What is Affiliate Marketing and How it Works - Useful Resources

What is Affiliate Marketing and How it Works – Useful Resources


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Hi, Brad Morgan here. I’ve had an online affiliate marketing business for over 10 years now. This page answers the top 3 questions I get from people interested in starting an online affiliate business:

  1. Will I be selling a product? If so, who provides the product?
  2. What will it cost me (in time and money)?
  3. What should my Affiliate Business be about?

1. Will I be selling a product? If so, who provides the product?

You don’t need a product of your own to sell. This opportunity is possible for anyone with a computer and an internet connection.

In a nutshell, online affiliate businesses earn commissions with special “affiliate links” that link to products & services online. This is easier than ever to do with modern tools that make creating websites and blogs a snap.

Here is a basic example of how to get started:

You can signup for the Amazon Associates Affiliate Program and link to any product you like on Amazon for a commission.

It is completely free to signup for affiliate programs like the Amazon Associates Program. Most companies have an affiliate program these days.

In affiliate business jargon, they are the “merchant”, and you are the “affiliate”.

In true “all roads lead to Rome” fashion, the affiliate merchants would like to see every blog and website on the internet promoting them. Having an affiliate program gets them closer to achieving that goal.

That’s also why affiliate programs are getting better for blog and website owners all the time. The merchants are competing to get you to promote their products over their competition.

Affiliate merchants will sometimes offer recurring commissions for monthly subscription products. That means you get paid every month for as long as your referral remains in that merchants monthly program.

This can result in a cumulative effect to your efforts month over month. You continue to receive affiliate commissions from old customers you referred, as well as new ones.

An online affiliate business is the way most people get started in online business. Why? You don’t have to worry about:

  • creating or sourcing a product of your own
  • collecting payments from customers
  • spending time on customer service

Okay, so how do you actually do this? The merchants you choose to promote will give you their special affiliate links to place on your website, or whatever method(s) you use to promote your affiliate business (e.g. social media, email newsletter etc.)

When people click on your affiliate link and buy something from the merchant, you earn a commission.

The merchant wins, you win, and your website visitor wins because you have just helped them solve a problem or make a decision on the best product for their situation.

This is why people sometimes say you can earn money online while you sleep. A website or blog is the most basic form of online automation. It is awake even when you aren’t …

… and making a sale requires no direct input from you once your website is setup and attracting visitors. This is the essence of earning “passive income” online.

This is also what people are talking about when they say you can create more freedom in your life with an online business …

… because when you promote products as an affiliate, the merchant (e.g. Amazon) does all the selling, takes care of all the customer service, and sends you your commissions like clockwork.

Your affiliate commissions can arrive in a variety of ways based on your preference, and the options offered by each merchant. The most common ways to get paid are by physical checks, direct deposit in your bank account, or via Paypal.

2. What will it cost me (in time and money)?

On the money side, the costs to start an affiliate business are ridiculously low compared to starting other kinds of businesses.

To have a “real” viable affiliate business you will want your own domain name eventually (e.g. for the website you are on now, the domain name is biztoolspro.net). This costs around $10 to $15 per year, depending on where you register it.

You will also need website hosting. This is often included if you signup for certain training programs, for example:

Affiliate Training with Hosting: Wealthy Affiliate Review

However, if you go it alone then good website hosting is typically around $5 to $7 per month. In many cases the hosting companies offer a free domain name. In that case the hosting cost would be your only cost.

Other than that, any other affiliate business costs would be optional. With a website you can publish pages with your affiliate links and attract visitors for free from search engines like Google (without paying for advertising).

On the time side, this is where the trade-offs begin. If you restrict your “money costs” to those mentioned above, then you will spend more of your own personal time to make progress with your affiliate business.

If you have more time than money, this is a good approach. You can do this in your spare time and enjoy watching the process unfold.

However, if you have some money to invest, you can accelerate your progress. You can invest in yourself with affiliate business training, in automation tools, and in outsourcing some of the work to others.

Again, these costs are very low compared to the startup costs of other kinds of businesses.

In the end, how much you spend in time or money on your affiliate business is completely up to you.

3. What should my Affiliate Business be about?

There may be many things you are passionate about, but only a few may have real potential for significant online profits.

There may be things you could become passionate about as you learn more about them, and the profit potential that comes with them.

The subject areas to consider for an affiliate business are referred to as niche markets.

What is a niche market? A niche market is nothing more than a group of people interested in a particular thing. You yourself belong to many niche markets related to everything you are interested in at this point in your life.

Success with an online affiliate business is strongly tied to picking a profitable niche market to focus on. Getting it right from the beginning can save you a lot of time and trouble learning things the hard way.

For a brief description of the top 7 affiliate niche market categories, go here (includes 659 Profitable Niche Markets organized by category).