patient. But you can also log in to the PartnerNet account. You should only include links or advertising material in your website once you have received confirmation of participation from Amazon.

How does affiliate marketing work on Amazon?

For product integration on your site, you can choose between

  • Text links

  • Banner links

  • Site stripes

  • Widgets ("bargain" widget or search widget)

which are made available to you by Amazon and contain all the necessary product information.

With the tools made available to you, you can create a link from your website to Amazon with just a few clicks. To do this, go to the desired product page in the Amazon.de shop and click the "Create link" button. You choose the link that suits you (e.g. text link or banner link). Amazon then generates an HTML code that you can copy and easily integrate into your website.

When you register, a tracking ID is automatically created, which is included in the affiliate links to Amazon. This makes it possible to assign a buyer to a specific affiliate. If a customer reaches a product on Amazon via your affiliate link and buys something within 24 hours, you will receive a commission for the entire shopping cart. The commissions can vary significantly depending on the product category. Video game downloads, software downloads, clothing, jewelry, luggage, shoes, watches and furniture have the highest commission at 10%.

How much money can you earn with Amazon PartnerNet?

Earnings mainly depend on the following three factors:

  1. Your niche:
    First of all, it is important that you have discovered a good niche in which Amazon products can be presented that can also be bought online and are lucrative.
  2. Your traffic:
    The more traffic you have on your website, the more money you can earn with affiliate marketing.
  3. The trust:
    Once you've discovered a good niche topic for yourself, it's important that your website doesn't appear dubious. Otherwise, people just won't trust you. Therefore, pay attention to an appealing design - also when integrating the Amazon affiliate links - and good content on your website. With a well-visited site that people trust, it is quite possible to make a few hundred to thousands of euros a month with Amazon's affiliate program.

Our conclusion on the Amazon partner program

Even if there are not only positive things to report about Amazon's affiliate program, it is still clear that the advantages of the program outweigh the advantages and that it is a good opportunity for you as a website operator to earn some money on the Internet.

Our conclusion on the subject of affiliate marketing

With affiliate marketing you can earn good money on the side and, with the appropriate preparatory work, even generate passive income. To do this, you need a certain reach, the trust of your readers or followers and relevant content that you can disseminate. Basically, you should make sure that you are also offering your target group added value with your product recommendations.

25 ideas for passive income

Tip 1: write a book

Books are one of the most classic ways to build a passive income. These are associated with a lot of work and creativity in advance. But when they are done, they can still be sold years later and give you a steady flow of money.

Workbooks are workbooks that can be sold as digital and print versions. They are filled with tasks that can be solved by the buyer. For example, you can learn a new language with them. Like books, workbooks require a lot of effort in advance, but can then, depending on the topic, be sold to a large target group.

Tip 3: sell stock photos

If you enjoy taking photos and editing images, selling stock photos can be the ideal way to earn money. There are now many platforms on which images are offered for sale and purchase. Here you can upload your pictures and receive a share of the profits for each picture sold. The same goes for stock graphics.

Tip 4: Interest and Dividends

Even if interest and dividends have been in the basement for ages, there are a few ways you can still make money with them. An example is to put the money in a fixed deposit account, as there is higher interest there. A passive income can also be built up by trading securities such as stocks, funds and ETFs. Here, however, you should familiarize yourself intensively with the topic.

If you are familiar with a topic that is not particularly popular, you can create a website about it. For example, this could be a blog where you write about this topic. You then earn passive income with advertising, affiliate links or cooperations.

Audio files can be, for example, your book as an audio book version, music recordings from your hobby band or special sound effects. All of these files are easy to resell and generate passive income. This is also possible with podcasts if you work with other companies and advertise their products in your podcast episodes.

Tip 7: sublet the apartment

If you are going to travel for a longer period of time or if you have a room free, you can also earn money with your apartment. This works particularly well if you live in a city where large trade fairs are held on a regular basis. At this time, all hotels are often fully booked and many people are looking for places to stay. Platforms like AirBnB make it possible for you to make your apartment available for sublet. But you have to clarify this with your landlord.

Just owning real estate does not allow you to generate passive income. Real estate only becomes interesting as a source of income if you do not use it yourself, but rather let it to others. Regular rental income generates a relatively high income stream for you. Returns of around five percent are possible here. Of course, this assumes that you can afford to invest in real estate.

Tip 9: monetize the blog or website

If you have your own website or blog, you shouldn't miss the opportunity to use this residual income to expand. For example, you can place advertising banners or collaborate with other companies and promote their products. Of course, this works best with products that fit your website.

There are numerous online platforms on which users can obtain loans from private individuals. So if you already have a good amount of capital at your disposal, such platforms can be quite interesting for investors. Because here you can get very attractive interest paid out, which will definitely pay off in the long run.

Tip 11: develop apps and software

Admittedly, this tip is a bit more specific. It assumes that you are familiar with programming and developing apps and software. Either because you come into contact with it professionally or privately. If you then have an idea that offers users added value and implements it in the form of a program, you can earn good money with it and build passive income.

You can not only rent your apartment to others. You can also make your car available to others if you don't need it often. Providers like getaround make it possible. You simply log into the platform and set how much it should cost the user per hour to use your car.

Tip 13: crowd investing & crowdlending

Crowdinvesting and crowdlending are also ways to generate passive income, but they are associated with a certain risk. With crowdinvesting, you become a partner in a company for a certain period of time, in which you invest a certain amount of capital. At the end or during the period you will then receive interest. Crowdlending, on the other hand, means that entrepreneurs or private individuals collect many small amounts of money from a mass of people. These are repaid after a certain period of time

Tip 14: Affiliate / Commissions

If you have your own blog or website, affiliate marketing can turn out to be