Affiliate Marketing Basics: Making Money From Commission

Affiliate Marketing is one of the most popular and the oldest form of internet marketing strategy. This strategy is not exclusive for online or internet marketing only. It’s also being used widely in the ‘real world’ since ancient history.

Affiliate Marketing in a nutshell is making money from commission when you sold other people’s product.

For example: Say you own a corner store / convenience store, and your friend makes a good cookies. So, you could make a deal with her that every pack of cookies that you sell from your store, she would give you 30% commission. But you don’t have to buy the cookies upfront. If nobody buys it, you just simply give it back to her without any money changing hand.

In the internet, although it’s still possible to sell cookies and other real product online, the most common products are of those that can be delivered digitally (download-able) such as: e-course, e-book, video, etc.

How Affiliate Marketing works

Below is how the affiliate marketing strategy works in the internet:
Affiliate Marketing Scheme

  • You select and choose first the product you want to sell.
  • Then you create a web page that explain how great the product is. This will be called “landing page“. On this page you have special link which has your affiliate ID. The link will be called Affiliate Link. If anybody click that link, the system will know it’s your link. If that person buy the product, you earn the commission.
  • Next, you need to advertise the product to attract potential customer to your landing page above. This potential customers which go to your landing page are usually referred as “traffic
  • So you generate traffic as many as possible. Some of those traffic will not go further and just leave. But some will get attracted and click your link. This traffic become known as “lead“.
  • Some of your lead will say ‘no’. (“Attracted, but no thanks”). But some will decide to buy. If they buy, you will earn some percentage of this sale as commission.

How to do Affiliate Marketing on Internet

  1. Choose your niche.
    You choose the category or type or area of the product that you want to sell. For example: whether you want weight-loss related program, or something about car, or something related to fishing, etc.
    This is referred as “niche“. So, first step is to choose your niche market.
  2. Find the product for your niche in an Affiliate Network.
    Affiliate Network is a place where product owner list their product. So, it’s like the catalog of product that you can sell and earn the commission from it. Usually Affiliate Network is also the one to whom the buyers pay to, it’s the one who will pay you the commission, process customer refund, and provide you with the system of tracking your lead.
    The most popular Affiliate Network is ClickBank (www.clickbank.com)
  3. Research your niche and product.
    You need to determine whether the potential market is huge enough to get some buyer, whether there are too many competitor or not, is the market responsive, etc. In short to check whether you have a good market.
    This particular research will involve keyword research,
  4. Then, it’s time to create the landing page which contains the Affiliate Link.
    This step will involve Copywriting technique (how to write a sales letter which can make people buy) and some SEO (Search Engine Optimization – how to optimize a website to be search-engine-friendly).
  5. Next is do the advertising to generate traffic.
    The advertising could be anything: word of mouth, email, radio or TV ads, etc. But most of the marketer will use advertising from major search engine such Google, Yahoo, etc.
  6. If all well, at this point, the system will work by itself creating you the ‘passive income’ that everybody wants: internet user found your ads, they go to landing page, they buy the product, you got commission, some of the commission will pay the advertising, and so on.

Characteristics of Affiliate Marketing

Some of the important characteristics of Affiliate Marketing can be outline below:

Great Aspects

  1. No upfront capital: less risk if it did not sold
  2. No need to create your own product.
  3. Less expertise required on that niche
  4. You can start immediately without waiting for product research, etc.
  5. No need to create marketing material (sales letter, banner, graphics). These will be provided by the product owner.

Less Favorable Aspect

  1. You don’t get the full profit, usually commission start 10% up to whopping 70%.
  2. You usually don’t keep the customer, they belong to the product owner.
  3. Beside web hosting and domain name, your main expenditure is the advertising cost which can be quite expensive if you use Pay Per Click advertising (you pay the ads only if somebody click the ads)

Conclusion

Internet Marketing’s terms

  • Affiliate Link: a internet link (hyperlink) which contains your unique affiliate ID to identify your sales.
  • Affiliate Marketing: a marketing strategy where you earn money from the commission for selling other people’s product.
  • Affiliate Network: The infra structure that will provide you with the sales tracking system, pay your commission, take care refund process, etc.
  • Copywriting: a skill to create effective advertising.
  • Keyword: you chosen phrase or words that you choose as a ‘bait’ or ‘description’ of your product. This phrase is the one would be entered into search engine by your potential customer.
  • Landing Page: a web page that is designed to explain and persuade people to buy a product. This page can consists of Testimonial, Product Features, Product Benefit, Examples, etc.
  • Lead: the potential customer which has visited your landing page (traffic) and decided to check out the product (not necessarily buy the product , though) and
  • List: collection /database of customer and potential customer. Usually at least name and email address. Having own the list make it possible for you to do follow up email or market other product in the future.
  • Niche: a specialized market which you want your focus on.
  • PPC (Pay Per Click): it’s an advertising method, where you will get charged only if your ads is being clicked by internet user. The most popular PPC advertising is Google’s Adwords.
  • SEO (Search Engine Optimization): a skill to make a web site search-engine-friendly in order to get higher ranking on search result for any particular keyword.
  • Traffic: potential customer that you can attract to go to your landing page.
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Comments

One Comment on Affiliate Marketing Basics: Making Money From Commission

  1. Ochieng on Wed, 26th Nov 2008 17:18
  2. i want a job on internet but i dont have membership fee which sites are asking for.

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