The affiliate marketing business model

The Affiliate Marketing Business Model: 2020

Do you plan to launch your own internet based business in the year 2020? Have you been wondering whether or not the affiliate marketing business model is for you? If yes, then this article is for you! Hi, my name is Francisco, and I am the owner of Planet Marketing. My company specializes in Google Ads, Facebook Ads and Remarketing. I have been around for a long time, and affiliate marketing is a subject that I am very familiar with. That’s because I am an affiliate for various companies whose products and services I sell through my website, planetmarketing.com. I also run my own in-house affiliate marketing program and have affiliates around the world who are selling my products. So, you can be sure that I know what I am talking about here. In this article, I am going to;

  1. Give you a background into affiliate marketing.
  2. Show you the players in an affiliate marketing business model.
  3. Show you how to start an affiliate marketing business.
  4. Show the available affiliate marketing channels
  5. Give you the advantages and disadvantages of the affiliate marketing model

What is Affiliate Marketing?

Most people do not realize that Affiliate marketing is the backbone that drives a lot of the content that’s floating around on the internet. Here is the thing, most people do not simply blog, produce YouTube videos and spend hours on Facebook because they love doing so!

Content producers work hard because they hope to earn a living out of their work
Content producers work hard because they hope to earn a living out of their work

They do it because they want to make money! I mean, I love blogging, but if it wasn’t a primary means of earning a living, I don’t think I would have been producing as much content as I do today! Unfortunately, things do not always turn out the way we want them to. Every day, many a blogger set out to make a living via the internet. They have probably heard that they can make money out of affiliate marketing. A lot of them are ultimately disappointed. The majority of people who start blogs give up within a year. But what is affiliate marketing and how can you make it work for you?

Affiliate marketing can be defined as a business model under which people sign up to sell goods and services on behalf of other people for a commission.

When did the Affiliate Marketing model begin?

salesmen were involved in affiliate marketing
Affiliate’s of the previous era

Selling goods and services for brands in order to gain a commission has been around for a long time. One of the enduring images of the 19th Century is that of the salesman totting around a suitcase full of various commodities and trying to get harried housewives to buy. The salesman would then get a commission for every sale. Now, that’s basically what affiliate marketing is, save for the fact that today’s salespeople have become more tech savvy. They have embraced the digital tools that are at their disposal to grow their earnings. Marketing is done through various internet based channels. The affiliate marketing business model, in any case, enables people around the globe to create passive sources of income.

Who is involved in the Affiliate Marketing business model?

To further clarify things, you need to understand that the affiliate marketing business model is composed of three people;

  • The business/brand/merchant whose products and services need to be sold.
  • The affiliate who signs up to sell these products and services.
  • The third party affiliate network that sometimes interposes itself between the two.

How to Start and Affiliate Marketing Business

Amazon Associates
Amazon Associates is one of the best known affiliate marketing programs

Yes, affiliate marketing can be a business. Indeed, there are thousands of people around the world who survive through affiliate marketing. There are even some who are making six figure salaries, partly through affiliate marketing. These are the ones that we all aspire to emulate. They are what keeps every other affiliate going even when the going it tough. So, how does one start an affiliate marketing business model?

  • Have clear goals: One of the major reasons why people fail at affiliate marketing is because they do not set out with clear goals. Most people have only vague ideas, when they start their blogs or YouTube channels, about wanting to get rich using their creations. However, this is a recipe for disaster. How are you going to get rich? Are you going to join Amazon Associates or will it happen through some other affiliate marketing program? Are you going to join Commission Junction or Clickbank? Goals are important, in that they help you have clarity on what is and what is not achievable.
  • Understand that the journey can be long: This is another core tenet of the affiliate marketing business model. You are probably not going to begin making money the moment you set up your website. This is the major reason why most people tend to be disappointed. Here is the thing; Search Engines, as every digital marketing expert knows, works in mysterious ways. However, one of the commonly understood things about them is that it can take years for a new website to begin to attract meaningful organic traffic. Simply put, there are probably already thousands of people who have the same idea that you have. And you are going to have to work hard to overtake them.
  • Leverage the power of social media: Having said that, all is not lost. This is where social media comes into play. Platforms such as Facebook and Twitter enable you to bypass the time limitations of starting a new blog. If you have a network of friends, you can use these to help grow your business without having to wait around for your site to catch up on Google.

Narrow down your focus:

You need to be really focused to succeed at the affiliate marketing business model

Another reason why people tend to fail at the affiliate marketing business model has to do with the fact that they fail at content marketing altogether. The goal, it has to be said, is to get as many people as is possible to visit your site. That way, you have a much better chance of convincing a few of them to sign up for a product or service for which you are an affiliate. I have already mentioned that the market tends to be clogged. Whatever you do, there are others who have the same ideas. And they have probably already been at it for a long time.

So, your chances of making a breakthrough are rather limited. You are much more likely to succeed by narrowing down your focus. If you are a blogger, as an example, what are you going to blog about? Some people will tell you that you should blog about the things that you are passionate about. This may be true, but there is nothing stopping you from diversifying your interests. Look, you may be in love with trees, but nobody is going to buy trees right. You need to be able to blog about things that can be monetized!

Blog about the right things, and your affiliate marketing model will succeed

That, really, is the key to every affiliate marketing model that has been successful over the years. The idea is not just to produce content. Rather, the idea is to produce content that people want to consume. And even that is not enough! You may start producing YouTube videos on a very popular theme. However, if there are a million others already doing the same thing, you are probably going to fail. So, the key lies in precisely targeting your audience.

Go for less competitive keywords

What you need to do in order to succeed is focus on less competitive keywords. Also go for long tail keywords, which are searched for by people who actually want to buy something. There are various keyword research tools that you can use out there. Google’s Keyword Planning tool is one of these tools.

An example

Okay, let me illustrate what I am trying to say in this article using an example. Let’s assume that you are a college student who is struggling to make ends meet. One of your friends then tells you that you can make money through the internet. All that you need to do is create a blog, or start a YouTube channels. This sounds like something that you can do, right? I mean, how difficult can it be. Well, it’s true, creating your own website can be mind numbing, but that’s no worry. You can get another struggling fellow student to do it for you at a fraction of the fee.

So, what happens when you have your website up and running? Does the money begin rolling in? Well, not really! Thing is, BEFORE you have even launched the site, you need clarity on what it is going to be about. Is it going to be about your life as a student? Or is it going to be a general technology site? Being focused helps you in that you know exactly how you are going to monetize your site.

Don’t be too broad

affiliate model
You can blog about anything, including your old shoes

Here I am repeating the point that I made above. Affiliate marketing business models that tend to succeed are ones that are narrowed in focus. Let’s say you love e ink readers, as an example. You can set out to blog about them. An example of what I am talking about is a site called Best E Ink Reader Reviews. The site focuses on e ink readers and nothing else. Monetization is through Amazon Associates. I know, this kind of specialization may appear to be too restrictive, but it works. Focusing on one topic allows you to become an expert on that particular field, and Search Engines will notice.

Just another example, you can join Amazon Associates and write reviews about the various shoes that are sold there. See, you have slightly narrowed down on what you are doing. What it means is that people that share a love for shoes are going to subscribe to your blog, and you are going to have a chance to keep growing your audience. Nobody, one the other hand, is going to want to subscribe to a blog that talks about shoes today and about Tesla cars the next.

Further narrowing down

Okay, our focus is now pretty narrow, but is it enough to have a sustainable affiliate marketing business model? Well, the sad truth is no! Narrowing down your focus actually needs to be taken a bit further because, what do you know, there are probably already a hundred people who are talking about shoes. Yes, you could make it, but you give yourself a better chance by further narrowing down your focus.

Nike Shoes

An example would be to start blogging about Nike Shoes. What happens when you do that is that you will draw all those Nike Shoes enthusiasts to your blog. They may not be that many, but you don’t need a lot of people to achieve your goals of monetizing your site. If you can further narrow down your audience, that would be even better for you!

Affiliate Marketing Channels

This is something that I have already alluded to in the above discussion. Affiliate marketing business models are centered around a number of affiliate marketing channels. These are;

  • Blogs
  • Website
  • Social Media
  • YouTube

Blogs

Most affiliate marketers are bloggers. I am partly a blogger, and I have been generating income through affiliate marketing for years. So, I am going to use my example to help you further understand how the affiliate marketing business model operates. My website, Planet Marketing, focuses on Digital Marketing. I know, it’s perhaps not as focused as it could be, but it’s working out for me. After all, I have been around for long! Anyway, the following are some of the companies for which I am an affiliate;

  • Web hosting companies such as Bluehost, Dreamhost and Kinsta. My website is hosted by Kinsta, by the way.  One thing to note is that web hosting tends to be really competitive when it comes to affiliates. You are probably never going to make meaningful amounts by targeting this area. That’s because there are so many people who have been at it for so long that it’s nearly impossible to dislodge them from first position on Google.
  • Online review companies such as eKomi and Shopper Approved. I have referred hundreds of people to these companies over the years.
  • Rank tracking companies such as SEMrush and Rankwatch.

Okay, those are just a few of the companies for which I am an affiliate. What happens, then, is that I write blog posts about these companies. I may, as an example, write an article showing the best web hosting companies that can be found out there. Now, when a person lands on the page, if they take a fancy to any of these companies, they may subscribe using my link, and I get a commission. That’s how the affiliate marketing business model operates!

Affiliate Marketing Payment Models

There are two ways through which affiliates get paid when they make sales;

  • Once off payments.
  • Recurring payments.

Once off payments

The affiliate marketing model that I gave above, involving web hosting companies, mainly involves the once off payment model. Today, the average payout when someone makes a referral to a web hosting company stands around $100. This can be surprising to some people, considering that companies such as iPage have web hosting plans that start at $1.99. Thing is, these companies think long term. After one year, the money that they charge for web hosting reverts to normal and they start making profits.

Recurring payments

Affiliate marketing can be a sustainable business
Affiliate marketing can be a sustainable source of income

This is the second mode of payment for affiliate marketing. For most people, recurring incomes forms the core of their affiliate marketing business models. What happens here is that when you refer someone to a company, your get a certain percentage of their subscriptions. However, this is not done once off. In fact, you continue to receive the agreed to percentage for as long as the person that you referred continues to make monthly or annual payments. This model is truly how affiliate marketing can become a source of passive income. I mean, the whole world is on the lookout for sources of passive income right? Who wouldn’t like a life lived on the beach, with the money to rolling in?

Most of the rank tracking companies for which I am an affiliate use this business model. I personally continue to receive money from sales that were made several years ago. And I read of a man who even closed his website, yet he continued to receive hundreds of dollars per month from the referral that he had previously made to a company.

Affiliate Networks

Though it’s possible to look for and find companies for which to become an affiliate on your own, truth is, the task is going to be daunting. That is why there are companies out there that have set up affiliate marketing agencies. The goal for these companies is to bring together affiliates and merchants. Once you have signed up, you can easily carry out a search of the companies in your field of interest that you can market via your blog, on YouTube or via Social Media. Anyway, the most well known affiliate networks are;

  • Commission Junction
  • Clickbank
  • MaxBounty
  • JVZoo

How do they work?

Affiliate networks, as already state, work as a middleman between the affiliate and the merchant. They charge a commission on the commission that you get per sale. I know, it may appear better to go it alone, but affiliate networks make your job as an affiliate easy.

Advantages of the Affiliate Marketing Model

If you have been around for long, you will understand that other ways of monetizing your website include running AdSense Ads and directly selling advertising space on your website. What I have discovered over the years is that the affiliate marketing model is the best way of generating money online. I know, this can be open for debate, but, in my view, there is nothing that beats affiliate marketing when it comes to the creation of passive income. So, what are the advantages of the affiliate marketing model?

  • Affiliate marketing can become a source of passive income, allowing you to live comfortably without having to worry about where your next pay check will come from.
  • There are so many products to be sold that you are bound to find a lucrative niche if you look hard enough.
  • With affiliate marketing, you are at less risk of being banned. The same cannot be said when it comes to other channels such as AdSense. Do something wrong on AdSense, and you will be banned for life; thus losing your source of income.
  • You can work directly with companies, rather than with affiliate networks, thus slightly increasing your revenue.
  • You don’t have to worry about customer service. Should something go wrong, the merchant is responsible for resolving the issue with the customer.
  • The affiliate marketing business model tends to be a bit more lucrative when compared to the AdSense.

Disadvantages

The affiliate marketing model does come with a few disadvantages. One thing is that affiliates can get carried away while competing to make sales. There are some affiliates out there who will promote products and services that they know are downright not good. The competition also tends to be rather fierce, because every blogger and YouTuber is looking to become an affiliate. Affiliates also do not have control over much of what happens. They are at the mercy of both the merchant and the affiliate network.

Affiliate Marketing is a viable business model

I have already mentioned that without affiliate marketing, the internet would be an entirely different thing. Affiliate marketing is what motivates me, along with other content creators, to keep churning out content. There is always the prospect of making a sale on the horizon. So, it is safe to say affiliate marketing remains a viable business model in the year 2020. If you need help getting started, don’t hesitate to get in touch with me!

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