Last updated on February 1st, 2020 at 02:43 pm
The phrase “Make Money Online” sparks different emotions in different people. Some call it a scam, some dream of achieving it, and some are making a fortune at it.
Making a full-time income online is neither a scam nor a dream. Anyone with the right guidance and mindset can achieve it. Just keep it in mind that this is not a get-rich-quick industry, and you should be willing to put in the needed hard work.
Affiliate marketing, blogging, YouTubing, dropshipping, etc. are a few legit business models to make money online. This article is aimed at giving you an overview of the most beginner-friendly model- Affiliate Marketing. Here you are:
- What is Affiliate Marketing?
- How Affiliate Marketing Works?
- How Affiliate Marketers Get Traffic?
- CPC and EPC, The God Metrics To Run Successful Affiliate Marketing Campaigns
- The Glossary of Affiliate Marketing
What is Affiliate Marketing?
Affiliate marketing is promoting the products of other brands and making a commission off every sale.
Once a sale happens, it is the merchant’s responsibility to process the payment, ship the product, handle the returns, and provide customer support.
It is a fairly hands-off business model to make decent money online. No doubt, the commission is much lower compared to the actual profit, but so are the responsibilities.
Thus, affiliate marketing is a win-win deal for both marketers and merchants. Thanks to its performance-based pay structure, a marketer has no cap on how much he can earn, and the merchant has to pay when he makes a profit.
How Affiliate Marketing Works?
The technical aspect of affiliate marketing is often taken care of by a third party called network. A network charges a small fee and, in turn, provides all the necessary tools. Here’s how it works:
- A brand signs up on a network as a merchant.
- A marketer signs up on a network as a publisher.
- The network provides dashboards to both the merchant and the publisher.
- Using the dashboard, the merchant lists his products and sets the commission structure.
- Using the dashboard, the publisher picks up products to promote and generates a unique link (that contains his referral id).
- The publisher uses various digital marketing strategies to promote the link generated.
- When someone clicks on the link and makes a purchase, the publisher is credited with a commission.
- The network sends the rest of the revenue to the brand after taking a cut of its fee.
How Affiliate Marketers Get Traffic?
There are primarily two ways affiliate marketers use to get visitors to their landing page. Let’s discuss:
1. Paid Traffic: Reach Out to People
Paid advertising is a quick way to reach out to a big audience quickly. It is a pay-to-play game where you have to pay for every visitor who clicks on your ad and visit your landing page. A few examples include Facebook ads, Google ads, YouTube ads, etc.
The issue is that these people are quite cold and not in the mood of buying the recommended products right away. You first need to get them on your email list and provide them free but valuable content consistently. It creates a sense of trust and bonding in their eyes. Down the road, when you put a product before them, they are very likely to buy it.
You must be careful with this traffic model. If you are not good at reading numbers, you may blow up a lot of money quickly. So, know your feedback loop very well.
2. Organic Traffic: Let People Come To You
This one is a slow road but well worth it. People use search engines like Google every day to find the type of products they need. These searches are called keywords.
Your job is to find such keywords, create excellent content around them, and do some link building to rank the content high in search engines. Once your website ranks high in search engines, it usually sticks there for a long time.
This model sends a consistent flow of traffic to you for a long time and for free. Moreover, these visitors are hot and in the mood of buying as they are actively looking for the product. So, the conversion rate usually sores through the roof. Here’s a good case study on the same model.
CPC and EPC, The God Metrics To Run Successful Affiliate Marketing Campaigns
CPC and EPC are the key metrics that you should monitor carefully to know if your campaigns are running in profit or loss. If you stay on top of these two metrics, you can quickly decide which campaign to scale and which one to kill. Here’s how it works:
1) CPC or Cost Per Click
CPC is the money you pay for each visitor to click on your ad and land on your landing page. You can know this number by dividing the total number of visitors by total ad spend.
Formula to know your CPC = Total Number of Visitors / Total Ad Spend
2) EPC or Earning Per Click
EPC is the money you earn for each visitor who clicks on your ad and land on your landing page. You can know this number by dividing total earnings by the total number of visitors.
Formula to know your EPC = Total Earning / Total Number of Visitors
3) Gross Profit/Loss
Once you get your CPC and EPC right, it is easy to know if you are running into profit or loss. Just subtract the CPC from EPC, and you will know your gross profit.
Formula to know your gross profit = EPC – CPC
4) Net Profit
To know your net profit, don’t forget to deduct any overhead that you bear such as content writer, graphic designer, web designers, etc. from your gross profit.
Formula to know your net profit = Gross Profit – Overheads
Sidenote: Always decide the fate of your campaigns based on net profit and not gross profit.
The Glossary of Affiliate Marketing
So that you can understand this article properly and can explore the world of affiliate marketing more in-depth, below, I have explained the critical terms used in this industry. Take a look:
1. Affiliate Network
A network is a connecting body between the affiliate marketers and the brands. The network handles all the tech stuff necessary for the affiliate model to work correctly.
A publisher is a fancy name for affiliate marketers. As an affiliate marketer, you create and publish a lot of pre-selling content. This pre-selling content warms up the traffic and makes them buy the product. So, the publisher is a more accurate term for affiliate marketers.
Any brand who joins up and lists his products on a network is called merchant. A merchant is responsible for all the after-sale processes.
A cookie is a small file that gets stored in the browser of a visitor when he clicks on the special link promoted by the affiliate marketer. This file contains the referral id of the affiliate marketer and helps to track and attribute the sales correctly.
5. Cookie Duration
A cookie can stay saved in a visitor’s browser for a set period of time only. This length varies product by product set by the merchant. If a sale goes by after the cookie expires, it doesn’t get credited to the affiliate marketer, something you should keep in mind.
The commission is part of the revenue that an affiliate marketer gets against a successful sale. Different brands offer different commission structures. Some prefer to pay a fixed amount of money on each sale while others provide a tiered commission structure that pays higher for more volume.
Traffic is the number of visitors that arrive on your landing page. You use different traffic strategies such as SEO, social media, paid advertising, etc. to get people to your landing page.
One thing to keep in mind is that visitors from almost all traffic sources are either cold or on the fence. It is the quality of your landing page and pre-selling content that converts them into buyers.
8. Landing Page
A landing page is one of your most valuable assets that makes all the conversion happen. It is a page that you drive all your traffic from different traffic sources.
A landing page is designed in a specific format, to fulfill an objective by offering something of value.
For example, a landing page will be designed as a squeeze page (format) to capture visitor’s emails (objective) by offering a lead magnet for free (value).
Or, a landing page will be designed as a blog post (format) to recommend products to buy (objective) by reviewing & comparing the top 10 products (value).
9. Conversion Rate
Conversion rate is a tricky concept, and a whole book can be written on this topic. The ultimate goal is to increase your revenue, and there are many ways to do that. The three most effective ways to improve your earnings are:
- Getting more traffic that results in more sales.
- Improving your offer and making more sales from current traffic.
- Negotiating for a higher commission payout.
The three ways discussed above are not exclusive to each other and always act together. Work for synergy among the three, and you will get the best bang for your bucks spent on marketing campaigns.
Over To You
Now that you know the entire landscape of affiliate marketing, I’d encourage you not to stop here and learn affiliate marketing in greater depth. This guide is just the tip of the iceberg, and there is a lot more to learn about affiliate marketing. Stay in touch for more awesome content. Thanks!
Ajay Verma is a Affiliate Marketer. Affiliate marketing is his one thing and he knows a thing or two about it. He loves to share his knowledge with new marketers and shorten their learning curve.