What is Affiliate Marketing & How Does It Work

Affiliate marketing is the most profitable way to make money online. Want to understand what is Affiliate marketing? Keep reading to learn everything about this popular passive income method.

I got to know about Affiliate marketing in 2008 and within a few months, I started earning a decent income from it. Since back in those days, it was a completely new concept, I also started publishing a monthly income report to inspire and motivate users like you to know more about affiliate marketing.

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

In the last 10 years, ShoutMeLoud has inspired millions of lives around the globe to help them earn passive income via affiliate marketing.  It would not have been possible if I had not quite my call-center 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.

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-t0 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, lets 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.

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:

Many online companies who sell products such as shoes, web-hosting spaces, or some other service, usually offer an affiliate program. 

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.

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:

  • Create a blog and use it to promote a product
  • Buy traffic from Facebook and drive it to the landing pages.
  • Create a YouTube channel and promote products

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

  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.

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:

How much money you can make as an affiliate marketer?

“Limitless”.

There are affiliate marketers who are making millions of dollars a month via affiliate marketing. I personally make more than $30000/month from Affiliate marketing. Below you could see a screenshot of my earnings from one such affiliate program:

The key here is how you are approaching the whole process. Are you using a blog or using PPC to market affiliate products. The one that I have been using from the past 10 years, is via blogging. This has been the most effective one so far.

Is it important to have a blog for affiliate promotion?

Not necessarily, but a blog is really the best promotional tool. With that said, you can always use methods such as PPC or advertising to promote a product. This is another popular method to grow in affiliate marketing. For me, the best way to make the most out of  affiliate marketing opportunities is to have a blog. Learn how to start a blog here.

How much does it cost to join an affiliate program?

There is no charge for joining an affiliate program, however, your total cost depends on what promotion technique you are using. For example, a blog post doesn’t cost a dime, but PPC marketing, email marketing, and advertising come with various price tags.

What qualifications do I need to become an affiliate marketer?

There is literally no qualification required to become an affiliate marketer, though having good copywriting skills and marketing skills will be an added advantage.

Is affiliate marketing harmful or illegal?

No, it is neither harmful nor illegal, as you will simply be using the affiliate link provided to you rather than a direct link to link to any site.

How do I find an affiliate link for any product?

Not all companies offer an affiliate program, of course, but for those that do offer affiliate programs, you can check their website for related information. When searching, be sure to check the company’s FAQ page if they have one.

Another way to find this information is to do a simple Google search. For example, one could place the following phrase into Google Search:  “(product name) + affiliate program”. (Replace “product name” with the name of the product you are promoting.) There is an interesting chrome addon called Affilitizer is available which makes this process easy.

This should bring you to a landing page. Many companies use an affiliate marketplace like ShareASale, CJ, or Clickbank. These are free to use and you can create a free account.

How do I find new products to promote?

Affiliate marketplaces such as those mentioned above are the best places to start your affiliate marketing research. You can browse your niche and see the top performing affiliate programs.

Alternatively, you can keep an eye on blogs in your niche and see which products they are promoting and what methods they are using.

Affiliate marketing and AdSense: Can we use both?

Yes, you can use both as affiliate marketing does not violate any AdSense TOS. In fact, for me, affiliate marketing works better than Adsense, and that is one reason you see fewer AdSense ads here at ShoutMeLoud.

How do I get started with Affiliate marketing?

Here at ShoutMeLoud, I and many guest authors have covered some of the best guides to help you to understand in depth about getting started, and some of the pros and cons. Here is a list from our affiliate marketing archive which will help you to get started:

I would also highly recommend you purchase ShoutMeLoud’s The Affiliate Marketing eBook. This a comprehensive guide on getting started with affiliate marketing.

I hope this beginner’s guide to affiliate marketing will help you get started. If you have any additional questions, feel free to ask me in the comments section below.

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This post was last modified on June 9, 2019 22:44

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Harsh Agrawal @denharsh

A blog scientist by the mind and a passionate blogger by heart ❤️. Fountainhead of ShoutMeLoud (Award winning blog), speaker at various international forums. Life motto: Live while you can! Teach & inspire while you could & Smile while you have the teeth.

View Comments

  • Ronald Segura says:

    A great resource for the beginners, I really loved it.

    I started a blog which I plan to monetize only through affiliate marketing and my own products, no ads. I've been working on building an audience for my blog, for about 1 year and a half, many people think is maybe too much time, but I just want to make sure that I build enough trust with my readers before I start to try to make them buy something.

    Finally, I have decided to start monetizing my blog this year since I already have decent amounts of traffic, this type of articles helped me a lot on making sure I'm going towards the right direction.

    Thanks Harsh!

  • Anshul Sharma says:

    this is the post through which i am earning money through blogging , before this i dont know what is affiliate marketing and stuff but the way you explain is just amazing keep it up Harsh Sir , i am earning money in great numbers through affiliate money all because of you

  • Sheikh Sadman says:

    Affiliate Marketing is good but need to learn about promoting the affiliate offers.I was getting problems with marketing earlier.

  • Rakesh Roy says:

    Affiliate marketing is totally a new concept for me but after reading your article its quite clear that how we can publish ads on other websites on our own blog and earn money with affiliate marketing. Need some more updates on those and will read your future posts too. Once again thanks @Harsh for sharing such blog!!

  • Prabash babu Aryal says:

    hey, harsh,
    if I sign up for affiliate programs like ShareASale & CJ from country "A" and if some of my reader from country "B" buy some products/service through my affiliate link, in such case, will I have a commission or not?

    as I am new for affiliate and once I saw your video interview where you have mentioned such things ( in case of Amazon)....so same thing apply for cj& ShareASale ??

    • Harsh Agrawal says:

      Hey Prabhas,

      It happens in the case of Amazon but not in Shareasale or CJ. For them, you just have one affiliate link and people from anywhere can buy some products and you will get a commission for it.

  • One thing I want to know if I have an affiliate link of a shoe and anyone go through my link on the product site and purchase any other product in place of the shoe, then will i get commission for that purchased product?

    • Harsh Agrawal says:

      @Sk Singh
      Yes, you will earn the affiliate commission for that sale. This is another biggest advantage of Affiliate marketing.

  • Aditya Garg says:

    Hi Just started off with my first blog(wordpress), that involves aggressive use of affiliate links, mostly of amazon.
    My concern regarding those affiliate links is that, how should i block those links from google crawlers?
    Somehow through robots.txt or any other medium?
    If it is through robots.txt, then how?

  • Hello Harsh,

    That's quite an excellent article on affiliate marketing - I am a nascent affiliate marketer myself and this is a good reference point.

    You speak about legality - I would like to understand one thing. UK and European Bookmakers also offer Affiliate marketing as an option using the same concept (you promote them and they pay you some percentage of the revenue they earn). Would you be able to say that's legal in India, i.e. can a website in India promote a British bookmaker without falling afoul of the law?

    Thanks in advance.

  • I agree with the second last comment that affiliate marketing is a great way to learn especially when dealing with informational products niche.

    I would also add that the best way to improve ones strategies and conversions are not by studying the courses that we buy and review, but by carefully observing how the sellers we buy from actually sell to us and then model off of that.

    For example, I might find a top selling course on click bank that I actually want to buy and when I buy it I can study all of the sales pages and up sells. I've found that I have learned much more from doing this than any actual courses. :-)

  • Hi, i’m just wondering about the affiliate program. As the advertiser, do we need to buy the item first or the company will give us for free for us to promote it? How does it work?
    Thank you

    • Megha Agrawal says:

      Hello, Maggie...!
      No, you don't need to buy anything.
      Let's clear it with a day-to-day life example.
      Suppose you have opened a shop and selling something. One day one of your friend came to you and said - I want to earn some money in part time, can you help me for that...?
      And you said, - Sell my few products and I will give you a few amount of money earned through your sell.
      So here, your friend doesn't need to purchase your product first. The same things happend while you are selling online using affiliate marketing technique. You get some percentage of the amount as a commission only if the products sold out by clicking on your affiliate link by any process, whether by Facebook, blogging, sharing whatever....

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