Affiliate Marketing 101—A Guide for Sellers and Prospective Promoters
Updated · Mar 04, 2023
The internet is a fascinating place. As online technology improves, it becomes more like the offline world, but at the same time more integrated with it, and so much more than it.
One thing the internet enables is new types of marketing. Whether you’re a business or a wannabe affiliate, our affiliate marketing 101 guide will give you a rundown on this ever-popular style of online marketing.
What Is Affiliate Marketing?
Affiliate marketing is a type of marketing in which a company partners with one or more online influencers or “affiliates” to promote its products or services.
In exchange for this promotion, the company pays the affiliate a commission on sales or other agreed conversion points generated by their referrals.
Affiliate marketing can be an effective way for businesses to reach a wide audience and generate sales, while also building relationships with online influencers and other businesses.
How to Get Started in Affiliate Marketing
Affiliate marketing is based on the relationships between businesses and influencers (which can be individuals or websites popular in their respective niches). Both parties must invest time and effort to build a working affiliation with each other.
But first things first.
A business must launch its affiliate program. Through it, it will recruit affiliates to advertise their offerings for them.
Each affiliate, once approved, will receive personal links or exclusive checkout codes.
The affiliates will then advertise the business’ products through various means, direct their viewers to their links, or advise them to use their referral code.
The business gets more customers, and the affiliate is paid a percentage or flat rate for every sale conducted through their link or code.
Benefits of Affiliate Marketing
Is affiliate marketing worth it, ultimately?
Affiliate marketing has many benefits for both businesses and the affiliates themselves.
Let’s take a closer look at them.
The Benefits for a Businesses
Below are some benefits of affiliate programs for businesses.
Because they have others advertising their business, marketing becomes more organic. The affiliate’s audience sees someone they like or trust promoting something, and are therefore more likely to take up the offer.
This is different from conventional marketing where the business itself is asking people to take up its offers.
If an influencer is a niche celebrity, like a Twitch streamer, or an authoritative website, that increases the chances of conversions.
Pay for Confirmed Returns
You only have to pay your affiliates when they actually generate leads or sales for you. This makes the affiliate marketing model a very efficient and cost-effective way to market your business.
Since a business is paying a percentage of every sale, it only pays after the sale is complete. This means businesses only spend after they’ve made money.
Again, this is different from conventional advertising where ads are paid for upfront, or in the case of “Pay-per-click” (PPC), where payments are made regardless of whether something was actually bought.
We’ll return to discuss PPC a bit later.
Low Maintenance Cost
Affiliate marketing programs require very little maintenance.
Once it is set up, and a business has its affiliates, they can just let the affiliates do the work, and check up on them periodically.
High Return on Investment
All of this combined means affiliate marketing channels offer high returns.
Affiliate marketing improves revenue by an estimated 30%.
That is a staggering number when you consider the low initial fees, low maintenance cost, and the fact that payouts are for confirmed sales.
The Benefits for Affiliate Marketers
So what about the benefits for affiliates themselves?
Similar to the business side, affiliate marketing is a low-cost model for the affiliates themselves.
All they need is a platform and skills like writing or speaking to a camera.
While cheap websites are perfect for affiliate marketing, not even that is a base requirement anymore. A simple social media page would do just fine.
Mobile affiliate marketing is taking off on TikTok since the platform rolled out ecommerce features.
No Barrier to Entry
There’s no barrier to entry.
In theory, anyone can be an affiliate marketer. No study or hyper-specialized skills are required.
Although it’s an advantage to have a popular platform, some smaller businesses may even be willing to give an unknown a shot.
The entry low cost does allow businesses to take minor risks.
Once you've built up a following, all you need to do is drop links, and affiliate marketing can become a form of passive income.
If you have evergreen content, that means the potential to generate income as long as those affiliate links are active.
Naturally, there are no set hours.
You work links and promotions into what you’re doing.
While most programs may have some requirements, such as at least five mentions a month, for instance, you’re free to meet those requirements within your schedule.
Downsides of Affiliate Marketing
While affiliate marketing can be a great way to earn money online, it does come with a few risks.
Risks for Businesses
First up, the risks to businesses
Because affiliates don’t work for a business, they can be a bit unpredictable. This is especially so when affiliates are creative personalities.
Affiliate marketers may not follow the brand’s guidelines, or they could become embroiled in drama. While this doesn’t reflect on the business, the risk is “negative brand association.”
There a many stories of brands having to drop affiliates due to public relations nightmares. Here’s a famous one.
Additionally, there is the risk of fraudulent affiliates who use shady tactics like cookie stuffing to inflate their number of impressions.
This can lead to businesses rewarding affiliates who haven't actually driven sales to their brand.
That said, one solution is to prioritize sales-based commissions.
Risks for Affiliate Marketers
So while the risks to businesses are mainly based on affiliate partner behavior being unpredictable, the risks to affiliates are more varied.
Lack of Control
Affiliates have very little control over the broader marketing campaigns.
Although they may loke the brand at large, at times they may have to endorse offers that they don’t enjoy, or know to be misleading.
A refusal to cooperate can often result in a partnership being dropped.
Of course, a business wants as many affiliates as possible.
While this is great for the business, it poses a problem for affiliates, because it puts them in direct competition with one another.
No Guarantee of Returns
There are no guarantees of a return.
It’s always possible that an affiliate channel audience may just not be interested in the products they’re pushing.
“Easy Road” Pitfalls
Finally, it is easy to fall into bad habits when working as an affiliate.
Affiliates may be tempted to try “blackhat” affiliate marketing tactics, which could see them being blacklisted.
They also may be tempted to spam their audience or mislead them, which will ultimately lead to them losing popularity.
The brand could also take issue with misrepresentation, no matter how it is intended.
Making the Most of Affiliate Marketing
With the pros and cons outlined, we wanted to end off with a few tips to help you when setting up affiliate programs as a business or joining them as an affiliate.
As a Business
Affiliate marketing can be a great way for businesses to reach new customers and generate sales, but it's important to do it right.
Look for affiliates that have established audiences. These businesses will be able to provide your business with greater exposure and reach more customers.
Do not try to “create” your own influencers by getting a marketing intern to start a TikTok account.
Many companies have learned the hard way that you can’t force viral marketing.
Target Your Niche
Always target an affiliate marketer who is in a similar niche to your own business.
This way, you'll be able to tap into an existing market of potential customers who are interested in what you have to offer.
A Customer Referral Program
In order to save some money, consider implementing a referral program along with your affiliate marketing campaign.
Your referral program should offer existing customers “in-house” bonuses for referring others.
The bonus can be subscription extensions or vouchers, rather than cash.
Vet and Monitor Affiliates
Vet affiliate partners before signing them up.
Check out their content and make sure it’s a good, and worthwhile fit.
After they’ve joined, take care to monitor them to make sure you’re happy with the way they’re representing your brand.
Prioritize Sales Links/Codes
It's also important to prioritize sales links and codes over PPC advertising.
By taking these steps, businesses can maximize their chances of success with affiliate marketing.
Some affiliate setups make use of “pay-per-click” advertising.
As we mentioned earlier, this method can end up being expensive, and unreliable due to various schemes.
As such we recommend sticking with sales links and codes and following a sales-based model, to keep affiliate marketing costs down, instead of one based on impressions.
Put Together a Media Kit
Lastly, it’s a good idea to put together a branding kit.
This should contain some logos and branding pointers (i.e. how frame the logo etc.) This one by Mailchimp is an excellent example.
You can also include sample scripts and talking points, but don’t be too rigorous.
Raid Shadow Legends is an infamous example where the company had hundreds of affiliates reading the exact same script.
This ruined any possibility of achieving an organic image.
As an Affiliate
In order to make the most of this as an affiliate, it’s all about research and preparation.
Stick to Your Niche
Start affiliate marketing with products and brands that fit into your niche.
This will allow you to speak on it with more authority and confidence, but it’ll also mean that your viewers are more likely to take up the offers.
Do Your Research
Research various programs.
Find the one that seems the best fit for you.
It’s a good idea to reach out to others and find out about their experiences.
Have Something to Show Businesses
While there’s no barrier to entry, it’s still a good idea to build a base first.
If you have a viewership/readership, and some content to show off, you’re more likely to land better affiliate deals with bigger brands.
Is Affiliate Marketing Worth It?
It’s a great opportunity for businesses to boost profit margins, and for individuals to make some money.
However, along with the benefits, it's important to remember that there are risks involved.
Be sure to do your research and choose programs carefully to minimize these risks.
We hope this affiliate marketing 101 crash course has helped.
Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.