On the Internet, there are many different ways to make money. However, when you boil it down to the basics, there are only 2 ways.
- Create a product and sell it.
- Help someone else sell their product.
That’s it. Money is made when a product is sold to a customer. So you either sell the product directly, or you help someone else sell their product. Everything else you find is a derivative of either of these 2 profit producers.
Now, a “product” may be a physical thing, a digital download, a service, or an experience. It could also be an idea, viewpoint, or feeling. Anything a person may be interested in paying money to obtain, or to promote to others. A community-service message to stop whale hunting is an example of a “product” that is more an idea than a thing. And while there isn’t much money to be made in promoting this “product”, there is money to be made in helping folks promote it. Advertising is used for more than just commercial ventures.
Okay, so now we have the foundation set, let’s see how we can make money by helping someone else sell their product as an affiliate.
What Is An Affiliate?
The term, “affiliate”, may be interpreted to mean several things. At it’s most basic level, the word ‘affiliate’ simply means someone who has a business relationship with another. For the purpose of this chapter, we’ll use the word ‘affiliate’ to mean someone who earns money by promoting one or more products they did not help to create.
This definition of ‘affiliate’ leads to the following 4 types of affiliates:
- Retail stores selling products created by others
- Commissioned sales reps
- Advertising brokers
- Media ad sources
In the above list, the first is the least common definition of an affiliate, although it is a very common business model. There are many online businesses that set up a storefront to sell products created by others, yet these businesses are not normally thought of as affiliates. Amazon.com is one example of this model. We will not address this type of affiliate here, however, since it is far more complicated than our other choices.
We also won’t discuss the last type of affiliate — media ad sources. This is because, in actual fact, media sources which sell advertising are selling their own product — the advertising itself. This business model is also complicated and beyond the scope of this book.
Most affiliates become so by signing up for one or more “affiliate programs” offered by various merchants. These merchants may offer to pay their affiliates a set amount for every visitor sent to the merchant’s website (Pay per click), a set amount for every person who fills out a form on the merchant’s site (Pay per lead), a set amount for every sale placed by those the affiliate refers (Pay per sale), or a percentage of the sales placed (also Pay per sale). There are other compensation plans too, but these are the primary ones.
Why Are Affiliates Paid?
To truly understand affiliate marketing, perhaps it’s best if we start by answering the question, “Why would a merchant pay an affiliate to promote their product(s)? Why not sell their own products and keep all the money?”
A merchant may not be very good at promoting their own products, and need the services provided by affiliates. There are many such merchants doing business online, and would not succeed if it weren’t for talented affiliates helping them describe their products in such a way that people see the value of owning them.
Alternatively, a merchant may be excellent at promoting their own products, yet still invite affiliates to join them in their promotional efforts. The reason for this is simply because there are SO MANY possible promotional opportunities, the merchant cannot pursue all of them, and relies upon affiliates to reach a larger audience than they can do on their own.
In either case, affiliates serve as an extension of the merchant’s marketing department. In the first case, affiliates may be the merchant’s ONLY source of marketing, whereas in the second case, affiliates merely augment the merchant’s marketing activities. When you view your role as an affiliate in this light, it becomes much easier to understand the types of activities necessary to be successful when promoting other people’s products.
In short, it’s advantageous to think of yourself as the merchant’s marketing department, or at least an extension to it. However, there is another way to think of your role as an affiliate, and that is to think of yourself as a source of advertising for the merchant. In this case, you may serve not only merchants, but other affiliates as well.
Most merchants spend money to place ads in various media, such as newspapers, radio, TV, search engines, website directories, blogs, forums, and so forth. If you become a media source, and attract a large audience, then you can sell advertising to help merchants and other affiliates sell products. The thing to realize about becoming a media source, is that this is a business unto itself, and requires much more than simply promoting products. While it is possible to make money as an affiliate by becoming a media source and attracting a large audience, you really have to want to be a media-based business to be successful with this model. Otherwise, if your heart just isn’t in it, it’s too much work.
Before leaving the topic of media, let me say that American business has relied upon media advertising for many decades. Newspapers, radio, and TV would not be the large industries they are if it were not for the effectiveness of ads placed in media. However, studies have shown that this form of advertising has lost much of it’s effectiveness in recent years, as the volume of advertising increases every year. Most people have learned to “tune it out” and do not respond as they once did. This isn’t to say that traditional advertising doesn’t work — it just needs to be better and repeated more often to get the previous level of response.
How Affiliates Earn Money
Each type of affiliate operates using a different strategy. Retail stores operate with the strategy of making the purchase process enjoyable for customers. Large selection, quick delivery, generous refund policies, regular specials, and an easy-to-use website are the foundations for this type of affiliate. Media sources focus on posting quality content, easily found, on a frequent basis to attract large audiences, to whom are shown ads in and around the content.
Commissioned sales reps generally focus on collecting leads and following up with those leads to complete a typical sales process. These affiliates may use quality content to attract leads initially, but do not focus on this once they begin the sales process. Commissioned sales reps may also represent a variety of merchants, and thus a variety of products, but do not show the prospect anything other than what the prospect may be interested in at the time. We’ll cover this in a bit more detail later.
The advertising broker type of affiliate is perhaps the least involved with the sales process, and merely places ads in media sources on behalf of the merchant(s) they represent. This type of affiliate may use advertising “creatives” (ad copy, graphics, banners, viral ebooks, etc.) provided by the merchant, or they may create their own (or hire others to create) before placing the ads. In most cases, this type of affiliate pays for the advertising out of their own pocket as an investment leading to the payoff, which is the commission earned on sales generated from the advertising they place.
Making Money As A Commissioned Sales Rep
One of the best guides for making money as a commissioned sales rep is Rosalind Gardner’s “Super Affiliate Handbook.” Her guidebook explains everything from setting up websites to review and promote affiliate products, to the backend stuff like keeping accurate records and choosing profitable programs to join. What I can offer here is a mere shadow in comparison.
The primary focus of a commissioned sales rep is in attracting people who may be interested in the products he/she represents, and then giving them enough information to make a purchase decision. Whereas some people see the role of a salesperson to be a manipulator attempting to get people to buy stuff they don’t need, successful salespeople do not see themselves this way. They see themselves as consultants who help people make choices leading to happy endings. If a product is not right for a prospect, a successful sales person will say so and lead them in a different direction, even if that means losing the sale. The reason for this is because it builds their reputation, and when folks talk, their reputation will attract more and more people who can be served with the products the rep handles.
Online, this often takes the form of writing product reviews and posting them to a resource site. Rosalind Gardner started in the area of online dating, and created several websites devoted to helping people compare the various online dating sites to help them decide which one was best suited to them. Quality reviews point out the negative aspects of a product as well as the positive one. Customers appreciate this, and will trust the advice given in a review more when negative aspects are brought out in the open. At the end of each review, a summary should be given, as well as a personal ranking of the individual product as it compares to others in the marketplace. And finally, a link to the merchant’s website, which includes your affiliate code so the merchant can track your referral and award you a commission if it results in a sale. The benefit to having a resource site is that you can offer your prospects a complete picture of the products you represent, and a sale can happen quickly.
Sometimes, a commissioned sales rep will create a mini-site offering a free guide to the topic they represent, such as online dating, personal development, spirituality, or romance novels. This mini-site offers a free guide in exchange for the visitor subscribing to the affiliate’s mailing list. Once a person is subscribed, an autoresponder will send them a series of emails providing information on each of the various products the affiliate represents, giving similar information as the reviews mentioned above. The benefit to this approach is that you can stay in touch with your prospects and send them new information any time you add a product to your database.
A third option is to create viral ebooks which carry a marketing message to sell one or more products. The advantage of this approach is that an ebook can go places a website cannot. We’ll talk more about viral ebooks in a later chapter.
While there are other structures in which a commissioned sales rep may operate, these are the 3 preferred formats. They take little work to set up and yet are quite effective.
Making Money As An Advertising Broker
There are advantages and disadvantages of working as an advertising broker. One of the advantages is that you don’t have to create a website. No domains to register. No scripts to install, configure, and update frequently. And no mailing list to maintain. In short, you don’t have to do much except place ads for other people. But that’s the disadvantage. Generally, you have to spend money to make money. And if you quit working, your income stops too. This is a good situation for the right type of person, but it’s not for everyone.
If you work with a merchant who is good at creating marketing materials, you can simply use what they offer and your job is easy. However, if you’re working with a merchant who isn’t as good creating marketing materials (and you should get a higher commission to do so), then you have to either create the materials yourself or hire talented people to do it for you. Either way, you have to start off with quality marketing materials, otherwise any ad costs will be wasted.
Sometimes, a good advertising broker will arrange for the ad results to be tracked and analyzed. This will shed light on which ads are working and which ones are not, helping to increase profitability for all concerned. Without tracking, you never really know how effective any given ad may be. To be fair, tracking is something that all affiliates (and merchants) should do, and isn’t just for advertising brokers. However, it may be more critical for an advertising broker than it is for any other type of affiliate.
People who are good with numbers usually make the best advertising brokers. Sometimes, you may want to negotiate price breaks for volume ad purchases, so a bit of selling skill certainly doesn’t hurt. In some respects, being an advertising broker is like being a banker. You spend some money on one side (much like a banker pays interest on savings accounts, CDs, and other investments) and earn money on the other side (for the banker, it’s interest paid on loans). The best advertising brokers keep meticulous records of how much every ad cost and how much profit it produced.
Because advertising brokers have little involvement in the fields they represent, they have an easier time representing many different merchants in a variety of fields. As such, a slowdown in one industry has little effect on the advertising broker’s income, as they can easily take on new clients in booming markets.
Choosing Your Pathway
None of these affiliate types are ‘better’ than the others, except how they fit with your own personal personality. When deciding which type of affiliate you want to become, consider the structure and format for that type and imagine how you will feel doing that kind of work. You’ll always be more successful doing the type of work you enjoy doing than working at a job you dislike.