Many of us dream of having passive income as either our main source of cash or as a reliable side hustle. For some, that dream takes the shape of affiliate marketing.
When done right, affiliate marketing offers a revenue stream you can set up and leave to its own devices. Instead of pulling yourself out of bed every morning for work, you can rest easy in the knowledge that money is coming in.
That said, there is work and strategic planning to be done when embarking on an affiliate marketing business. Many popular affiliate markets are highly competitive, and you need to play it smart if you want to succeed.
In this guide, we’ll introduce you to the basics of affiliate marketing, advise you on how to set up your affiliate business, and equip you with the tools you need to become a successful affiliate.
Table of Contents
What is affiliate marketing and how does it work?
Affiliate marketing is a smart way to make money online. Sometimes, it’s pretty quick too.
In its simplest form, affiliate marketing involves a third party (the affiliate) earning a commission on sales from an online retailer or service provider (the seller).
They do this by sending visitor traffic to the seller’s website and taking a share of the profits if visitors become customers.
What does ‘affiliate’ mean?
The affiliate is the owner of a website or publisher of advertisements that promote someone else’s products or services.
Generally, an affiliate does not have an online store of their own, or any inventory to sell. Instead, an affiliate uses their online presence to promote others’ stores and services for a share of the income.
An affiliate could really be anyone:
- They could be an expert in a certain industry, offering reviews and advice to their visitors.
- They might be a star marketer, who knows how to get ads in front of the right people.
- They may also just be someone with an email list or captive audience they want to monetize.
How does a marketing affiliate earn money?
Affiliates will put an ‘affiliate link’ as part of their website content or as a call-to-action (CTA) button. These are unique links that take consumers from the affiliate website to the seller, and shows that this user has been sent by that affiliate.
Affiliates that successfully promote a seller’s site and send traffic are rewarded with a commission. There are a few different commission models an affiliate program might offer, so it’s important to find the one that’s right for you.
1. Pay per click (PPC)
PPC often offers affiliates the highest earning potential. In this model, sellers pay affiliates for every time a user clicks on one of their affiliate links to travel to the seller’s website.
While the per-action price will likely be lower than in other models, if you have a lot of traffic, you can make up for that in volume.
The commission will be a fixed sum of money.
2. Pay per lead (PPL)
This model requires a little more from the affiliate. As well as clicking an affiliate link, the user must also carry out a defined action before the affiliate earns their commission.
This usually means signing up for an account with the seller, but it might also be completing a survey, submitting a contact form, signing up for a mailing list, or downloading some software.
The commission will be a fixed sum of money.
3. Pay per sale (PPS)
Affiliates working on this model need users to click their affiliate link and successfully make a purchase of a product or service before commission is paid.
While this tends to be the model with the lowest volume, the commission paid tends to be the highest to balance this out.
The commission will either be a fixed sum or a percentage of the revenue made by the seller.
The benefits of being an affiliate marketer
It’s obvious why sellers would welcome affiliates taking on the hard work to promote products and services, but what’s in it for the affiliates?
There are actually a few good reasons you’d want to go into affiliate marketing, here are just a few:
Return on investment
Given that all you need to make a start in affiliate marketing is a website and some free time, the barrier to entry in terms of cost is pretty low.
It’s true that the income you make from affiliate marketing is performance-based, so it’s a business that suits someone who likes to push themselves. The return on investment can be really high.
Provided you’re willing to work for it, the commission you can make is theoretically limitless, and you don’t necessarily need to pour more money into your business to make it more successful.
Some of the most profitable affiliate businesses have started with just one or two marketers working hard on a shoestring.
Another great feature of affiliate marketing is the fact that you can sell a product or service without even owning it, or having to ship it to the consumer.
Through affiliation, you’re able to profit from sales, without having to handle any inventory yourself. The seller is ultimately responsible for providing the products and services, and all you need to do is make a connection.
That’s the magic of affiliate marketing.
In today’s internet age, the golden goose that many people are chasing is the chance to have a reliable income every month, without having to work for it every day. This is known as passive income and is something affiliate marketing offers.
For many affiliates, making money is as simple as creating a website, setting up links, making sure you’re attracting traffic, then forgetting about it. As long as the traffic keeps coming, so should the passive income.
Here’s a word to the wise, though: even if you’re not putting work in every day, keep an eye on your websites.
Ensure you’re continuing to promote the right products for your audience, and keep an eye on your SEO positions too.
Never handle complaints
One of the biggest time and money drains for any business is the handling of customer communications and complaints.
Whether it’s return requests, inquiries before a purchase is made, or simply disgruntled customers, those phone calls, chats, and emails add up.
With affiliate marketing, all of that is handled by the seller. While you may get the odd customer reaching out about a product or service you promote, you can always just direct that customer to the seller’s own customer support line.
Work when and where you want
Because affiliate marketing is 100% online, you are totally freed up to work in any place and at any time that you want.
To put together a website, all you need is a laptop. Because you’re not handling inventory or customer complaints, you don’t have to stay in one place or be available at any specific times.
Many affiliates choose to travel the world and sell products and services online to fund their trips.
What you do with your freedom is entirely up to you.
So, working when you want and traveling the world with freedom might sound great to some, but what if you want to take this affiliate sales thing more seriously?
While affiliation is relatively easy to get started in as a beginner, as compared to other forms of online marketing, the opportunities for growth are almost limitless.
Whether you start on your own or with the help of one or two people, it’s possible to grow your affiliate operation into a big business.
You can hire developers and copywriters, or just use freelancers, and offload even more of the labor to them.
Learn for your own business
Many people who get into selling affiliate products later decide they want to sell products and services themselves. If you decide you want to become a seller yourself, you can use what you’ve learned from being an affiliate to inform how you do things.
Everything from which products and services are popular, which kind of messaging converts well, and how to design your store is made easier through your experience.
Better yet, new sellers get to set up their own affiliate programs. You will know whether an affiliate network is reputable, and use your experience to get the best working relationship with the affiliates promoting your products or services.
A case study: Zyro’s affiliate program
To better understand how to do affiliate marketing in practice, let’s take a look at the example of Zyro’s own affiliate marketing program.
Zyro is a website builder and eCommerce platform, which helps its users create great-looking, fully-functional, and SEO-friendly websites in a matter of minutes.
Who are Zyro’s affiliates?
Zyro’s website builder and eCommerce platform is particularly suited to small and medium-sized businesses.
Because of this, the affiliates that Zyro’s affiliate marketing program attracts tend to have an audience of people who either own such businesses or plan to start one.
The beauty of affiliate marketing is that it doesn’t really matter what kind of channel you have your audience through. If you can direct users via a link, you can start making money from their subscriptions.
Among others, Zyro works with affiliate marketers who:
- Run business blogs where they offer advice to company owners
- Own web-focused blogs aimed at advising people starting websites
- Have big social media followings on platforms like Facebook and Instagram
- Operate YouTube channels where they vlog about related topics
What is Zyro’s commission model?
Zyro’s standard affiliate commission deal is based on revenue share, at the rate of 60%. This revenue share is calculated from the cost of a user’s first subscription to Zyro.
This means that the affiliate will keep 60% of the revenue made when a customer signs up for a Zyro subscription. This is a relatively generous revenue share deal among affiliate programs.
With that big of a share of revenue, you can easily see why lots of people online are turning to affiliate marketing for some extra cash.
Here’s how the process works:
- An affiliate signs up to work with Zyro’s affiliate program.
- Zyro gives the affiliate unique affiliate links.
- The affiliate adds the links to their content, inviting visitors to click and sign up.
- When a user clicks the link, Zyro knows they’ve come from the specific affiliate.
- If the user signs up for a paid subscription, 60% of the revenue is added to the affiliate’s account.
- Once the affiliate reaches the commission threshold, they receive a payment via TransferWise or PayPal.
How to become an affiliate marketer
Are you liking what you hear about affiliate marketing? Are you ready to get stuck in and sell services and products through your third-party channels?
Here are the steps you need to take to become a top affiliate:
1. Choose your niche
The first step is likely the most challenging: working out which industry and niche you’re going to focus on.
Later on in this guide, we’ll share some of the top affiliate marketing trends of 2020. But for now, let us offer you some advice for choosing the focus of your marketing activities.
When choosing your niche, you should:
- Make sure you understand the industry and niche. If you have experience and expertise in the area, even better. If not, don’t worry – just be sure to read up all you can.
- Find a niche that has a big enough audience that you will always have customers. Think of products that are popular and high-volume.
- Pick a niche that doesn’t have too much competition. While it’s always possible to be a successful latecomer, the more crowded the competition field, the more work you’ll have ahead of you.
- Ensure you’ll be able to create enough valuable content on the subject that people will keep coming back. If you’re a one-hit-wonder, you’ll not be able to build a sustainable business.
2. Pick your marketing channel
Find a means of connecting with your target audience in a way that is cost-effective, not too time-consuming, and helps you get value out of your traffic.
Marketing channels you might consider include your own blog, review websites, social media, YouTube, Twitch, or anywhere else your target market hangs out.
When choosing your channel(s), you should:
- Identify a place where your target audience is most likely to be found. If the people likely to buy products in your niche don’t watch YouTube videos, there’s no point targeting them there.
- Think about the mediums you’re most comfortable in. Not an inspiring writer? Blogging might not be for you.
- See where your competition is sourcing their traffic. Is there an untapped channel? Can you create better content within an existing channel? Do whatever makes sense.
3. Build a website
If you decide that the channel you want to to use needs a website, like a blog or review site, then at this stage you’ll definitely need to think about setting it up (Zyro can help).
However, even if promoting through YouTube, social media, or another channel, and not directly using a website for your affiliate marketing efforts, it can still be helpful to have one.
All affiliate marketers should consider getting a website because:
- It can help make your business appear more legitimate and professional. This makes you more trustworthy among customers and partners.
- It can get you found by new partners, let you share your contact details, and generally improve outreach.
- It can help you take control of user experience. Channeling traffic through your own website can help prime customers for purchase.
4. Grow your traffic
Before you can offer value to sellers, you’ll need to have traffic to your own channels which you can then forward to your partners.
At this stage, you should be putting most of your energy into making sure you get incoming traffic. This might come from search engine optimization (SEO), by growing your social following, or by getting links from other reputable websites.
Since your traffic is effectively the product you’re selling, you need to make sure it is high quality, relevant, and high in volume.
5. Choose your partners
Deciding whom to work with is as important as any other stage in the process of setting up your affiliate business.
In many ways, it will ultimately dictate how successful your affiliate operation ends up being.
To choose your first partners, you should do the following:
- Identify brands with affiliate programs that are relevant to your niche.
- Find out as much as you can about their programs. What kind of commission is available? Under what terms will you get paid? Make sure you know it all.
- See which other affiliates are already working with the brands. This will tell you about your competition, and the quality of the brands.
- Check out the brands’ user experience for yourself. If they do not invite you to convert, they may not make a profitable partner.
6. Agree your commission deal
Just because an affiliate program offers a certain commission deal, that doesn’t mean that’s the only one available.
Savvy affiliates know what their traffic is worth, and ask for it. If you’re planning to negotiate a better commission deal, make sure:
- You can tell the seller how much traffic you expect
- You know where your traffic is coming from geographically and demographically
- You’re able to demonstrate that there is value in your traffic
- You can justify why your traffic is more valuable than other affiliates’
7. Send traffic
This is the simplest step. Once everything else is set up, you just need to add an affiliate link to your content, and start sending traffic through to your partners.
You can start making money straight away.
Top-level affiliates are never content with their current income. They are always looking for new ways to increase their traffic and conversions.
If you are serious about making it in the affiliation game, then this is the approach you should take.
To start optimizing your affiliate business, you can:
- Use insights from tools like Google Analytics to understand where your traffic is coming from, what users find interesting about your site, and how to improve your search engine performance.
- Boost your presence on social media using paid ads or aggressive outreach campaigns.
- Negotiate new deals with existing seller partners based on the performance of your traffic. The higher quality your traffic is, the better deal you can ask for.
- Seek out new sellers to partner with. You can experiment by splitting your traffic between multiple sellers and seeing which performs better. You can then send more traffic to optimize the value you receive.
- Promote new products or services related to your niche. Find what your traffic wants and give it to them.
Biggest affiliate marketing trends of 2020
As with all forms of online marketing, affiliate marketing goes through trends.
New marketing techniques, products, platforms, affiliate programs, and technologies are appearing all the time, and existing ways of doing things quickly become obsolete.
With that in mind, we’ve compiled a list of the most important trends aspiring affiliate marketers should be aware of before they get started.
1. Influencers are increasingly influential
A couple of years ago, many marketers were discrediting influencer marketing as a bubble set to burst. The growth of the industry shows this is not going to be the case.
Individual influencers won’t send the same high volumes of traffic as big established affiliates.
However, since their audience tends to be very specific, the traffic that they do send tends to have a higher intention of buying, and is, therefore, more valuable.
2. Varied sellers are a safer bet
It used to be that some affiliates would work with only one or two sellers, and derive all their income from just a few relationships.
However, today the online market is more dynamic, crowded, and competitive. This means that relying on a single or just a few sources of income could see you losing out if those companies fail to perform.
It’s far wiser for modern affiliates to diversify their merchant offering. Work with as many sellers as makes sense, so if one fails to deliver, you have plenty to fall back on.
3. There are new services and products in the game
One of the best ways to be a successful affiliate is to be the first to fill a certain niche. With that in mind, it’s important that you always have an eye on the latest trends for sellers to be marketing via affiliates.
Among the hottest new markets in affiliate marketing in 2020 are things like:
- eSports – AKA video games played as sports, the market for gaming gear, merchandise, and gambling on matches has really opened up over the last couple of years.
- Online counseling and therapy – increasingly people are turning to apps and web services for mental health care. Believe it or not, that leaves the door wide open for affiliates to capitalize on the market.
- Vaping products – toted as a healthier alternative to smoking, vaping has become huge over the last few years, and there are millions of people online looking for the best products. You can cash in by connecting them.
- Biohacking – this might sound scary, but it’s really just about people using pharmaceuticals and technology to improve their physical and mental performance. It’s increasingly big business.
4. Some niches are evergreen
While finding a new niche is great, there’s no shame relying on an established market.
Among the services and products which seem always to be popular with affiliate audience are:
- Beauty and skincare – makeup, moisturizer, and cosmetics of all types show no signs of becoming less popular online.
- Travel – know a clever way to connect consumers with cheap flights? That could make you millions as an affiliate.
- Online dating – singles are always on the lookout for new ways to meet people, and dating apps are always looking for new customers.
- Gaming and gambling – though they represent the most competitive affiliate market, online gaming and gambling are hugely lucrative.
- Weight loss – this one’s pretty simple; there’s always someone who wants to lose weight.
- Home decor – be the person to connect a customer with the cushion they’ll never throw away.
5. Reviews are more trusted
As consumers become more experienced online shoppers, they increasingly want information about the products or services you promote, not just adverts.
This is where knowing your niche inside and out really comes into its own.
If you’re able to offer in-depth reviews and consumer advice, you’re not only adding value as an affiliate but increasing your chances of making a sale.
Remember that writing a compelling review that is read by 3 visitors who turn into customers is better than showing an ad to 100 visitors who just ignore it.
Affiliate marketing FAQs
How do you become an affiliate marketer?
With a website and the will to succeed, you can start as an affiliate marketer today.
In this guide, we’ve already laid out the steps to answer the questions “what is affiliate marketing” and “how do you become an affiliate marketer”, but to reiterate, here is a quick summary.
Affiliate marketing is a form of online marketing where you (the affiliate) can earn money (commission) on the sale of products or services of a retailer (the seller). To do this, you need to:
- Choose your niche
- Pick your marketing channel
- Grow your traffic
- Choose your partners
- Agree your commission deal
- Send traffic
How much money can you make as an affiliate marketer?
Unfortunately, this is almost an impossible question to answer here, since so much depends on the industry you’re working in, the size of your affiliate operation, and the deals you’re able to negotiate with your seller partners.
Suffice to say, a moderately successful affiliate marketer working on their own can expect to make enough to support themselves comfortably.
Generally speaking, the earning potential of an affiliate business grows in line with the size of the operation. That said, sole traders have been known to become affiliate millionaires.
Which affiliate program is the best?
Since there are thousands of different affiliate programs for different companies, industries, and niches, there’s no one answer for what the best program is.
When you’re looking for a program to work with, you should simply be looking for signs that it suits your needs, and should be profitable.
1. Relevant to your niche
The very first thing you need to look for is an affiliate program that fits your traffic.
If you sign up for a program with a totally different focus to your niche, it doesn’t matter how many users you send their way. You won’t make money.
When conducting research, look for brands, companies, and programs which have a similar focus to your content, where your visitors will find what they’re looking for.
2. Generous and fair commission model
Remember, your income hinges on how much commission you get paid by a program.
Not only does a generous commission deal mean that you’ll be pocketing more cash, but it also indicates that a seller or program is generally a fair partner.
3. Decent conversion rate
While it’s good to have a high commission rate, it’s no use unless you have a high conversion rate too.
You won’t get a proper idea of the conversion rate of an affiliate program until you start working with them.
However, you can check out the user experience of the seller’s website before you sign up, to see how they encourage users to sign up and pay.
4. Good reviews
Chances are, you won’t be the first affiliate signing up for an affiliate program. Learn from others’ experiences by seeking out reviews of a program before you sign up.
There are lots of places online where affiliates offer reviews of programs, but you can also contact people who are already promoting the seller’s website to get one-on-one feedback.
Which products or services can you sell via affiliate marketing?
Theoretically, anything that can be sold on the internet can be sold with the help of affiliate marketing. As consumers do more research online before making purchasing decisions, affiliates can step in to guide their choices.
That said, there are some industries that lend themselves better to this style of marketing, there are also trends in what is popular in affiliate marketing, and there are certain industries with more established affiliate ecosystems than others.
In 2020, some of the most popular and profitable affiliate niches include:
- Beauty and skincare
- Online counseling and therapy
- Vaping products
- Online dating
- Gaming and gambling
- Weight loss
- Home decor
What are affiliate networks?
Another element of affiliate marketing you might run into are affiliate networks.
These are unique in that they neither act as a seller or an affiliate, but rather a middle-man that connects the two.
- Affiliate networks will reach out to sellers, negotiate commission deals, and set up an affiliate account. They’ll then contact the affiliate, provide them with affiliate links, and take a cut of the commission.
- Affiliates might choose to work with an affiliate network because it takes the hard work out of finding relevant sellers to send their traffic to. They may also get a better commission deal than they would alone.
- Affiliates work with affiliate networks as they tend to be able to bring in higher volumes of traffic, have varied traffic sources, and make commission payments to multiple affiliates simpler.
If you’re just starting out in affiliate marketing, working with an affiliate network might help you with some of the trickier parts of the job.
What are the risks of becoming an affiliate?
While you don’t have to keep your own inventory and diversify your revenue streams, there are still some risks and drawbacks when it comes to affiliate marketing.
To make sure you’re ready to partner with the big boys, keep these risks in mind:
1. Lack of traffic
The value of an affiliate business comes from its success in driving traffic to their partners’ online stores or service websites. Without traffic on your website, you’re not going to be able to promote any sales or have any revenue.
Clearly, there are fixes to this issue. You have to have a clear plan for how you’re going to get users to visit your website. This might include an effective SEO strategy or simply an extensive marketing campaign.
2. Low conversion rate
You might be the best at driving traffic to the websites you’re promoting, but you won’t be making any commission if that traffic isn’t converting into customers or paid users.
This either means that the traffic you’re sending isn’t relevant for the product or service, or the website you’re sending it to isn’t attractive enough to promote conversions.
Either way, you’ll be best off switching partners, or making sure you work on a pay per click commission model.
3. Broken affiliate links
You know you’re getting tons of traffic on your website, but none of it seems to be clicking your affiliate links?
There’s a good chance your affiliate link is broke, either through an error your end, or on the affiliate program you’re working with.
Even if you treat affiliate marketing as passive income, it’s wise to always check your links are working. If they’re not, you risk either sending free traffic to partners or having 404 errors on your site, which will harm your SEO.
4. Dishonest partners
As with all walks of life, in affiliate marketing, you will occasionally come across a dishonest actor.
This might be a retailer who doesn’t pay the right amount of commission or a service provider who doesn’t report all the conversions or affiliate sales you provide.
To some extent this is unavoidable, but it’s advisable to keep an eye on all your key metrics to see if there are any abnormalities. Know your traffic well, so that you can spot when something seems wrong.
5. Stiff competition
If you find the sound of easily earned passive income attractive, you’ll be unsurprised that plenty of other people have found affiliate marketing to be an alluring way to make money.
Be realistic about the sort of competition you face, and try as best as you can to find a niche gap in the market. The more high-quality and unique your offering, the better you’ll be able to see off the competition.
6. Expensive marketing
Now you know how to start affiliate marketing yourself, but what you might not realize is that there are some startup costs that can’t be avoided if you want to be successful.
A big drain on financial and time resources can be your own marketing efforts. If you want to rank well on search engines or display your ads on Google and social media, there is a cost associated.
Be very careful to make sure that you’re always bringing in more commission than your traffic costs you, and only spend on marketing what you can afford to lose.