What is Affiliate Marketing and How Does it Work in 2022?

You recommended a product to someone, and you got some commission in return.

Sound interesting?

Welcome to affiliate marketing.

The goal of working hard all day long is to earn enough money and live a good life, but what if you can earn money while you sleep?

Yes, it’s true.

In fact, statistics show that by 2022, the affiliate marketing industry is expected to become worth $12 billion.

This figure has more than tripled its value in 2015.

According to Statista, affiliate marketing expenditures are expected to increase from $7.4 billion in 2021 to $8.2 billion in 2022 in the United States alone.

affiliate marketing industry statistics

These statistics are enough to tell that the affiliate marketing industry is enormous, but the question is – Is this industry suitable for you? And should you step into this industry?

In this blog, I will walk you through the proper definition of Affiliate Marketing and whether it is worth doing in 2022 or not?

In this blog you will learn:

Let’s dive right in.

What is Affiliate Marketing?

If you resolve someone’s problem by recommending a product or service and earning money aka commission in return, it is called affiliate marketing.

These commissions are paid to us by the entity that has made that product or provides service.

Let me explain it with a simple example.

Do you watch movies? Probably yes; who wouldn’t.

So when you watch a movie and tell a friend or relative about that movie, and you say it is a great movie, you should watch it too.

This process is similar to affiliate marketing if you are making money by recommending that movie.

But how can the money be made by recommending films?

What you have to do is, join some movie affiliate programs and recommend movies to your friends, relatives or your audience.

When you share your affiliate links and if they make a purchase, you get a commission in return.

Simple as that.

Now how does this affiliate marketing model work?

Before getting into it, let us understand a little about the history of affiliate marketing; how did it originate?

Affiliate Marketing Origin

According to Wikipedia, the founder of PC Flowers & Gifts, William J. Tobin, launched the concept of Affiliate Marketing in 1989 as Prodigy Networks.

The commercial version of the PC Flowers & Gifts website was launched in 1995 and connected 2600 affiliate marketing partners.

However, people did not take this concept seriously until Amazon launched its affiliate marketing program in 1996.

Since Amazon was not the first affiliate program, it was the program that spread this concept worldwide, and people started learning about affiliate marketing.

Now let’s go a little further and know how this concept works?

How Does Affiliate Marketing Work?

Basically, the affiliate marketing model is divided into three parts:

  • Advertiser – Also called merchant, creator, seller or vendor. These are people or companies who have created a product or service.
  • Publisher: You can also call them an affiliate marketer; they share these products with their audience and suggest they use that product.
  • Consumer: And finally, the consumer who buys your recommended products according to their needs.

Let us go into this a little deeper.

how does affiliate marketing work

Advertiser

An advertiser is someone who owns a product or service.

If we talk about the product, it can be of any type:

  • Softwares
  • Ebooks
  • Courses
  • Books
  • Apps
  • Physical products, etc.

Let’s talk about how advertisers bring these products to affiliates?

An advertiser’s goal is to reach more people with its product to get maximum sales.

The easiest way is that they resort to affiliate marketing.

They do not have to spend any money on the marketing of the products; instead, other affiliates promote their products.

Now here, advertisers have two options.

First, they should list their product on an affiliate marketplace where other advertisers also list their products like ClickBank, CJ Affiliate, and even Amazon Associate.

Advertisers do not have to spend their brains managing the affiliates that promote their products in this option.

These affiliate marketplaces tend to all the affiliates and provide them with unique affiliate links to promote the products.

Advertisers’ job is only to list their products on these marketplaces; all the rest of the work is done by these networks.

For example, ClickBank’s affiliate marketplace has about 4000 products listed by advertisers here.

ClickBank does all the work, from generating affiliate links for these products to sending their commission to affiliates.

Advertisers have another option to have their own affiliate marketplace.

There are many brands that build their own affiliate program and list their products instead of listing on these affiliate marketplaces.

This method is a bit costly and complicated, due to which only a few advertisers go for this option.

To run their affiliate program, advertisers need a complete team who handles it in the backend.

Apart from this, advertisers have to work hard on their own to get their products to affiliates.

Tasks like attracting affiliates, providing them with a separate affiliate dashboard, and paying a commission on sales have to be done by the advertisers themselves.

For example:

GeneratePress is one of the fastest WordPress themes out there, which is very popular among bloggers.

Tom Usborne is behind this theme, who has created this product and invite affiliates to promote it as part of his affiliate program.

For this, he has a complete team that handles all these tasks.

There are some individuals or entities that run their affiliate programs.

Similarly, if we consider services, then there can be the following examples:

  • SEO consulting
  • Content writing
  • Web designing
  • Graphics designing
  • Video editing etc.

Like products, advertisers also try to make their services reach as many people as possible.

Just as a product owner looks for users who need that product, service providers find clients who need their service.

For this, they resort to some platform.

Some marketplaces for services are quite popular such as Fiverr, UpWork, and PeoplePerHour.

However, some advertisers promote their services by creating their websites or using social media platforms.

These service providers take the help of platforms like WordPress to create their own website and try to make their service reach as many people as possible.

Publisher

The second part of the affiliate marketing model is the Publisher, also known as an affiliate marketer.

Their work starts after the advertisers create the product, which mainly ends in three steps:

Step #1 – Generating affiliate links for products
Step #2 – Promoting affiliate links through a blog or social media
Step #3 – Receive commission when users buy products by clicking on their links

Let’s now understand these steps one by one.

Step #1

The first step of any affiliate marketer is to generate affiliate links for the products, and for this, he has first to join the program on which the products are listed.

These programs can also be any affiliate marketplaces like ClickBank and also individual affiliate programs of a product.

A dashboard is provided to the affiliate marketer to generate their unique affiliate links on joining these programs.

Step #2

After generating affiliate links, the publisher promotes those links on their blog or social media platforms like Facebook, Instagram, etc.

The publisher gives complete information about that product on these platforms, such as:

  • What are the products?
  • How does it work?
  • And who should use?

With all this information, the publisher puts in an affiliate link, and when someone is interested in the product, they click on the link and buy it.

Then comes the third step.

Step #3

On purchasing the user’s product, the publisher has to be paid some percentage commission by the advertiser.

There are different methods for paying publishers through each affiliate program.

Most programs pay commission to the Publisher using the following methods:

  • Direct deposit
  • Check
  • Wire transfer
  • Paypal
  • Payoneer etc.

When the publisher’s commission crosses a certain threshold (e.g., $50), the affiliate network transfers the commission through its chosen payment method.

I have explained all these steps in my guide on how to get started with affiliate marketing; check it out.

Consumer

The third and most important part of the affiliate marketing business is the consumer, which everyone needs, whether it is an advertiser or a publisher.

Whenever someone wants to buy a product, they often search about it on Google or YouTube to get information.

There are high chances that along with the information about the product on these search engines, it also has affiliate links, through which the searcher goes to the landing page of the product and buys it.

Let us understand this with an example.

Suppose someone wants a laptop worth less than $500, then he searches about it on Google or YouTube.

Many results are shown when searching “best laptop under $500” on Google.

All these blogs are affiliate blogs.

When you visit any of these blogs and click on the link of any product, they redirect you to an affiliate program from where you can buy them.

And in this way, the products are sold.

In addition, the publisher also gets a percentage of the commission on the sale of these products.

In a nutshell, the affiliate marketing model starts with the advertiser and ends with the consumer.

Affiliate marketing is a long-standing business model seen as one of the best passive income sources.

But in today’s time, there are also some types of affiliate marketing that people use to earn money.

Type of Affiliate Marketing

Pat Flynn, the founder of Smart Passive Income, divided affiliate marketing into three parts in 2009 to make it even easier to understand, the first of which is:

Unattached Affiliate Marketing

The easiest way to do affiliate marketing is to promote affiliate links through direct advertisements.

Unattached affiliate marketing is the name of this.

In this type of affiliate marketing, you generate affiliate links and promote them by running pay-per-click campaigns.

This method is simple because you neither need to be an expert in any particular niche nor come in front of people.

Here, you play the role of a behind-the-scenes middle man who promotes the products through an advertisement to the user.

You’re putting an affiliate link in front of someone via Google Adwords, Facebook ads, etc., in hopes that they will click on your link, buy the product, and you’ll make a commission.

This method is costly in which you have to invest money in your advertising campaign every day.

But despite this, this method is quite attractive due to several reasons:

  • In this, you do not need to be an expert in any particular niche
  • You don’t have to promote the product by coming in front of people
  • No need to create content related to products
  • Products get sold very quickly (provided you have run the campaign properly)

However, I would never recommend this method as it is not a business model but just an income-generating model.

You can earn money in this way only as long as you keep running ads.

Which means you will always have to spend money to earn money.

This method is suitable for those who see affiliate marketing as a side income rather than a sustainable business.

If you want to do affiliate marketing to earn extra income, then “Unattached Affiliate Marketing” can prove to be a helpful way for you.

To do this, you have to take the affiliate link of any product to the people through an advertising campaign.

However, nowadays, most affiliate programs do not allow direct affiliate links in these PPC ads.

Therefore, before using this type, read the guidelines of affiliate programs.

Related Affiliate Marketing

This second form of affiliate marketing is called “Related Affiliate Marketing.”

In this type of affiliate marketing, you have an online presence, and you promote products that you are not well familiar with.

An online presence can be in any form:

  • Blogs
  • Podcast
  • Videos
  • Social media etc.

This type of affiliate marketing is used the most in this industry.

Most of the blogs you would read about the products are blogs that do not know that product.

They collect information related to the product by searching online and publishing it in an article.

It has many advantages and also many disadvantages.

You can create more content in less time because you do not need to use any product.

You just gathered information about the product from somewhere and published the blog.

But apart from this, you cannot build a relationship with your audience because your audience is hesitant to trust you.

And the result of this is that despite having more content on your site, your sales remain very low.

That’s why more than 90% of affiliate marketers fail in this business.

Involved Affiliate Marketing

The third and most crucial way of affiliate marketing is “Involved Affiliate Marketing.”

In this, you only promote those products you have used or are doing.

It is my favorite way to grow this business.

In this, you are an expert in any one niche, whose most prominent advantage is that you can build an excellent relationship with your audience.

Because of this, whenever you promote a product, the audience trusts you, and your sales increase manifold.

When you promote only those products you have used, it is straightforward for you to give accurate and detailed information about that product, and Google likes this.

Here you have less content, but your sales are very high, due to which you can create a sustainable business.

All the prominent affiliate marketers worldwide do this kind of affiliate marketing.

For example, I have been doing affiliate marketing for several years.

Of the tools I have used so far, I recommend only those tools because I have a lot of knowledge.

This type of affiliate marketing is for those who want to build a real business by promoting others’ products.

Well, a simple yet most prominent hack to succeed in affiliate marketing is to – promote only those products you used.

Affiliate Marketing Program Examples

To understand affiliate marketing more deeply, I would like to tell you about some affiliate marketing examples so that you will be able to understand this business model even better.

See, although today, there are thousands of affiliate marketing programs. Still, to give a clear definition of affiliate marketing, I will give you examples of only a few programs.

Amazon Affiliate Associate

amazon affiliate program

As I told you about the origin of affiliate marketing, this concept got its strength from amazon affiliate, then, first of all, we will talk about this program.

Amazon is the largest e-commerce platform in the world as well as a favorite of affiliate marketers.

You will get to see millions of products on this platform.

Amazon allows us to promote these products and earn money.

You can easily register yourself by visiting amazon’s affiliate associate, after which you will get to access your amazon affiliate dashboard.

From this dashboard, you can generate your unique affiliate link and share it with your audience, and whenever they buy a product from Amazon through your link, you will get some percentage of commission in return.

Click here to learn how to become an Amazon Affiliate.

Clickbank

clickbank affiliate program

Just as you read about the amazon affiliate program, ClickBank is also a famous and widely used program around the globe.

The only difference is that you get physical products in more quantity on amazon, whereas ClickBank provides you digital products such as softwares, eBooks, courses and much more.

Clickbank’s affiliate dashboard is very simple and easy to use, where you can create your unique affiliate link and promote the product of your choice.

We will discuss all these affiliate programs in detail in another blog post.

Click here to read ClickBank review.

Affiliate Marketing Benefits and Limitations

Now that you have come to know the right affiliate marketing definition, now we know some of its advantages and disadvantages.

Benefits of Affiliate Marketing

Passive income

The biggest advantage of affiliate marketing is that it gives you a source for your passive income. If any product is promoted only once, it will continue to earn for a long time.

And this is the reason why nowadays, people are giving so much importance to affiliate marketing.

Less hard work

You do not need to work for hours every day to do affiliate marketing. Even if you work only 2 hours a day, you can earn good money.

But this does not mean that you do not have to work hard at all; if you want to earn huge amounts of money, you have to work hard.

Be your own boss

In affiliate marketing, you do not need to work in any direction. You can work whenever you want, work from wherever you want.

Like corporate Jobs, you do not need to wake up every morning and go to the office, but you can easily do it from your home. Even if you do it in pajamas, it does not matter.

No limited income

You get a fixed salary at the end of the month in spite of working every day in jobs, which is often not enough for most people, but in affiliate marketing, you have no limit to earning.

You can earn as much as you want through affiliate marketing.

Income in affiliate marketing depends on your hard work; the more you work, the better will be the return.

And I have also seen many such affiliate marketers who earn more than $10000 every single day.

Yes, every single day, not months or years.

Low risk

The risk in affiliate marketing is equal to zero because neither you have to create any product nor do you have to pay money to join any affiliate marketing program.

Therefore, there is very little risk in earning money from affiliate marketing.

Now that you have learned so many good things about affiliate marketing before you get too excited to do it, there are some limitations as well; know them too.

Affiliate Marketing Limitations

Have to be patient

Affiliate marketing is not a get-rich-quick scheme that will make you a millionaire overnight.

It is a business in which not only will you have to work hard to grow, but you will also have to invest your time.

To turn affiliate marketing into a sustainable business, you have to build your audience, which is possible only if you are patient.

Since people cannot be patient, that is why 95 percent of affiliate marketers fail in this business.

No control over affiliate programs

You are your own boss, but you have no control over any affiliate program.

Every affiliate program has some rules and regulations that every affiliate marketer must follow.

Some affiliate programs like amazon have many limitations, due to which affiliate marketers find it very difficult to promote the product.

Some Real-Life Examples To Boost Your Confidence

Now is the time to know about some big fishes who have touched new heights in this business.

These people earn more than six figures every month by promoting others products.

Pat Flynn

We just talked about the types of affiliate marketing in this article.

Pat Flynn invented them.

He helps beginners to build an online business through his blog Smart Passive Income.

Pat Flynn stopped publishing income reports on his blog after December 2017.

In December 2017, he published an income report of about $125,819.91, where he told about all the products from which he earns.

Adam Enfroy

In 2019, Adam Enfroy launched his blog AdamEnfroy.com and started earning more than $250,000 in just two years.

Adam Enfroy has previously handled affiliate programs of many big brands, due to which he has an excellent knowledge of this field, which he got the benefit of in this blog.

Looking at the income of these people, it proves that affiliate marketing is not a scam.

It is a legitimate business from which everyone can make money.

The only need is to choose a niche and products that perfect for you and your audience.

In this guide, I have told powerful ways to choose a profitable niche for affiliate marketing, which will prove to be very helpful in building the foundation of this business.

Final Words on What is Affiliate Marketing

So this was some such information that will help you understand the correct affiliate marketing meaning.

If you are a beginner and want to make affiliate marketing your career, you must do good research about it first.

I have tried to explain it to you in the best way possible in this blog.

In this blog, you learned:

  • What is Affiliate Marketing?
  • Affiliate marketing origin
  • How does affiliate marketing work?
  • Types of Affiliate Marketing
  • Affiliate marketing program examples
  • Affiliate marketing pros and cons
  • Some real-life examples of affiliate marketing

I hope you liked this blog of mine where we talked in-depth about what is affiliate marketing?

If you still have any questions about affiliate marketing, you can ask in the comments below.

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