Affiliate marketing is a great way for brands to generate revenue and affiliate marketers to drive sales. The new push towards less traditional marketing tactics has certainly been beneficial to both.

Affiliate marketing spend in the United States is expected to increase from $5.4 billion in 2017 to $8.2 billion in 2022. This presents an opportunity for people looking to get involved in this type of marketing.

If you’re looking to start an affiliate marketing business, this guide will show you how to get started and what benefits you can expect.

Because affiliate marketing works by spreading the responsibilities of product marketing and creation across parties, it leverages the abilities of a variety of individuals for a more effective marketing strategy while providing contributors with a share of the profit. To make this work, three different parties must be involved:

1. Seller and product creators.
2. The affiliate or advertiser.
3. The consumer.

Let’s delve into the complex relationship these three parties share to ensure affiliate marketing is a success:

Seller and product creators.

Also known as the brand, the seller does not need to be actively involved in the marketing, but they may also be the advertiser and profit from the revenue sharing associated with affiliate marketing. The seller, whether a solo entrepreneur or large enterprise, is a vendor, merchant, product creator or retailer with a product to market. The product can be a physical object, like household goods, or a service, like makeup tutorials. Also known as the brand, the seller does not need to be actively involved in the marketing, but they may also be the advertiser and profit from the revenue sharing associated with affiliate marketing.

The brand, or the seller, is not required to be actively involved in the marketing of their product, but they may be the advertiser and make money from the revenue sharing that comes with affiliate marketing.

In other words, the seller could be an ecommerce merchant that uses dropshipping to promote their products, or they could be a SaaS company that sells marketing software.

The affiliate or publisher.

An affiliate is someone who markets a seller’s product to potential consumers in a way that makes it appealing to them. The affiliate tries to convince consumers to buy the product by showing them how valuable or useful it is. If the consumer ends up buying the product, the affiliate gets a share of the revenue.

Affiliates usually have a very specific group of people that they advertise to, who share similar interests. This creates a defined niche or personal brand that makes it easier for the affiliate to attract customers who are more likely to take action on the promotion.

The consumer.

The affiliate system only works if there are sales, which the consumer or customer makes happen.

The affiliate will promote the product/service to consumers through the necessary channels, whether it be social media, a blog or a YouTube video. If the consumer judges the product to be valuable or beneficial, they can follow the affiliate link and purchase it from the merchant’s website. If the customer does purchase the item, the affiliate will receive a percentage of the revenue.

The customer should be aware that the affiliate is receiving a commission from the product.

An affiliate marketer needs to let the consumer know about their relationship to the retailer so the consumer can decide how credible the endorsement is.

The following text contains a disclaimer which informs the viewer that the products used in the video were given by Company X. This allows the viewer to make a more informed decision about whether or not to buy the affiliate product.

With affiliate marketing, a seller pays an affiliate for linking them to a consumer. The amount the affiliate gets paid depends on how much the consumer spends on the product.

The answer can get complicated.

The affiliate may get paid in various ways: The affiliate doesn’t always need to buy the product for the seller to get a commission. The amount the affiliate gets paid depends on the program. The affiliate may get paid in various ways, for example:

The affiliate may get paid in various ways:

Pay per sale.

The affiliate marketing structure typically involves the merchant paying the affiliate a percentage of the sale price of the product after the consumer purchases the product as a result of the affiliate’s marketing efforts. In other words, the affiliate must actually get the consumer to purchase the affiliate product before they are compensated.

Pay per lead.

This program compensates the affiliate based on the number of leads they are able to generate. In order to receive compensation, the affiliate must direct the consumer to the merchant’s website and get them to take a desired action – whether it’s filling out a contact form, signing up for a trial product, subscribing to a newsletter, or downloading software or files.

Pay per click.

Affiliate marketing generally focuses on two things: getting people to visit websites and convincing them to take action. So it’s no wonder that people believe affiliate marketing is all about SEO.

Even though organic traffic doesn’t cost anything, there’s so much competition that affiliate marketers can’t rely on it. That’s why some of them use pay-per-click advertising.

The affiliate is paid a commission for every click that redirected the consumer from their marketing platform to the merchant’s website.

There are two common concepts in PPC:

• CPA (cost-per-acquisition): With this model, the affiliate gets paid each time the seller or retailer acquires a lead, which is when an affiliate link takes the customer to the merchant’s online store and they take an action, such as subscribing to an email list or filling out a “Contact Us” form. 
• EPC (earnings-per-click): This is the measure for the average earnings per 100 clicks for all affiliates in a retailer’s affiliate program.

Pay per install.

In this style of payout, the affiliate is given a sum of money each time they lead a customer to the seller’s site who then downloads and installs a product, most often a mobile app or some type of software.

The retailer will pay $100 for 1,000 installs if they budget for a $0.10 bid.

Who can benefit from affiliate marketing?

Affiliate marketing is beneficial for both brands and content creators.

Affiliate marketing is a way for brands to partner with content creators and influencers while only paying for results that can be track. For content creators, it is a easy way to make money from your content, regardless of the size of your following.

Ecommerce brands and merchants

Affiliate marketing is beneficial for brands because it allows them to reach a wider audience without having to pay for advertising. Affiliates only get paid when a conversion is made, so brands only have to pay for actual results.

In most cases, brands and merchants will pay a commission on sales that are made when a customer clicks on an affiliate link. In some cases, brands might pay for leads, app installs, sign-ups, or clicks. The brand only pays for results that have a direct impact on the sales funnel.

An affiliate program is a great way for brands to benefit from recommendations by nano-influencers. These influencers might not have a large following, but their followers can be fiercely dedicated.

Affiliate marketing is a beneficial form of marketing because it increases revenue and creates trust between the customer and the brand.

Content creators

There are many brands that offer affiliate marketing, so content creators can earn commissions on products and services they actually use.

This allows them to easily include product recommendations in their posts.

Do you ever recommend products to people and wish you could get paid for it? Some companies have affiliate programs where you can earn commission from recommendations. All you need to do is sign up and start recommending the products you love.

How to set up an affiliate marketing program

Step 1: Determine your goals

Something else? The affiliate program’s purpose is to _____. Are you looking to strictly increase sales, bring leads into your sales funnel, improve brand awareness, or something else?

Defining clear, achievable goals for your affiliate marketing campaign will help you to see how it will fit in with your wider social media strategy.

Before you can create a successful program, you need to have a clear understanding of what you hope to achieve.

Step 2: Determine your payment, attribution, and commission models

In short, the amount you pay affiliates and the results you expect from them are determined by the following factors.

• Payment model, a.ka.a. what you will pay your affiliates for. As mentioned above, the overwhelming majority of brands (99%) use a cost-per-action (CPA) model, like paying a commission per sale. Other options include cost per lead, cost per click, and cost per install. This is a choice social marketers are used to making from regular social ad campaigns.
• Attribution model. If multiple affiliates are involved in sending a customer your way, who gets the commission? The most common model (86%) is last-click attribution. This means paying a commission to the last affiliate who refers someone to your site before they buy. But multiple affiliates might impact the sale as customers visit your site multiple times. So, you could also use first click attribution or pay affiliates who impact all stages of the sales funnel.
• Commission structure: Will you pay a flat rate per sale or a percentage commission? What will the amount be? You should have a sense of how much it’s worth for you to spend on a new customer or a sale based on your budget for regular social media ads. Make sure you offer enough to motivate affiliates to sign up for your program and promote your brand.

It is beneficial to research what your competition is doing. Try searching your competitor’s brand name + “affiliate program” on Google to see what results come up.

You can use social listening to keep an eye out for band name plus “voucher,” “affiliate,” or “partner.” This can be done by setting up a search stream with your partner’s brand name on Hootsuite. Additionally, you should look for and monitor hashtags such as [brandname]partner or [brandname]affiliate.

Step 3: Set up tracking

If you’re finding the idea of setting up tracking for an affiliate program daunting, you’re not the only one. A full 20% of marketers in the UK don’t know how their affiliates’ activity is tracked. Even more use third-party cookies, which is becoming increasingly problematic in light of changes to cookie tracking on major browsers and iOS 14.

The best way to set up affiliate tracking is through an affiliate management tool. If you run your website through an ecommerce platform, check their recommendations for tools that integrate with their software.

Some popular apps for Shopify include Tapfiliate and UpPromote.

An alternative to running your program through an affiliate network is to get into manual tracking and code. This may be more complicated, but it has the advantage of helping more affiliates find you.

This means that you can use unique UTM codes and coupon codes to track each affiliate’s performance. Then, you can look at the results in Google Analytics to see how they are doing.

Make it easy for affiliates to incorporate their code into social posts by providing a coupon code with a discount. This will help to track affiliate sales while motivating followers to check out your brand.

Step 4: Find your affiliates

An affiliate program won’t be very effective until you have affiliates. To get started, you may want to reach out to creators and invite them to join, similar to how you would contact influencers for a traditional brand partnership. For more tips, check out our post on how to find Instagram influencers.

After announcing your launch on your social channels, you could also ask your most ardent fans to become potential affiliates.

It’s beneficial for your website to have an easily accessible affiliate program, and it doesn’t cost anything to share affiliate content on your social media platforms.

Affiliate marketing is a new and easy way to market your product. By using platforms such as reviews, blogs, social media and webinars, you can reach a wide audience with your product.

This article provides tips on how to engage your audience, convert passive readers into active consumers, and enhance your paycheck.