beginner's guide to affiliate marketing
Newbie's Toolbox

What is Affiliate Marketing and does it even work? Affiliate Marketing explained and demystified for newbies

What is affiliate marketing (and does it even work)?

Affiliate marketing is one of the oldest forms of marketing. It involves you promoting a product you like, and being paid a commission when someone buys the product based on your recommendation.

Many online companies who sell anything from books, shoes, TVs, dating services, couples counselling or some other service, usually offer an affiliate program.

For example, if you type in “book affiliate programs” into google you will find a list of all the companies which offer affiliate programs for selling books.

All you need to do is sign up for the affiliate program and get your unique tracking link. Then on your blog or website, whenever you are writing about a book available on the online bookstore, you simply use your special tracking affiliate link to recommend the company’s site.

If your readers buy the book through the link on your website, you will get a commission.

If you are more of a visual person, this is I created these infographics to step through how Affiliate Marketing actually works.

Affiliate Marketing Explained

Affiliate Marketing Step by Step Guide

A bit more about how the tracking works

One of the first questions I had as a newbie was, “how do companies actually track the record of who was sending people through via the unique tracking links and making sales?”

The simple answer is with the unique tracking link (which given to you by the affiliate company or product company when you sign up), is used to keep track of all the sales you are driving to the company’s page via your website or other promotional techniques.

Back in the day, affiliate programs would ask the buyers for an email address of who their referrer was in order to track where the sale came from. As you can imagine, this was not the most reliable way to track affiliate sales.

Thankfully, tracking now happens with cookies. No, not the kind that Nana’s bakes.

So What are these Cookies?

It’s the kind of cookie that works with web browsers to store information like user preferences, login or registration information, and shopping cart contents.

Not the type of cookie in affiliate marketing

Have you ever asked website “remember” your password and username details for easy sign in next time? Well, that’s a cookie!

This is also why when you have Google for “travel deals”, you suddenly see travel display banners on other non-travel related websites? Those ads appear because you have been cookied (its okay, it’s doesn’t hurt or contain any calories).

In affiliate marketing, these hard working cookies tag a tracker onto the link when your reader clicks on it. For example, if your reader uses the unique tracking link on your website to land on the company’s sales page, it will track the sale for a period of time.

Many companies track sales for up to 60 days. That means if a reader clicks on your link to go through to Amazon.com for example but only makes a purchase 2 months later, you will still get a commission.

Did you know that CJ Affiliate, one of the largest affiliate networks, tracked a total of over 3 billion website visits, 175 million transactions and over $6 billion in online sales in 2011 alone.

Crazy huh!

 

So Is Affiliate Marketing a Legitimate Way To Make Money Online?

Yes, it absolutely is!

Affiliate marketing is a legitimate way to monetize your blog or website. There are just thousands and thousands of companies that run affiliate programs and will pay you a commission for sending you sales.

This is a fair question to ask as there are so many scams on the internet these days, including scams centered around affiliate marketing.

Here are some potential red flags to look out for:

  • Affiliate programs that aren’t free to join,
  • Promises of BIG money without any hard work,
  • Pictures of lavish cars and other “proof” of the crazy lavish lifestyle you can achieve with their program in a short amount of time,
  • Claim that it is a “fool proof system”. While there are proven methods, no one can guarantee you 100% success.

If you see any of these red flags, have a look under the “product reviews” category to see if I have done a review.

If not, please reach out to me at shan@youcanescapetheratrace.com. I am happy to do a review of the product if you want to be sure 🙂

So Why Affiliate Marketing – because Affiliate Marketing creates passive income.

Passive income is literally earning money while you sleep.

No more trading hours for dollars.

However, the downside is that you usually need a large sum of money to be able to create passive income.

For example, to earn $50,000 per year in passive income (before taxes) in rental income you will need a purchase property of about $700,000 (where I live). Most people don’t have that kind of money sitting around and if you want to get a loan and have to pay interest then you need to buy even more property, about a million dollars’ worth, to cover the interest costs.

If you put a million dollars into the stock market, you might get dividends at a rate of 5% that would also give you $50,000 per year in passive income.

That’s probably the biggest attraction of affiliate marketing; that you do not need such a massive amount to invest. You can even get started for free to check it out. Although I would strongly recommend making some investment if you are serious about getting into this business. You can get a great online business off the ground with about $1,000.

This is after all a lot less than what most people starting brick and mortar businesses invest when starting a business

In addition, since the internet ever sleeps, your Affiliate website is open 24/7 to get traffic from Google. Whether you’re sleeping, on vacation, or just taking the day off, your website is online and available to earn you money.

However, I must note that Affiliate Marketing is definitely not a get rich quick scheme and you don’t earn passive income on day 1.

If you’re writing consistent content for your website, you can expect to start seeing visitors and sales at around the 3-6 month mark. So that means you may have to put in consistent hard work for six months before you start to get consistent traffic and sales coming in.

You then have to keep building to the level of passive income that you want to get. See what I mean? That’s why I said anything promising $100,000 in 3 months without much work just smells like a scam. You just don’t get such results in such a short time especially while you are sitting on your couch watching TV.

I wish it were that easy. But the journey to passive income and escaping the rat race is definitely worth the hard work in my opinion.

So How Much Does It Cost To Get Into Affiliate Marketing?

There should be no charge for joining an affiliate program. As I previously mentioned, legitimate affiliate programs don’t ask for any payment to join.

However, there will be other costs to building, running and promoting your blog or website. Your costs will depend on the type of traffic (way of getting visitors to your website) you choose. There are 2 methods of getting traffic:

Organic Traffic: This means you create a website and get traffic from search engines like Google. This is you write content in a post, your post gets ranked in Google, people find your post when they Google search, people read your post and then click on your unique affiliate links to products you promote.

Paid Traffic: This is where you use PPC advertising (or other forms of advertising). For example you tell Google AdWords or Bing Ads you want to pay $0.10 per click to your page. If you get 10 clicks, that’s $1.00 you pay for traffic.

If you have an affiliate link on the page that gets you $2 per sale, you just made money! While the concept is very simple, I would warn newbies against using starting off with paid traffic unless you have a lot of money to “learn” with. It does take skill to get your PPC advertising aimed in the right direction. If not you can end up dishing out a lot of cash with no sales…not good.

 

What Lingo Do I Have To Know To Speak Affiliate Marketing?

Here are some common affiliate marketing terms you will come across in your Affiliate Marketing travels explained:

  • Affiliates: People like you and me who are using affiliate program unique links to promote and make sales.
  • Affiliate marketplace: There are many marketplaces like Shareasale, CJ Affiliate, and Clickbank. These are like Amazon.com for affiliate programs in different niches.
  • Affiliate link: This is your unique tracking link offered by your affiliate program to track the progress of your affiliate promotion (remember the cookies we talked about before).
  • Affiliate ID: Some affiliate programs offer a unique ID which you can add to any page of the product site instead of an affiliate link.
  • Affiliate Manager: Many companies have dedicated affiliate managers who send you regular tips and material to help promote the company’s product/service.
  • Commission percentage/amount: The amount or percentage you will be receiving in affiliate income from every sale. For example, a 40% commission percentage means you will get $40 for every $100 of sales.
  • Payment mode: Different affiliate programs offer different methods of how they will pay you – e.g. like cheque or PayPal (I personally prefer PayPal). Different companies also have different thresholds before you will receive a payout. For example, some only pay out after you have made at least $50 in commissions.

Alright, now that I get Affiliate Marketing, How Do I Get Started?

If you are ready to build an online business, I suggest you check out my no. 1 recommendation here. This is for those who are serious about building an additional stream of income online.

If that’s you and you are willing to commit time and effort, then check it out.

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6 Comments

  • Reply Brendon August 21, 2017 at 9:13 am

    I just finished reading your article, and you really filled it with some helpful information.
    I am new at affiliate marketing, but so far so good. I have signed up with some of the vendors you mentioned already.
    I was wondering what your thoughts were in regards to Click 2 Sell?
    I was thinking about signing up with them, please let me know what you think.
    Thank You,
    Brendon

    • Reply Shan August 22, 2017 at 4:11 am

      Hi Brendon, I’m glad you found the post helpful.

      That’s awesome that you have signed up with affiliate vendors already. I personally haven’t really used Click2sell, I had a quick go and didn’t find their interface particularly helpful to use. I much prefer the vendors like Clickbank that I mentioned.

      I’d love to hear your experience with Click2sell. And if you have any question re picking a niche or anything at all please ask:)

  • Reply Sharon Whyte August 21, 2017 at 11:46 am

    Hi there Shan,
    This is a really good guide for the beginner to affiliate marketing. I like how you go over the “lingo” as well, sometimes the language used with various things is half the battle of understanding! Affiliate marketing is a great way for anyone to make money, as long as they are prepared to learn how to do it! Great article.
    Cheers, Sharon

    • Reply Shan August 22, 2017 at 4:15 am

      Thanks for stopping by Sharon.

      Yes I agree, I really struggled with the lingo as a newbie. I found that once you understand the lingo you can then move onto understanding the wider picture and start the put the pieces of the very large affiliate marketing puzzle together. 

      And that’s why I designed a course to help guide newbies through how to get an online business started. I spend too much time figuring out just the lingo let alone trying to make sense of all the information there is out there.

  • Reply Kenny September 6, 2017 at 10:33 am

    Hi Shan!

    Amazing post – thank you for that! I am from Malaysia but I don’t think they issue commission via PayPal. I say this because I am only using PayPal. Are there alternatives to ClickBank asides from CJ and JVZoo?

    I am really looking to get into affiliate marketing and am pumped after reading your post! Great job! 🙂

    Kind Regards,
    Kenny Wong

    • Reply Shan September 6, 2017 at 9:29 pm

      Hi Kenny!

      Thanks for stopping by and I’m so glad you the post pumped you up. Affiliate marketing is definitely an awesome opportunity for normal every day people to build a sustainable long term business online.

      You are right, Clickbank doesn’t pay via Paypal unfortunately but they do pay via direct banking to certain countries. I just checked and Malaysia isn’t on the list :(. For any other networks that pay out via direct banking, here is a tip to how you can link this to your paypal.

      JVZoo does payout via paypal and so does Rapbank and Click2sell Affiliate network. I have not personally used these programs so do make sure you do some research and let me know how you find them.

      I’ve also heard good things about Rakuten but have yet to try them just yet.

      If you are just getting started with Affiliate marketing, I suggest checking out these posts to get you going and just sing out if you have any questions 🙂

      How to pick a niche for my blog

      How to choose a web host

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