What Is an Affiliate Program & How Does It Work?

Affiliate marketers earn commissions by referring customers through ads, blog posts, and tutorials. What is an affiliate program? It’s what merchants set up to track orders and leads to pay out affiliate commissions. It’s easy to get started with affiliate marketing for beginners because it’s free to participate; only merchants pay to run a program.

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How Affiliate Programs Work

An affiliate marketing program can take place with an affiliate marketing network or through an in-house program. Examples of affiliate marketing networks are Amazon Associates and ClickBank.

Whether using an in-house or affiliate network, merchants provide unique links to affiliate marketers to promote the merchant’s products or services. If someone takes an action using that link, such as a purchase or clicking the link, the affiliate earns a percentage of the sale or a fixed dollar amount for the click. This incentivizes the affiliate marketer to promote a product or service, and in turn, the merchant gets more sales or leads. Merchants also like this because it provides exposure to new audiences.

Who Affiliate Marketing Is Right For

An affiliate marketing program is right for people desiring passive income, bloggers, coaches, and consultants. The reason for this is because these people tend to have the passion and commitment required to make money as an affiliate marketer. Most affiliate marketing programs take time to build and are rarely an overnight success.

Affiliate marketing is right for people who:

• Instagram influencers: While some earn a full-time income with affiliate marketing, many make a small passive income.
• Bloggers: Writing about your favorite products and services in a blog post is an easy way to incorporate affiliate links.
• Coaches and consultants: Experts work with many different tools and services they can recommend to their clients, and can use affiliate links in their recommendations.

When asking what is an affiliate marketing program, you’ll need more than the definition and who it’s right for. You’ll need to learn about the tools for promoting the program, implementation, and any costs associated with it. With the right resources, skills, and determination, you may find success as an affiliate marketer.

Affiliate Marketing Costs

No affiliate marketing program we’ve come across requires you to pay anything to become an affiliate. However, it’s possible you may incur an inactivity fee if your account goes dormant. You may have costs associated with marketing the affiliate program you’re supporting. These marketing costs include web hosting, maintenance, and paid promotions.

Here are the various costs that may come with affiliate marketing for beginners:

• Web hosting: Many affiliates choose to have a website to talk about all of their various recommendations and will post their affiliate link within articles or side bar ads. You will need a reliable website host for this. Dreamhost is our pick for just $31.08 per year. They offer a free domain name, pre-installation of WordPress, and a free SSL certificate.
• Maintenance: If you’re using WordPress.org, you will likely use plugins and themes that allow for further customization of your site. Some plugins and themes are free, while others can be over $200.
• Paid promotions: To further scale affiliate marketing efforts, an affiliate might run ads. These ads vary in costs, but the average cost-per-click on a Facebook ad is $1.86, and the average small business spends $1,000 to $2,000 per month on Facebook ads. It’s important to note that there’s no minimum ad spend, so your budget is up to you.

While you can spend as much as you want to promote an affiliate marketing program, it’s important to plan for profit. After you figure out your fixed expenses, you can determine how much to spend on running ads, if you choose to do so.

Affiliate Marketing Program Providers

There are many different affiliate marketing program providers. Some merchants belong to affiliate marketing networks, which contain thousands of merchants and products to promote. You’ll apply to each one of these programs after getting approval to be part of the network. Other merchants have their own affiliate marketing program not attached to a network.

These are some of the top affiliate marketing program providers:

1. ClickBank

ClickBank is one of the oldest affiliate marketing companies retailing digital products such as e-books, courses, and membership sites. It offers high commission rates, fast payments, and low commission thresholds. This is perfect for merchants and affiliates desiring recurring revenue since ClickBank makes it easy to get order upsells. It also is an attractive option for affiliate marketing for beginners because of the possibility of getting paid very quickly.

ClickBank makes it easy to see how many visits you’ve had to a particular link, orders, and upsells.

2. Amazon Associates

Amazon Associates is the affiliate program for Amazon and is one of the most widely recognized affiliate marketing programs in the world. With the enormous amount of traffic each month, affiliate marketers usually have this program in their arsenal. Affiliates earn commissions when a customer purchases through an affiliate link and any time a user signs up for a free Prime trial.

Amazon Associates is right for marketers who want to dabble in affiliate marketing as a hobby. The reason for this is because while it is an incredibly popular program, it also has some of the lowest commission rates—as low as 1% depending on the category of the item purchased. Some commission rates are higher, such as for their Bounty program, when a customer signs up for a free trial of Amazon Prime, or when they create a gift registry.

Amazon Associates pay commission on shipped items, and affiliates can view orders referred in real-time.

3. ShareASale

ShareASale is an affiliate program with some very recognizable brand names on their list of merchants—companies like 123 Print, Thinkific, and Dollar Tree. Marketers who are new will like this program because of the brand recognition, but it may be better suited for those who already know how to market products and services. The reason for this is because it has a limited training process.

ShareaSale has thousands of merchants to choose from.

4. In-house Affiliate Programs

Not every brand or company chooses to go through an affiliate network. Some prefer to keep their affiliate programs in-house. These companies use programs like Tipalti, Cake, Post Affiliate Pro, and Omnistar Affiliate Software to track orders and facilitate payments to their affiliates.

An affiliate will need to apply for the company’s affiliate program right on the company’s website rather than through an affiliate network. This also means that an affiliate marketer has to apply for each company’s affiliate program separately rather than just clicking a button to join. In-house affiliate programs are great for affiliate marketers who are set on working with a particular company versus having access to a network of merchants.

ClickFunnels uses Tipalti to pay their affiliates when they sell any of the programs under the ClickFunnels brand.

Types of Affiliate Marketing Programs

An affiliate marketing program can operate in several different ways. Some of the most common ways that bloggers, influencers, and affiliate marketers get paid is on a pay-per-click, pay-per-sale, and cost-per-action basis. They typically promote these through review sites, email marketing, blog posts, and social media posts.

Pay-per-Click (PPC)

Pay-per-click (PPC) is a type of campaign that pays a certain dollar amount each time someone clicks on a link. This differs from other campaigns because it doesn’t require the link clicker to actually make a purchase in order for the affiliate to get paid. Typically, PPC campaigns happen through search engine advertising. However, there are PPC campaigns on any platform, whether it’s in a blog post or a social media post.

Pay-per-Sale (PPS)

Pay-per-sale (PPS) is the most common affiliate marketing campaign because a merchant only pays the affiliate once a sale happens through the referral link. Digital products tend to pay much higher than a physical product and are usually 50% to 80% of the sale. Physical products typically pay 10% to 30% of the sale to affiliates.

Cost-per-Action (CPA)

Cost-per-action (CPA) campaigns focus on the outcome of a click, such as the merchant getting a sale or a lead. It’s similar to PPS, but specifically allows for leads to pay as well. This is sometimes known as cost-per-acquisition or pay-per-action. CPA campaigns do well when a company has a great sales page or sales team that actually converts the leads they collect.

What to Know About Affiliate Marketing for Beginners

If you’re just getting started, it could be tempting to sign up for many different affiliate marketing programs. However, it’s best to start with an affiliate marketing program whose products you use every day. You’re likely already sharing how much you like this product to your friends and followers, so it won’t take much more effort to include an affiliate link.

After you’ve had success promoting products and services you use now, it makes sense to extend your offerings into other products. You want to choose products that have excellent reviews and craftsmanship. Creating a weekly list of your top recommendations works well for many affiliate marketing beginners.

Pros & Cons of Affiliate Marketing

Figuring out what an affiliate program is is one of your first steps to getting started in affiliate marketing. While there are a lot of merchants, there are also a lot of affiliates promoting their products and services. You’ll need to remain competitive and keep your expenses in check to be profitable.

Pros of Affiliate Marketing

Here are the benefits of affiliate marketing:

• Passive income: Affiliate marketers can earn $2,000 to $3,000 per month promoting an affiliate program.
• Increased exposure: If you win an affiliate competition, people will look to you for advice. Similarly, if you have a niche site to promote products like car seats, you are likely going to be the person that anyone thinks of when a friend is in the market for a new car seat. You automatically become the go-to expert.
• Cost-effective business: Affiliate marketers don’t have to front money to create prototypes and test their own products and services. Instead, they promote someone else’s business and get a cut of those sales for the referral.

Cons of Affiliate Marketing

Here are the cons of affiliate marketing:

• Little guarantee: You aren’t guaranteed to earn anything even if you heavily promote a merchant. A lot of programs only pay per sale.
• Control: You have no control over the pricing or the product. This means that if the quality of the product or customer service changes, your referrals may not be happy with you for recommending them.
• Competition: There is typically a lot of competition in the affiliate space, particularly for any affiliate marketing program with a high commission rate.

Alternatives to Affiliate Marketing

Affiliate marketing isn’t right for everyone because of the time it takes to learn the process and promote an affiliate marketing program effectively. Instead, people and businesses can create sponsored blog posts, sell products and services of their own, and ghostwrite articles for others.

Here are some alternatives to affiliate marketing:

Sponsored Blog Posts

A sponsored blog post is when a brand, or company, pays a blogger or writer to talk about their product. These posts don’t always have to be reviews. Writers mention products in articles, a giveaway, or even as part of a gift guide. If you’re a blogger, you might consider pitching brands and companies you use every day to get started. A brand should pay attention to any influencers who regularly promote their products in a natural way—these make the best collaborations.

It seems that companies care more about engagement than vanity metrics like the number of page views or followers. The reason for this is because an engaged audience is a buying audience. Bloggers shouldn’t worry about being too small to pitch, and similarly, brands shouldn’t worry about hiring bloggers with an engaged audience.

An example of a sponsored blog post on The Budget Mom.

Sell Products & Services of Your Own

Selling your own products and services involves figuring out what your niche is, sourcing a product, and then marketing it. It can take considerable time to turn a profit on a product, so many choose to go with a digital one like an e-book. You can also have online courses and membership sites. Both options require you to create content that explains how to do something, such as how to make money traveling or how to prepare for taking your real estate exam.

There are a few differences between a course and a membership site—a course is typically more expensive and has content that’s only created once, and a membership site is usually around $30 per month and gets new content regularly. If you want something you only need to update periodically, go with the course. Otherwise, if you enjoy teaching new things every month, a membership site is a great option.

An example of a successful membership site is the Female Entrepreneur Associations’ The Member’s Club.

Ghostwrite Articles

A ghostwriter is someone who writes an article for someone with the intention that the work gets credited to another author. This is a very common practice with books and blog posts. The reason for this is because many people like the idea of writing a book, but rarely have the time to do so.

There are entire Facebook groups full of ghostwriters selling their content to bloggers because the bloggers know they need quality content but don’t always have the time to create their own. Typically, the ghostwriter can command a higher rate for an article than if the work gives the ghostwriter credit.

Frequently Asked Questions (FAQs) About Affiliate Programs

This section includes the most frequently asked questions about what is an affiliate program. If you don’t see your question, head over to our forum and post your question there. We have a whole team of industry experts who answer questions from small businesses every day.

How much money can I make as an affiliate?

Your income will depend on many factors, such as your social media influence and number of followers. However, many affiliate marketers make a full-time living with their efforts. More successful affiliate marketers earn over $100,000 a year.

Can I make money as an affiliate without a blog?

Affiliates can make money in many different ways. While there are some programs with restrictions as to where you can use affiliate links, most allow you to use them in places like emails, in ads, and on social media.

As a merchant, where are the best places to find affiliates?

Your best affiliates are those who already know and like your product. You can find these people naturally promoting your products on social media. Another place to find affiliates is through their blogs. Usually bloggers have a contact form or email for these types of inquiries.

Bottom Line: What Is an Affiliate Program?

Before reading this article, you probably knew that people made money online, but weren’t familiar with how they do it promoting someone else’s products and services. Your next step is to take action. Whether you’re looking to make passive income as an affiliate or as a merchant, getting started is simple.

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