What is Affiliate Marketing & How Does It Work?

When it comes to making money online, affiliate marketing is a skill-based approach, that could be learned by anyone. It is one of those segments of online world, that doesn’t require any degree or formal education.

Want to understand what is Affiliate marketing?

Keep reading to learn everything about this popular passive income method.

My Journey with affiliate marketing started in 2008 when I accidentally read about it on a discussion forum. I was surprised to know how something so simple and powerful is not taught in college or very few talks about it.

With this guide, my aim is to help you understand affiliate marketing, so you can apply this technique in any field you are in to make money.

Before, you embark on the journey of understanding affiliate marketing, let me show you the possibilities of affiliate marketing.

Here is a screenshot of one of the affiliate program that I promote:

The above one took about 2 years to accomplish.

And here is another one:

This one was outcome of 2 and half years.

However, the real question is:

How did I achieve this kind of result, and can you do it too?

Well, the key here is your zeal to learn, and how badly you want to live a free life.

I have accomplished all this working only 6-8 hours a day on things that I like. Not even a single day of my online career, has felt like pressure or something I didnot wanted to do.

The only thing that create a differentiator is, I didnot cheat my way up. Those 6-8 hours of work was complete dedication, and based on my 10 years of experience, I could definitely say:

Anyone with decent IQ could start making $3000-4000 within 6-8 months by regular practicing every day for 2 hours.

How to do this?

Well, We will dwell into details, and more technicalities of affiliate marketing as we move ahead in this free course, but for now, lets learn the basics.

Before that…

If this is your first time here at ShoutMeLoud, you should know that…

In the last 11 years, ShoutMeLoud has inspired millions of lives around the globe to help them earn passive income via blogging and affiliate marketing. 

It would not have been possible if I took the risk of living my day job to pursue my passion. When I think about this, I find it amazing as for how my life unfolded when I took the courage of starting something of my own. I feel this is something you, and others individual should try once to go beyond our limitations.

The only ceveat is, this is not something you will read in academics books or a point of disucssion with friends over drinks. This is one of those skills that you learn yourself by reading a guide like this, or watching YouTube videos like this.

With this Affiliate marketing guide, I want to provide you all the details about:

• Basics of Affiliate marketing
• How Affiliate marketing works
• How to get started with Affiliate marketing
• Affiliate marketing Terminologies

This is your go-to guide and you should bookmark this one along with all linked articles to master the art of affiliate marketing. 

If you are someone who likes to read everything in the book format, you can purchase our affiliate marketing handbook from our store as well.

Alright, let’s get started.

What is affiliate marketing and how does it work?

Affiliate marketing is one of the oldest forms of digital marketing wherein you refer someone to any online product and when that person buys the product based on your recommendation, you receive a commission.

Every big companies like Amazon, Apple, Google have affiliate program, which is free to join by any individul across the globe. If you didnot knew about this, then pay close attention to rest of this guide, my friend, you are about to discover one of the most interesting aspect of making money from home.

This commission varies from $1 to $10,000 depending on what product you are promoting.

Here is how affiliate marketing works in 4 simple steps:

1. You join an affiliate program (Here is a list to get started)
2. You pick a product to promote (You will get a unique affiliate link)
3. You share the link via Social media, Blog, YouTube videos, Facebook ads or any other form
4. When someone makes a purchase, you earn a handsome affiliate commission.

The below infographic will help you understand the lifecycle of affiliate marketing:

So, in simple words:

Any companies that sell products online, offers an affiliate program, which is free to join. It is as simple as creating an online profile.

You can simply sign up for the program and get your unique tracking link. Now, whenever you are writing about their product, you can simply use this special tracking affiliate link to recommend the company’s site.  If your readers/traffic buys anything by clicking your affiliate link, you will get a commission.

Is it as easy as it sounds?

Yes, and no!

Yes, because of 2 reasons:

1. Joining an affiliate program
2. Getting paid

Is super easy. Thanks to advancement in digital marketing, and services like PayPal and Payoneer, this all is automated.

The tough part is, how badly you want this.

To become successful in affiliate marketing, you need to train regularly (Daily). Think of this as learning to play cricket, and the only way you get better by showing up every day on the ground.

And then there is another part, as we gain more responsibilities in life like (job, kids, parents, spouce, weekend parties), we find it hard to dedicate time for acquiring learning new skills.

This is where the question comes:

How badly you want this?

How badly you need this?

If your want or need falls in “unsure” segment, take a 360 view of life, and ask what is that you have to lose and what are the possible gains.

If dedicating 1-2 hours a day for few months could give you financial freedom for life, it doesnot sound like a bad deal.

Moreover, it is proven method that works!

Moving on…

Also, see:

How to Start Affiliate marketing for beginners:

You can get started with Affiliate marketing in many ways.

Here are a few that you can pick from:

• Start a blog in a targeted niche and use it to promote a product. This is by far the chepest and easiest way to start an affiliate marketing business. For example: Start a blog about Women shoes, Work from home products, and so on.
• Buy traffic from PPC sites like Google, Facebook, Quora and drive traffic to affiliate products or services. This is called PPC marketing, and those who have taken a basic course of digital marketing, could understand it better. For rest, give it a little time and you will understand this.
• Create a YouTube channel and promote products.
• Create an email list by creating a mini-website. An example if Finshots
• Start a Podcast and recommend products.

Here are steps to get started with affiliate marketing via your blog:

This is just a rough highlight, as we move ahead in this free course, you will understand everything in greater depth and length to create your own affiliate marketing system.

1. Start a blog
2. Select a profitable industry and then pick a niche for your blog
3. Choose the affiliate products that you can promote
4. Create content around those products
5. Drive traffic to your website/affiliate post
6. Use email-marketing services to capture email of visitors
7. Create email-sequence to automate the funnel (We will discuss this in details soon)
8. Focus on driving more traffic and repeating the process.

The reason blogging is one of the most effective ways to get started with affiliate marketing is because it requires minimum investment and you can learn everything around it in no time. From here on, what really matters it how much dedication, time and smart work you put in to grow your affiliate business.

Affiliate marketing terminologies:

Here are some of the common terms associated with affiliate marketing:

• Affiliates: Publishers like you and me who are using affiliate program links to promote and make sales.
• Affiliate marketplace: There are many marketplaces like Shareasale, CJ, and Clickbank. These work as central databases for affiliate programs in different niches.
• Affiliate software: Software used by companies to create an affiliate program for their product.
• Affiliate link: Special tracking link offered by your affiliate program to track the progress of your affiliate promotion.
• Affiliate ID: Similar to the affiliate link, but many affiliate programs offer a unique ID which you can add to any page of the product site.
• Payment mode: Different affiliate programs offer different methods of payment.
  • Example: Cheque, wire transfer, PayPal, and others.
• Affiliate Manager/OPM: Many companies have dedicated affiliate managers to help publishers earn more by giving them optimization tips.
• Commission percentage/amount: The amount or percentage you will be receiving in affiliate income from every sale.
• 2-tier affiliate marketing: This is a great way of making money from an affiliate program. With this method, you recommend that others join affiliate programs, and you receive a commission when a sub-affiliate makes a sale (similar to MLM or multi-level marketing). This income is also known as a sub-affiliate commission.
• Landing pages: A unique product sales or demo page used for the purpose of increasing sales. Most of the programs that you will be promoting have many landing pages, and you can run A/B testing to see which pages convert best for you.
• Custom affiliate income/account: Unlike a generic affiliate account, many companies offer custom affiliate income to people making the most affiliate sales for them.
• Link clocking: Most of the affiliate tracking links are ugly. Using a link clocking technique like URL shorteners, Thirsty Affiliates, etc., you can turn ugly links into links that can be read and understood by your readers.
• Custom coupons: Many programs allow affiliates to create custom coupons which are also used to track sales. Custom discount coupons help you to increase affiliate sales as well.

For companies offering an affiliate program, this is one of the best ways to receive free promotion, thus saving substantially on advertising.

For example, whenever you see coupons or discount links, most of the time these are affiliate links, and when you make a purchase, webmasters make money.

Every affiliate program has a set TOS.

For example, payout condition, cookie policy and so on.

Let me explain cookie policy as it’s intermediate level topic but will give you an idea about the possibilities of affiliate marketing.

Many of the affiliate product offer 30-150 days cookie period, which means that if a visitor clicks your affiliate link to land on an affiliate product, now even if they don’t buy anything immediately, but re-visit the site in next 30-150 days, you will earn an affiliate commission.

How to find new Affiliate Program to join?

Finding a new affiliate program is challanging, and if you do it right, you will increase your chances of earning huge.

Here are a few ways to find new affiliate programs:

• Affiliate Network and marketing platform: There are affiliate networks and marketplaces that would help you find new affiliate programs.
• Affiliatizer: This is a chrome addon that would help you find the new affiliate program.
• Competitor analysis: Analyze the top websites in the niche you are targeting, and make a list of affiliate products they promote. This will help you find high value and profitable affiliate products.

I have also published a long list of affiliate programs that is worth looking at:

Moving on…

Affiliate Marketing: FAQ

At this point, you should have a basic understanding of what affiliate marketing is and how it works.

Now, let me answer some of the common questions asked by webmasters and marketers about affiliate marketing: