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Affiliate Marketing: The Basics Simply Explained

Creation: 28. February 2023
Updated: 20. March 2024

What is Affiliate Marketing?

Have you ever bought a product and been so excited about it that you had to tell your friends about it right away? Did you even recommend them to buy the same product?

Now you recommend the product to your friends and receive a few euros commission from the store. This is basically affiliate marketing explained on a small scale.

As an affiliate marketer, you do just that. You promote the product on your website, Youtube channel or social media. Visitors follow your recommendation and then click on the affiliate link. If the visitor now buys the product, the referred sale will be assigned to your account and you will receive a commission for it.

How does affiliate marketing work?

In order for the merchant (online store) to associate your account with the sale, they must provide you with a unique link. This link usually has a "ref=" or a "tag=" in the URL. How to recognize an affiliate link.

Here is an example of an Amazon affiliate link:

Here is an example of our own affiliate program:

Now when someone clicks on this link, you will be redirected to this website normally. However, the online store now knows that you have sent this visitor.

In most cases, a cookie is also set by the online store. This is a small file which is stored in the browser. With this affiliate cookie you can achieve the following:

  • When the visitor navigates through the online store, the referral link is not lost.
  • If the visitor orders later, the purchase is still assigned.

There are also ways that the online store can assign the purchase without a cookie. A unique key is generated by the store on the server, which can clearly assign the visitor.

Here is a concrete example.

They discovered fishing as a hobby years ago. So now create a comprehensive guide on fishing equipment. Among them are countless comparisons and tests of fishing routes.

Now a visitor has landed on your website who is looking for cheap but good fishing routes for his son to get started. He finds what he is looking for on your website and clicks on the appropriate product.

The visitor has now landed on the Amazon page and immediately adds the fishing route to his shopping cart. Unfortunately, he can't finish his shopping now because the doorbell has rung and he has to get to the door.

After that he is still on the road and only comes back in the evening to take care of the fishing route. But now it occurred to him that he also needs a jacket. That's why he puts them in the shopping cart right away.

You may remember that the visitor came to the Amazon website through your affiliate link. This now comes into play as the visitor completes the order within 24 hours.

The good thing is, you will now be paid for the fishing route and the jacket. The jacket as an additional product is called bycatch.

How much money can you make as an affiliate?

There is no concrete answer to this here. Basically, there are no upper limits. The larger your target audience is, the more you can earn but the more effort you have to put in.

Now, we could refer at this point to Pat Flynn of Passive Income, who earns six figures a month, but those are extraordinary results.

The amount of revenue depends on these factors:

  • Range
    The more visitors you have, the more sales you can arrange.
  • Partner programs used
    There are affiliate programs which pay higher commissions, with longer cookie runtime or also per click. You have to deal with it intensively here.
  • Visitor confidence
    If you already enjoy the trust of the visitor, it is even more likely that the visitor will click on the link and it comes to a mediated sale.
  • Conversion optimization
    You should make sure that the products are presented in an appealing way. If you put only uncharitable links in the text, visitors will be less likely to click on the links.

If you are just starting out with affiliate marketing, you will need some patience.

The most profitable niches are:

  • Finance and Business
  • Games or e-sports
  • Health, beauty and personal development
  • Animals

But that doesn't mean you can't make a good income in other niches! These niches are also highly competitive and it takes years to get good positions in the search results.

What is the prerequisite for affiliate marketing?

The great advantage of an online business is that you can start with relatively few resources. You don't have to buy any machines and you don't have to take any financial risk.

If you want to start with the classic affiliate websites, one website is enough. Here the costs are manageable. You can also start with TikTok or Youtube and thus do not need your own website. However, most affiliate programs require a website.

What is an advertiser?

An advertiser is an advertiser that offers its products or services via advertising media within the framework of affiliate marketing.

The advertiser is also referred to as the program operator or merchant in various affiliate networks. Simply put, it is the online store which enters into a partnership with you.

What is a publisher?

The publisher is you. Other common terms would also be affiliate or partner. You promote the advertiser's products on your website or in your other channels.

How is one usually compensated as an affiliate?

You will only be compensated if you refer something. You will not receive any commission for the embedding itself. A distinction is also made between the following variants of remuneration.

Pay per click

You will receive a commission per click on your link. These are mostly amounts from 0.02 to 0.60 cents per click. The network independently evaluates whether the clicks are fake and deducts them from the invoice. The advantage with this method is that you don't have to hope for a sale, on the other hand they don't get the full commission either. The networks, Geizhals and Yadore are all integrated on a CPC basis.

If you are promoting large and expensive goods, this method can be beneficial. Your bottom line is more than you get from a brokered sale.

Pay per Sale

This is the classic affiliate marketing. You will receive a percentage of the purchase value per referred sale. The percentages may vary depending on the category and the cookie's duration is also limited.

If you mediate products worth 20 to 40 euros, this can give a very good result with enough rich values.

Pay per lead

There are advertisers who collect leads (contacts). This is usually a download advertise or a book against shipping costs. With this type of compensation, you receive a commission per contact made by the prospect. This can be between 1 and 5 euros. Some also pay more for good leads. Some affiliate programs also combine this with pay per sale. This means that if the lead then becomes a customer, you will receive commission again.

Pay per Assist

Unlike "Pay per Sale" where the last cookie always wins, this variant takes a different approach. This technique is to recognize the "value contributor" affiliate. That is, you want to strengthen editorial content.

In classic tracking, the voucher portal would get the sale because it is the last to set the cookie before the sale. With Pay per Assist, however, the advice article would get the sale. Since this article has provided the content for the sale.

This new variant is known to us so far only at AWIN.

What is the Lifetime model?

Just like "Pay per Sale", this is a commission per sale. Unlike the one-time sale, here all sales are assigned to the affiliate for life. This is usually the case with online services or subscriptions. You refer the customer and receive a commission for it every month.

What is an Inhouse Affiliate Program?

With an in-house affiliate program, the store does not rely on an affiliate network like AWIN, Belboon or others. The advertiser relies on its own solution. Good examples of this are Amazon, eBay or Mediamarkt. In these cases, you have to apply directly to the affiliate programs and then they can embed the links or products.

Article written by Christof
Developer with passion. PHP, HTML, CSS have accompanied me since I was 14 years old. .NET applications and services have been part of my profile for a long time. Rounded off by good knowledge of marketing, image editing and video editing.

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