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what-is-affiliate-marketing-and-how-does-it-workWhat is affiliate marketing and how does it work? In a nutshell, you promote a service or product and get a commission from anyone who purchases it, through your unique affiliate link.

Affiliate marketing is a great way to monetize on your own website because it’s a type of passive income where you can make money while you sleep. In the most simplest terms, affiliate marketing is just getting paid to promote a service or product to others.

What People Think

But it’s a lot more then that, and a lot harder to be successful at. What most people think when it comes to affiliate marketing, is to just choose a whole bunch of products to promote, and then throw up a bunch of links on their website. The same thing goes with ads and trying to make money from using Google Adsense. If you take this approach, you’re not going to be so successful at affiliate marketing, unless of course you’re already an established brand or have a high volume of traffic going to your website already. But even then, if you’re not promoting the right products to the right audience, then your efforts can be useless.

I remember when I first tried out affiliate marketing through a dating site I once created. I didn’t really know what I was doing, but I knew I wanted to promote some E-Books about dating and relationships. So, I signed up to their affiliate program and generated some banner ads to put up on my website. I waited a few weeks and made zero dollars. In fact, I barely even got any clicks, and got really frustrated. What was I doing wrong? I had a clean looking website with some great posts, but nobody was clicking on my banner ads. I started to lose hope, and my conclusion was affiliate marketing was fake and I could not make any real money from it.

But I’ve learned a lot since then, and looking back I realized I messed up on a bunch of things.

Why do Affiliate Marketing?

When you have a website that talks about a specific niche or topic, you probably use certain tools and resources to help you in your goals. For example, I teach others how to start a website using WordPress, and one of the first steps is to purchase a good web-hosting service that provides a one-click WordPress install. I promote IX Webhosting, and I’m an affiliate of theirs. I back up their services and what they do, and share this with my readers and listeners. The best part about me promoting them, is that they reward me with a small commission.

If I were not an affiliate of theirs, then I would be losing out on some extra income whenever I promoted their service and somebody listened to me and took action. It’s just a great way to help others by introducing to them your recommend product, and getting a commission from it.

The Dark Side of Affiliate Marketing

Some people try to take advantage of affiliate marketing by doing some sneaky technique or even breaking the law. You want to avoid this route because it’s not only bad for your own reputation but it’s also bad for your audience. I’m talking about promoting shady products just to get a quick buck or hiding the fact that your links are affiliate links. Whenever you promote something as an affiliate, you legally have to state this somewhere, as a disclaimer on your website.

Remember, if you don’t back up a product or service, then trying to promote it to others can come back to you in a bad way. Imagine buying a car from your friend who suggested it to you, but realized it was over-priced and not a good fit for you? And then you realize your friend only suggested it to you because he got a fat commission? Now imagine a stranger doing this to you, would you trust them anymore?

You can promote other people’s products and services legally, and effectively.

Affiliate Process

The actual process of becoming an affiliate of some company and then promoting what they have is pretty simple:

  1. Sign up for their affiliate program. Look for an “affiliate” link somewhere on the companies website (usually at the top or the bottom of the page).
  2. Fill out their forms. They will ask you the basics, as well as your S.S.# and how you want to get paid.
  3. You generate links and banners. You will choose from pre-made graphics and links to use. You have your own unique tracking link (usually places a cookie in users browsers).
  4. You promote a product and get a commission. This is the harder part.

For me, I chose Audible as one of my services I wanted to promote, because I truly believe in audiobooks and have purchased many for myself. I think it’s important to read books and if you’re on-the-go you should still be able to learn through listening. So, I chose Audible and to become an affiliate I not only needed to fill out a bunch of things, but I needed to also explain what my website / podcast was about, and also needed to submit an application to be reviewed by them.

Audible.com goes through Commission Junction (a type of website service that has a network of other affiliate programs) to handle their affiliate program. The advantage of this for me was that I could also promote other things through Commission Junction since they have a whole database of products and services to meet my needs.

Best Way to Start Affiliate Marketing

Before you start promoting other products, ask yourself which products do I believe in and want to share with others? If you have a niche site or idea already, revolve your affiliate products from that, and not the other way around. Don’t choose an affiliate program because the commission is high and then try to make a website around that. Always put your audience first, because at the end of the day, it’s your behind that is on the line when you try to promote that weird product.

How to Be Successful at Affiliate Marketing

One of things that I want to make clear is that you need lots of traffic or most importantly targeted traffic to your website to be successful with affiliate marketing. What I mean is, the more people visiting and seeing your web site with affiliate links, the higher the chance of you getting a commission from someone clicking using one of your affiliate links! But also, it’s not just how much traffic you get, but how much targeted traffic you have. If you have just 100 visitors a day but most of them really like what you do and what you promote, you’ll make more money from that group, than having 100,000 visitors a day who aren’t interested at all.

Share your story or experience about the affiliate product to show your audience you know about this. If they see that you know about what you’re promoting, they’ll be more likely to use your affiliate link and become a customer. This goes back to my first story I mentioned here, and that was that I was trying to promote a product that I’ve never used or would care to buy myself. I just knew others should buy it so I could make some easy money. It didn’t work out as planned.

One great tip I’ve gotten from other online entrepreneurs and web owners who use affiliate marketing as one of their sources of income is to have a “Resources” page on your website and share with everyone your affiliate links. You need to add a disclaimer here stating that you promote these products and services and at no additional cost to them, you get a small commission as a gift for recommending it. You’d be surprised at how many people don’t know what an affiliate link is, but since you’ve gained their trust they are willing to help you out too.

How Do You Get Paid?

Depending on your affiliate program that you’re in, you would get paid differently. Most programs though give you the options of either receiving the money through direct deposit (my choice), through checks that you get in the mail, or through some other means like “credit” to use on their own products. I’m an affiliate of Themeforest.net and whenever somebody purchases something, I get a commission and I can either “cash out” and get the money after a certain amount has accumulated, or I can instantly use my money as credits to buy something on their website.

Some affiliate programs pay you a commission once, and usually that’s when they first sign-up for their service, or when they buy a product. But some other affiliate programs like Aweber pays you not only upon someone signing up, but also monthly through a reoccurring bonus. Sounds awesome, right?

Do keep in mind that most affiliate programs only pay you after you surpass a certain dollar amount threshold.

How Do I Know I’m Getting Paid?

Usually what happens is when somebody clicks on your banner ad or link, a browser cookie is saved on their computer so they know who referred that potential customer. They do this through a unique tracking ID or URL. But I also know that some websites not only save cookies, but they also look at the persons IP Address to identify them. You can look more into this if you want on a per-affiliate program basis, but in general, stick with the auto-generated unique link that they gave you, and use that.

You will know when you get paid by an email, and you can also check your stats by logging into their affiliate program admin section. Here you should be able to see how many people clicked on your links, on what day, and if any actually went through and purchased your promoted product.

Do I Have To  Pay Taxes?

If you make any money online you do need to pay taxes. Whether or not the company or affiliate program that’s paying you has given you a 1099 form, you still need to state how much you earned. No matter how you make money online, you are required to report your earnings to the IRS.

Even if you don’t have an official company, or an actual business license, you as an individual need to report your earnings. This is not at all any legal or professional advice, but this is through my experience and what I know. You need to talk to your tax preparer person if you have any questions.

As far as tax write-offs, since you’re now an online entrepreneur of whatever company or made-up entity you have, you may be eligible to get a tax write-off. Again, you first need to speak to a tax professional to really know what you can and cannot do. My advice though, is to keep track of how much you make through affiliate marketing, as well as how much you’ve spent all together on your online business and website.

Dont’s for Affiliate Marketing

  • Don’t just put up affiliate links because you can. You need to understand why, and how you’re going to do this.
  • Don’t expect any clicks, if you don’t have traffic to begin with! New websites, I’m talking to you!
  • Don’t just use colorful banner ads everywhere and anywhere. Instead, use banners only when necessary, and remember that links are very effective.
  • Don’t promote products or services you would not use yourself. If you can’t back it up, then don’t try to convince others. It’s bad business.
  • Don’t do it for the money, do it to truly help your visitors.
  • Don’t promote products or services that have nothing to do with your niche or website.
  • Don’t hide the fact that you have affiliate links, legally you must have a disclaimer somewhere on your website.

Do’s for Affiliate Marketing

  • Do research first and figure out which products or services you want to promote.
  • Do promote products and services that you use and know a lot about.
  • Do let others know about your affiliate links.
  • Do share with others and offer help when they use your affiliate products.
  • Do provide tutorials or a behind-the-scenes look at the affiliate products you promote.

Resources To Consider

I hope that this info has been helpful to you, even if it just served as a reference to understand what it is in general. There’s many other ways to make money with your website, but affiliate marketing is one way that I favor. It’s a simple concept, but still takes some skill to be successful at.

Here’s just a few links of some affiliate programs that you may want to look at:
https://affiliate-program.amazon.com/
http://www.cj.com/
http://www.clickbank.com/
http://www.google.com/ads/affiliatenetwork/
http://www.affiliate.com/

Many products and services have their own affiliate program, so start there. Ever since I became an affiliate marketer, I’ve noticed that many companies have a program themselves! For instance, Netflix has their won affiliate program, but I would have never guessed!

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