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How Affiliate Networks Work?

Waking up at the crack of dawn. Logging on and doing tedious work for 8-9 hours, reading email after email until the sweet release at five o’clock pm. 

Does it sound horribly monotonous?

What if, instead of going through the stupor and monotony of the daily grind to earn a salary that gets you through the month, you could make more money anytime, anywhere — even while you’re asleep?

That’s the beauty and power of affiliate networks.

What is an affiliate network?

An affiliate network is a popular marketing tactic to drive sales and generate significant revenue online. It is extremely beneficial to both businesses and affiliate marketers. According to an industry review on affiliate marketing, affiliate networks are in a period of growth — with 7 in 10 advertisers stating that they intend to increase their affiliate marketing spend in the next few years.

In an affiliate network, an affiliate earns a commission for marketing another company’s or person’s products. Whenever an affiliate promotes a product, they earn a piece of the profit from each sale they make. The leads and sales are then tracked via affiliate links that lead the prospect from one website to another.

How an affiliate network works:

Now that you know what an affiliate network is, how exactly does an affiliate network work? As affiliate networks work by spreading the duties of product marketing and creation across parties, it leverages the abilities of different individuals while providing contributors with their share of the profit. To make this strategy work, three parties are involved:

  1. Seller or product creators
  2. The advertiser or affiliate
  3. The customer 

Let’s take a deeper look at the complex relationship between these three parties to understand how affiliate networks work.

  1. Seller or product creators

The seller, be it a large enterprise or a solo entrepreneur, is a merchant, a product creator, a vendor or a retailer with a product to market. The product can be anything tangible, like electronics and household goods, or a service, like makeup application or yoga classes.

Also known as the brand, the seller or product creator doesn’t need to be actively involved in the affiliate network, but they can also be an advertiser and profit from the overall revenue share.

For example, the seller could be a digital marketing company that recently started offering Shopify development services. As the service is fairly new, they want to reach new customers by paying affiliate websites to showcase or market their latest offerings.

  1. The affiliate or advertiser

Also known as the publisher, the affiliate can either be a company or an individual who markets the seller’s products and services in an appealing way to prospects. In other words, the affiliate promotes the products by persuading potential customers that the products are valuable. If the prospect ends up purchasing the product, the affiliate receives a portion of the profit made.

Affiliates often have a target audience, whom they market, and generally, adhere to the interests of that audience. This creates a personal brand or a defined niche that helps affiliates attract prospects that will most likely complete a conversion action. For instance, the famous Kardashian family made millions through affiliate marketing.  They’ve advertised numerous brands on their Twitter and Instagram profiles.

  1. The consumer

In order to fully understand how affiliate network works, we should never forget to discuss the consumer. Why? Because whether the consumer knows it or not, they’re the main drivers of the affiliate network. Affiliates share the products with them on websites, social media, and blogs.

When consumers end up buying the products, the seller and the advertiser or affiliate share the profits. Sometimes, the affiliates are upfront with their audience, disclosing to consumers that they receive commissions for the sales they make. But more often than not, the consumers are completely oblivious to the affiliate network infrastructure behind their purchase.

Either way, they rarely pay more for the products they purchase through affiliate marketing, as the overall retail price already includes the affiliate’s share of the profit. The consumer will complete the buying process and receive the product as normal, totally unaffected by the affiliate network structure in which they play a significant role.

What are the qualities of a good affiliate network program?

Now that you know how affiliate networks work, are you interested in joining an affiliate marketing program?

When you’re just starting out with affiliate marketing, it’s best to always conduct research so you find the best affiliate network programs that will earn you high commission rates. Here are the qualities of a good affiliate marketing program:

Easy to use

Comfort and ease of use are essential when you’re searching for open source affiliate marketing software. Sign up for a program that provides you easy access to earn money online. 

Available products in the market

Affiliating with a business that already has products in the market is better than partnering with brands who have limited inventory. This way, you can promote as many products or services as you can and earn a lot from them.

Popularity and Loyal Following

Always choose an affiliate marketing program that’s timely and relevant. Bigger networks tend to attract more buyers and vendors, providing you with more chances of becoming a successful affiliate.

Do affiliate networks really work?

Now that you know what is an affiliate network and the methodology behind it, does it actually work?

To answer that question, yes it does. Affiliate marketing is a flexible and logical sales model that builds multiple income streams for both the seller and the affiliate. However, it’s not entirely an easy, get-rich-quick scheme. 

Earning a steady income stream through affiliate marketing requires:

  • Extensive research into the products, follower interests, and web traffic patterns
  • Constant engagement with the products, services and brand networks that they choose to endorse on their platforms
  • Hours of maintaining an authentic relationship with their followers or readers who purchase the products through their affiliate links
  • Basic or even in-depth knowledge and understanding of social media marketing and search engine optimization to consistently attract new followers and generate additional income

Additionally, while affiliate marketing is a great way to earn passive income, it won’t entirely work for every business. Making an income via an affiliate network also requires commitment and dedication over a long period of time.

Pros and Cons of Affiliate Networks

It’s not enough to just know what is an affiliate network is and how an affiliate network works. Like any form of business model or self-employment, affiliate marketing has its pros and cons. Understanding these will help you decide whether partaking in an affiliate network is a good fit for your business and financial goals.

Pros of Affiliate Marketing

Affiliate marketing is ideal for information entrepreneurs, bloggers and social media influencers. Affiliate marketing is a good home business model for them due to these many aspects:

 

  • Low overhead costs

 

Most affiliate programs don’t require membership fees, so costs are typically related to marketing and referral methods.

 

  • No physical products

 

Affiliates have no need to create products or services because they will already be marketing ones that already exist. They also don’t have to stock or ship the products.

 

  • Flexibility

 

As long as affiliates have internet access, they can work anytime and from anywhere.

  • Supplemental income

Depending on how you market your affiliate programs, there is definitely potential for passive income.

Cons of Affiliate Marketing

Like any business model, affiliate networks have their own challenges and drawbacks too. These include:

  • Time: It takes experimentation and commitment to generate the amount of traffic that will result in income.
  • Lost payments: Affiliate hijacking may occur, wherein affiliates are not given proper credit or payment for their referrals.
  • Lack of control: Brands have no control over the business fulfillment of a given product or service. A bad referral can ruin an affiliate’s credibility with their followers, and vice versa. It’s crucial for both brands and affiliates to research and select quality partners.
  • Competition: Affiliate marketing is extremely competitive. Many affiliates compete for the same customers and traffic while also promoting the same products or services. It can also be difficult to become an affiliate for popular products or companies, especially the ones that sell fast.

How Successful Affiliate Networks Work

It can be hard to stand out among other marketers and earn a reliable stream of income from affiliate marketing. Once you’ve built up a blog, website, or social media page, there are actionable steps you can take to generate a reliable revenue stream. Here’s how successful networks work:

  1. Know your partners. Conduct thorough research about their products and understand their terms and conditions.
  2. Build trust. Buy the products you plan on promoting so you can personally attest to the quality. As you’ll be judged by the products you’ll market, you want your recommendations to be credible. The more trustworthy you are, the more they’ll likely buy through your affiliate links.
  3. Have a brand. Choose products that match the content and niche of your blog or social media page. This starts by understanding who your target audience is, where you’ll find them, and how you can entice them to buy from you.
  4. Track your traffic and earnings. If you work with several brands or affiliate programs, monitor their performance. Know which ones are the most successful and which products resonate the best with your audience so you can plan future campaigns.

Success in affiliate marketing ultimately depends on the time and effort you’ll put in to build a good relationship with your partner brands and customers. If you decide to become an affiliate marketer, understand that it won’t make you rich instantly. However, once you know how affiliate networks work and the ways to make your campaigns successful, you’ll earn a steady income as an affiliate marketer.

Author: Usman Raza is the co-founder of a Christian Guest Posting Service and marketing strategist working with various brands online. Usman is the content marketing manager at SeedX Inc in Los Angeles, PSD to WordPress, and Nano Hearing Aids. He is devoted to helping small businesses bridge success gaps by providing in-depth, actionable advice on digital marketing, search engine optimization , and small business growth. Follow him on Twitter @usmanintrotech.

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