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Affiliate Marketing 101

What is Affiliate Marketing?

Affiliate Marketing is a marketing strategy that has become enormously popular with the growth of the Internet. Particularly suited to the Internet's many-to-many (many publishers, many viewers - and with Web 2.0 the distinction is becoming blurred) nature, it describes the outsourcing of the marketing function by a product or service vendor to numerous, independent, marketers who receive a commission for delivering some pre-defined goal. This goal could be referring a visitor to the vendor's site, having a potential customer fill out a registration form, or a completed sale.

Advantages of Affiliate Marketing

For vendors, affiliate marketing provides the benefit of multiple routes to bring their products to market, which are only paid-for where successful.

For marketers, affiliate marketing offers:

  • A cheap, easy, and low-risk way to establish an online business.
  • The ability to select from an enormous range of affiliate products, market multiple products simultaneously, and switch in and out of different products with minimal effort/cost, all without holding inventory.
  • Up-to-date performance information to highlight what's working (and what isn't) available from every worthwhile affiliate network or program.
  • Freedom from shipping, accounting, inventory-control, customer service etc concerns, meaning affiliate marketers can focus solely on marketing.
  • Potentially very generous commissions, eg digital products can pay 50% or more of the sale price.

Niche Marketing and The Long Tail

Although much online business is dominated by behemoths such as Amazon and eBay, there is still plenty of room for smaller players to carve a presence in the multitude of niche channels. Chris Anderson coined the term The Long Tail to describe the Internet's ability to make available (and profitable) numerous choices that could not exist in the physical world. Although Amazon etc do serve narrow niches, and affiliates may well end up directing their visitors to these sites, they will not carry the same depth of content as a specialized niche site maintained by a true enthusiast.

How Does Affiliate Marketing Work?

Affiliates choose a product to market, eg by searching the network site, and obtain an affiliate link pointing to the vendor's page along with some tracking code indicating traffic origin (ie you).

According to Ken Evoy of the affiliate's job is to pre-sell. The affiliate's aim is to deliver relevant (ie interested in the product) traffic  to the affiliate link in a frame of mind that is pre-disposed to buy.

The Internet itself and key traffic sources such as Google are highly complex systems resulting in a high level of uncertainty for any individual marketing campaign, particularly for new affiliates without an established reputation or group of followers. As such, it is advisable for those starting out in this field to run multiple campaigns side-by-side, carefully tracking & monitoring results to reveal which products & marketing techniques produce the best results.

Contrary to what some of the more dubious online marketing campaigns suggest, affiliate marketing is not a get rich quick scheme. However, it does provide an excellent opportunity for those of moderate talent from all walks of life to be their own boss and make a decent living free from the bonds of corporate drudgery. And for the very best there is a genuine opportunity to get rich, albeit over the longer term.

Affiliate Product Choice

A good place to start is by registering with one or more of the major affiliate networks such as ClickBank and Commission Junction. These companies serve as an interface between vendors and affiliates providing directories of products, product performance statistics, and account (and payment) management. Between them these networks handle thousands of products across every imaginable niche.

Product choice is one of the most important decisions faced by an affiliate marketer. As mentioned above, affiliates have the option to switch in and out of product relatively easily, and there's no reason not to run multiple simultaneous campaigns. However, taking account of the following factors will maximize each campaign's probability of success:

  • Select niches and products for which there is demonstrable demand and limited supply. Gauge demand from what people are searching for, eg Google's Keyword Tool. ClickBank's Gravity rating can also indicate demand within a niche. Gauge supply from the number of site's meeting this need, eg search Google; you probably won't be the only seller, but if there are many existing sites offering your proposed product you're likely better looking at something else.
  • Sell people what they want or, preferably, need to buy.
  • Select quality products. If you don't believe in a product it's near impossible to convince someone else it's worth opening their wallet for. Recommending poor products is a sure-fire way to lose the all-important credibility essential to marketing.
  • Select products related in some way to your personal interests. Enthusiasm sells, and it's hard to feign enthusiasm for something you couldn't care less about.
  • Leverage an existing Web presence by choosing products in some way related to your site(s).
  • Assess the quality of the vendor's landing page. If the product were a solution to your need, would it win your custom?
  • Ensure the commission is sufficiently valuable to cover your marketing costs. If you're paying to advertise then revenue must exceed costs, but even if you're relying on free marketing methods the (potential) rewards must cover the costs of your time. NB the complexity of the Internet makes it difficult to estimate the effectiveness of any particular campaign, but marketers should ensure the potential profit from any campaign makes it sufficiently worthwhile to undertake.

When selecting products, visualize your target audience. You need to profile what your potential customers - in need of your solution - are typing into  their search boxes, what will prompt them to click-through to your page, and what will clinch the sale. It helps to have an idea of their demographics (gender, age, location, social class etc), not only for framing your content, but some ad networks, eg Facebook allow you to target ads to specific viewers.

Affiliate Marketing Models

The cheapest way to start affiliate marketing is by creating your own content-rich niche Web site (these days most likely a blog), building traffic (and ideally community), and introducing relevant affiliate products. Choose a niche in which you have an interest - preferably passion - and begin by sharing it with the world. This model is the route to long-term sustainable revenue for minimum effort (ie everyone's dream!) but it takes time and effort to build.

The goal is a site that truly contributes to the niche it serves by providing valuable, up-to-date, content. It is frequently renewed, giving visitors motivation to return periodically or, better still, to subscribe to your (auto-generated) RSS feed. Visitors are encouraged to sign-up to your newsletter (maybe through the incentive of a bonus, eg a free e-book) and you use this not just to pitch, but to provide topical material targeted to your visitors interests. Furthermore, your site is not a one-way broadcast, but an online community with multiple participants, not just further motivating return visits but also giving you lots of effort-free, cost-free, search-engine friendly content.

Traffic for a dedicated site comes from a number of sources, eg: organic search (ie natural search results), paid advertising such as pay per click (PPC), social marketing (promoting your site on the various social networks and bookmarking sites), article marketing (writing articles for free publication that link to your site) etc. Paid advertising is a good way to drive targeted traffic in the short-term, eg when starting-out. If you build a site along the lines of that described above you will find that over time, as your site gains reputation, much more traffic comes from organic search and other free sources.

Search Engine Optimization

Search Engine Optimization (SEO) is the process of trying to get pages to rank as highly as possible in the search results for selected key terms. SEO is big business and forms an entire industry within the online sector.

A major component of SEO is the selection of appropriate key terms for each page. These are the search phrases for which you'd like that page to feature highly in search results. A quick indication of a key term's SEO usefulness is given by the demand divided by the supply (D/S). A commonly used measure is the Keyword Effectiveness Index (KEI), usually defined as demand squared divided by supply (DxD/S).

Initially (at least until your site becomes established) it is preferable to avoid key terms with overly large supply numbers as it is harder for new sites to rank well for these terms. Instead focus on more modest demand and supply figures which have a realistic chance of producing some organic traffic.

Although the number of results returned for any search will likely be humongous it is not just the quantity that indicates supply but also their quality or relevance. Look through the first page or two of results and check how many are direct competitors for your target visitors.

As well as ensuring the targeted key terms are prominent on the page it is also necessary to have other sites linking to yours. These "backlinks" act as votes for the quality of your site and contribute to Google's "PageRank". These days SEO is aided by peer recommendation on the various social sites, or most recently Google's +1 button.

Social Marketing

Social marketing, an increasingly common and effective means of driving traffic and promoting product, refers to the use of the various social channels to communicate one's message. These channels include social networks - eg Facebook, microblogging - eg Twitter, video & photo sharing - eg YouTube & Flickr, and social bookmarking - eg delicious, Digg and StumbleUpon. Social marketing is a subtle art demanding a very soft sell. Overt marketing is frowned upon and could be counterproductive. Instead the most successful social campaigns require the marketer to become a trusted and valuable member of the community, contributing much freely, in return for the occasional mention of and link to their Web site.

Paid Affiliate Marketing

PPC and other paid advertising involves paying other sites to place links either to your pages or to your vendors' (NB check each vendor's terms and conditions to ensure direct linking from ads is allowed). The most popular PPC platform is Google's AdWords which places ads alongside organic search results as well as on relevant independent Websites. Indeed, Google's complementary AdSense program allows you to generate additional revenue by running PPC ads on your site. The goal of paid advertising is to ensure revenue generated exceeds advertising expenditure.

There are two variants of the PPC affiliate marketing model.

  • The first takes visitors directly to your affiliate link, ie to the vendor's site along with your affiliate ID.
  • The second takes visitors to a pre-sell, or landing, page on your site which includes your affiliate link.

The former approach is to be preferred since visitors arrive at your desired destination in a single click (ie they have less chance to get lost along the way). However, some vendors and advertising networks prohibit this "direct linking", so be sure to check the relevant terms and conditions before employing it.

Although delivering fewer visitors per ad-click, the latter tactic also has advantages. Since you've had a chance to pre-sell the conversion rate at the vendor's site should be significantly higher. And, assuming your pre-sell page is part of a larger, relevant, value-adding site, even if they don't click through to the vendor the visitor may choose to explore your site further, sign-up to a list, click an AdSense ad, and/or become a regular visitor.

E-mail marketing means sending your message directly to potential customer's inboxes. E-mail marketing is the most controversial of the models described here. Not only do most folk abhor spam, it is also illegal. Stay on the right side of the law by only mailing those who have opted to receive such messages. Not only is this the ethical approach, it is also likely to yield much greater success since messages are only sent to those who have actively expressed an interest in your topic.

If you have, or opt to start, your own Web site, leverage existing traffic by building an email list. Encourage people to sign up by offering an incentive, eg a free e-book.

However, building a list from scratch can take time so for faster results you can pay to have your ad sent to targeted lists. A further option is to take an ad in one of the many ezines, or even commission a solo ad (one-off mailing) be sent to the ezine's list.