What Is Affiliate Marketing?

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What Is Affiliate Marketing?

Do you ever land on a site and wonder how it’s making money? There’s a high chance the site owner is generating revenue through affiliate marketing.

For bloggers and webmasters, affiliate marketing is a great way to earn income from their already-existing digital assets.

The affiliate marketing industry is currently worth $17 billion. And it is expected to reach 40 billion by 2030. It’s a great way to earn money online without needing to develop products of your own.

With this in mind, it’s no surprise that many marketers operate affiliate websites as a side hustle, using their skills to drive traffic and earn a commission.

But to be successful with affiliate marketing, you need to understand what it is, how to get started, and how to earn money from the channel.

The good news is that anyone with an online presence and the ability to drive traffic can earn income by promoting other people’s products.

What Is Affiliate Marketing?

Affiliate marketing is a performance-based advertising method. Essentially, an affiliate (a business or individual) earns a commission by selling or promoting another business’s products or services on their website.

With affiliate marketing, the affiliate doesn’t hold inventory, fulfill orders, or engage with customer service.

Instead, their job is to point customers toward a business’s products or services with the goal of generating sales, leads, clicks, or some other kinds of action.

Depending on the terms of the affiliate marketing agreement, the affiliate is paid based on the number of agreed-upon conversions they generate.

Affiliate marketing is popular for a variety of reasons. If you’re trying to decide whether affiliate marketing is a good monetization channel for you, consider these benefits.

  • You can earn money with affiliate marketing from anywhere. You could be traveling and working on a beach or even at home in your bedroom. As long as you have an internet connection and computer, you’ll be able to run an affiliate business from anywhere.
  • You can work your own hours. Affiliate marketers aren’t tied to a 9-5 schedule. It’s a great option if you’re looking to earn extra at night or on weekends. And if affiliate marketing becomes full-time income for you, you can have complete flexibility.
  • You can earn a passive income. You have real opportunities to drive sales and earn commission payments, even when you aren’t working.
  • You can make a significant amount of money. If you’ve got access to a consistent stream of potential customers or are ready to build a successful marketing strategy, you can earn a good income with affiliate marketing.
  • You can leave the customer service to someone else. Because you’re only acting as a referrer to other businesses, introducing your audience and encouraging a sale, you won’t have to handle customer complaints.
  • You can get started without many barriers. The startup costs for an affiliate business are typically pretty low. In fact, the investment needed is much more weighted toward time than money.
  • The returns can beat freelance work. If you’re a skilled SEO able to rank a website for competitive terms, the returns from affiliate marketing could either supplement or completely outweigh, in some instances, client work.

Looking at these benefits can help you make a clear decision about whether affiliate marketing is the right monetization channel for you. If you’re a business-savvy entrepreneur, a freelancer, or the owner of a website or two, you may want to give it a shot.

How Does Affiliate Marketing Work?

Affiliate marketing works as a collaboration between a merchant and its affiliates. But to clear up any confusion, let’s break it down.

In the affiliate marketing equation, there are two parties:

  • A merchant: The business that is selling the product or service and who the customer hands the money to
  • An affiliate: The affiliate promotes the business’s products or services to their audience with the goal of driving customers back to the merchant’s products or services. They’re paid a commission upon a successful sale, lead, or another agreed-upon conversion.

Essentially, the merchant sells products or services through the affiliate and pays a commission for those sales.

How Businesses Use Affiliate Marketing

Businesses typically use affiliate marketing as one of many channels in their mix. It allows them to benefit (in terms of sales and leads) from someone else’s (the affiliate’s) marketing strategy and audience.

Most types of businesses are able to take advantage of affiliate marketing. Examples include everything from selling physical products via an ecommerce store to financial services selling insurance, credit cards, or mortgages.

You’ll also find SaaS providers selling their tools and other businesses selling ebooks or virtual training courses.

When a merchant collaborates with an affiliate, they typically supply tracking links. When a visitor to an affiliate’s site clicks on the tracking link, the merchant is able to track the outcome and calculate the commission.

In many instances, merchants will work with an affiliate network to manage their affiliate scheme on their behalf. This can help remove some of the administrative overhead. However, larger brands sometimes manage affiliate marketing internally.

We’ll look at this in more detail below. But for any merchants considering this channel for the first time, it’s important to know that much of the process can usually be handled by an in-house specialist. They can manage the program on your behalf, including onboarding affiliates and paying out the commission owed.

And finally, merchants pay affiliates on a commission basis on a pre-arranged percentage of each sale. In some instances and sectors, this may also (or instead of) be offered on a per-lead basis, where a payment is made every time a lead is generated, regardless of whether it converts. This model is riskier to the merchant, so the payout will likely be lower.

If you’re a merchant looking to set up an affiliate scheme, check out this guide on how to find affiliates with Semrush.

How Affiliates Promote Products and Services

The more sales an affiliate makes, the more money for both parties. So typically, the affiliate is free to strategize as they see fit. In most cases, it’s up to an affiliate to leverage their own network to promote products and services in whatever way works for them.

Many marketers and entrepreneurs begin by scoping out a niche and developing a full marketing strategy. In this way, becoming an affiliate is like starting a business from scratch.

On the other hand, sometimes bloggers and influencers already have a strong following and can use affiliate marketing as a way to monetize a channel or audience that they’ve already built up.

The process in both of these instances is fairly similar.

Once you’ve signed up for an affiliate scheme (or, ideally, a number of these), affiliates can use a number of marketing tactics to drive traffic to a merchant (either directly or via their own site or platform) and, hopefully, drive a sale or inquiry.

Popular marketing channels with affiliates include:

  • SEO
  • PPC (But be careful to read the terms of affiliate agreements to see whether bidding on a merchant’s “brand” terms is allowed)
  • Social media (especially popular with influencers)
  • Content marketing
  • Courses and training videos

Often, savvy affiliates will layer various marketing channels to increase their outcomes and boost their earnings. Either way, the goal is to focus on bringing high-quality traffic to their websites that has the best possible chances of converting.

How Are Affiliates Paid?

Affiliates are paid depending on the terms agreed upon in their contract. Often, it depends on the kind of product or service being promoted and their value. Either way, here are some common commission structures.

  • Pay Per Sale (Fixed Fee): A fixed fee commission is paid to the affiliate every time a sale is made, regardless of the order value. This is how the Semrush Affiliate Program works.
  • Pay Per Lead or Inquiry: A commission is paid out every time a qualified lead or inquiry is made through the affiliate site.
  • Pay Per Click: A (small) commission is paid out every time a user clicks on a link on an affiliate’s site, regardless of whether it results in a lead, inquiry, or sale.

The agreed-upon payment structure usually depends on the individual merchants and the niche in which they operate. In some cases, affiliates will be given a choice of different payment structures to choose from and be incentivized accordingly.

Before we look at some trends in affiliate marketing and dive into how to get started as an affiliate, let’s take a look at some popular websites that you may already use but might not realize they’re affiliate sites. We’ll take a look at how they’re monetizing themselves, too.

RetailMeNot

Website with affiliate links example

There’s a good chance you’ve used RetailMeNot in the past to hunt for discount codes to save money when you shop online.

Were you aware it’s an affiliate site?

When you use a voucher or a deal listed on the site, they’re paid an affiliate fee. And using the Domain Overview tool, we can see they’re receiving somewhere in the region of 23.7 million organic hits each month.

Affiliate Domain organic traffic

NerdWallet

Example of affiliate marketing website

NerdWallet is perhaps one of the best examples of an affiliate site. The team behind the website offers a solid user experience and a great content strategy that helps users find the right financial products and make the right decisions.

The site is monetized by comparing brokers, credit cards, and other financial products and sending traffic to each of these through affiliate links.

Website monetized with affiliate links

And we can see that they receive over 14 million organic hits every month.

Affiliate marketing traffic stats

The Points Guy

Affiliate marketing website

If you’re a frequent traveler, there’s a good chance that you’ve come across The Points Guy. This site is an awesome content-heavy platform that helps you collect and use points and miles, as well as find the perfect vacation experience.

It offers another great example of an affiliate setup by recommending cards, such as Amex, to visitors and encouraging sign-ups.

Affiliate marketing strategy example

Looking at the site’s organic visibility, we can see they receive an estimated 3.3 million hits from search engines each month. While this is less traffic than other affiliate marketing websites, it still is an impressive number that’s targeted toward a key group of users.

Affiliate marketing website traffic

Now that we’ve looked at some popular affiliate sites, let’s look at some emerging trends these and other sites are using to boost their impacts.

As the internet evolves, affiliate marketing continues to change, too. In 2023, we’re witnessing several exciting trends that are reshaping the affiliate marketing landscape.

These trends reflect the evolving preferences of both consumers and marketers, and they present new opportunities for affiliates to thrive in this dynamic field.

Increase in Visual Content

Visual content has been a powerful tool in the affiliate marketer’s toolkit for some time, but its significance is growing even further in 2023.

Consumers are increasingly drawn to visual content. As a result, affiliates are incorporating more visually appealing elements into their marketing strategies, including:

  • Product demonstrations through video reviews
  • Eye-catching graphics for social media
  • Compelling email templates

More and more, affiliates are finding creative ways to leverage visual content to engage their audiences. This trend emphasizes the importance of not just what you say but also how you present it.

Increase in Mobile Commerce

Mobile commerce is on the rise, and it’s impacting affiliate marketing. With the widening use of smartphones and tablets for online shopping, affiliates are optimizing their strategies for mobile users.

Emerging strategies include creating mobile-responsive websites, tailoring content for mobile consumption, and incorporating mobile-friendly affiliate links and ads.

Affiliates who adapt to the mobile commerce trend can tap into a vast and growing audience of mobile shoppers, enhancing their potential for conversions and commissions.

Increased Focus on Storytelling

Affiliate marketers are using storytelling as a powerful way to connect their audiences with new products. Telling compelling stories around a product makes it more desirable, and it can help your marketing feel less “salesy” or hollow.

By sharing personal experiences, testimonials, and relatable stories, affiliates can establish deeper emotional connections with their audience. This storytelling approach not only builds trust but also makes the affiliate’s content more engaging and memorable.

Increased Emphasis on Personalization

Personalization is becoming a necessity in affiliate marketing. In 2023, affiliates are leveraging data-driven insights to personalize their marketing efforts. This includes tailoring product recommendations, content, and promotional offers to match the individual preferences and behaviors of their target audience.

Affiliate marketers are increasingly using tools like CRM systems, email marketing automation, and advanced analytics to deliver personalized experiences that resonate with their audience. This level of personalization enhances the relevance and effectiveness of affiliate campaigns.

Increased Use of AI

Artificial intelligence (AI) is impacting every industry, and affiliate marketing is no exception. AI-powered tools are helping affiliates make data-driven decisions, automate routine tasks, and optimize their campaigns for better results.

Affiliates are using AI for tasks like:

  • Audience segmentation
  • Content optimization
  • Predictive analytics
  • Chatbot-driven customer interactions

This trend allows affiliates to work smarter and more efficiently, freeing up time for strategic planning and creative content creation.

How to Get Started with Affiliate Marketing

All right, now that we’ve talked about what affiliate marketing is and how to do it, you’re probably ready to get started. With your own affiliate marketing strategy, you can monetize your existing assets or launch an affiliate site of your own from scratch.

Let’s look at how you can get started on your path to becoming a successful affiliate.

  • Step 1: Choose a Niche
  • Step 2: Find Affiliate Networks or Schemes to Use
  • Step 3: Choosing Products to Promote
  • Step 4: Plan a Strategy to Promote These Products

Step 1: Choose a Niche

The first thing you’ll need to do is choose a niche.

If you already have an audience that you want to monetize, you probably know your niche and have a good start on your affiliate marketing program. But if you’re starting out fresh, you’ll need to identify a niche that can be profitable.

We’re often drawn to high-competition niches, simply because of the opportunities. However, you’re often better going after something a little less crowded and a little more specific.

As Vahe Arabian recommends in this post on identifying profitable niches:

The value of finding a profitable niche is that niche audiences are loyal. They stick with you for the long-term rather than dashing off to see what’s shiny and new on the next site.

— Vahe Arabian

But how do you actually find a niche that has an audience you could tap into?

Keyword research, that’s how.

Using the Semrush Keyword Overview tool, look for potential keywords that drive traffic. Keywords that have around 2,000 searches per month is a good baseline, and should be the minimum level you consider.

Keyword research affiliate marketing

For further recommended reading on how to find a profitable niche, check out this post by Authority Hackers.

Step 2: Find Affiliate Networks or Schemes to Use

Once you’ve identified your niche, you need to find one or more affiliate networks or schemes.

Networks are usually a middle ground between affiliates and merchants, and a number of these exist.

Start by scoping out merchants you want to promote and look for how to sign up for their schemes. For example, let’s say you operate a successful travel blog and want to heavily promote car rental offerings as an affiliate. You know that Avis is one of the top rental companies.

Let’s find their scheme.

A quick search returns its affiliate program page on their site.

Affiliate marketing program page example

This clicks through to here when you enroll.

We can see they’re using the Partnerize network. Often, you’ll find links to a merchant’s affiliate program in their footer, but if not, a quick Google search for “[merchant] + affiliate program” usually returns what you’re looking for.

Scoping out merchants can be a great starting point, but once you’re signed up to a network, you’ll also be able to sign up to their other merchants, where relevant, to promote their offerings and earn from them.

Popular affiliate networks include:

But you don’t always need to work with a merchant through an affiliate network. In fact, blogging expert Harsh Agrawal told us:

You can negotiate with any brand to work directly with you when you have a large number of sales, bypassing the affiliate network completely. You get a better percentage of the sales and can often request additional perks such as a branded landing page or branded coupon.

And Craig Campbell went on to claim:

You can make significantly more revenue when you can go directly to a brand rather than running through Amazon or another affiliate network.

It’s all about building a partnership, something that Geno Prussakov talks about in more detail here.

Step 3: Choosing Products to Promote

Once you’re on board with one or more affiliate programs, choose what products to promote. These should align with your content strategy.

You’ve already used keyword research to scope out a potential niche to launch an affiliate site. But a good strategy that aligns with the products your chosen merchants want to promote is key. Pay attention to how competitive it is to rank for certain keywords, and gauge your potential to drive traffic from other sources alongside search volumes and the affiliate payout.

Sometimes you’ll see bigger wins by narrowing down on niche topics and earning a large percentage of a small pool, rather than struggling to rank and gain visibility in higher-volume markets. It’s also worth chatting with the merchants or network to help you figure out what you should be promoting and when.

Step 4: Plan a Strategy to Promote These Products

Once you’ve figured out what you’ll be promoting, you need to start driving traffic to the merchants.

As mentioned, affiliates use a lot of different channels to drive traffic to their merchant partners. The strategy that you take depends on your goals and vision.

Do you want to launch one (or more) niche-specific affiliate sites that essentially act as a funnel for merchants that you claim a commission on? Or do you want to build a brand? Think about your goal and design your strategy:

  • SEO is a no-brainer for most affiliates, as it drives traffic on an ongoing basis for free.
  • PPC can work for some niches, but others don’t respond as well. Do some research to make sure that click cost isn’t demolishing your commissions.
  • Social media usually sits strongly alongside an SEO strategy and is a good way to attract new potential customers.
  • Email can drive repeat sales from previous users if you can build a process for generating sign-ups.

Introducing the Semrush Affiliate Program

You’ll find that a large number of businesses have affiliate programs. After all, it’s a great way to drive sales from new audiences who were perhaps not familiar with your product or service previously.

And here at Semrush, we’ve got our own Affiliate Program.

Affiliate marketing Semrush

Even if you don’t have a large number of marketers and business owners visiting your site, we can help you begin your affiliate marketing journey. Take a look at how it’s set up, the commission levels we offer, and how it works for existing affiliates.

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