What is Affiliate Marketing?

What is affiliate marketing? Earn money online

Affiliate marketing is still one of the most relevant growth drivers in the online marketing mix of companies. On the other hand, affiliate marketing offers good opportunities for website operators or bloggers to generate a strong revenue stream.

To do this, however, you have to familiarize yourself with the regulations and principles of affiliate marketing. In the following article, you’ll learn everything you need to know about how to do referral marketing.

What is affiliate marketing?

Many equate affiliate marketing with passive income.

At some point, after many years of very hard work, this may also be the case. But don’t let this blind you, you will need more than four hours of work per week at the beginning!

Affiliate marketing is referral marketing.

Affiliate Marketing Definition

The idea is that you promote other people’s products, often through an affiliate network, and earn a commission when people actually buy something from the merchant thanks to your marketing.

Referral marketing is based on a revenue share.

So, let’s dive into my Affiliate Marketing Guide.

How does affiliate marketing work?

Affiliate marketing is all about the so-called affiliate programs. This is a kind of virtual distribution network between merchants (companies) and website operators (affiliates). Affiliate marketing is now widely used and one of the most popular methods to make money on the Internet as the operator of your own website.

How Affiliate Marketing Works
How Affiliate Marketing Works

The website operator, i.e. the affiliate, integrates advertising media, such as banners or text links, of products or services on its website. If a website visitor then clicks on the integrated advertising material, he will be redirected to the merchant website. If he decides to make a purchase (sale) or carries out another action, such as the entry in a newsletter (lead), the company you advertise will pay you a commission for the successful placement of customers.

In the advertising media that you integrate on your website as an affiliate, a so-called affiliate ID is integrated. This makes it possible to track exactly whether you have participated in the purchase process with a referral and are therefore entitled to a corresponding commission.

This mapping is called tracking. In practice, various solutions are used.

These tracking models are used

In order for a sale to be assigned to the affiliate marketer, a tracking technique is required. Then I’ll show you the four most important tracking options:

Cookie Tracking

With this tracking variant, tracking is realized by means of cookies. If these cookies are used in affiliate marketing, the files contain additional information about the publisher responsible for contact mediation. This allows the affiliate to be explicitly identified so that he receives his remuneration correctly. However, cookies are always stored on the client side.

Session Tracking

With this tracking method, an automatically generated session ID is assigned to visitors to a merchant website via hidden form fields (POST method) or via the URL (GET method). The affiliate who brokered the contact or a purchase will also receive such a session ID in this case. As a result, the companies can specifically assign the customer actions carried out and the resulting commission claim to the respective publisher.

Tracking Pixels

In this case, the companies advertised by a publisher usually integrate a 1×1 pixel image (GIF format) into the respective HTML code of the advertising medium. If a visitor to your website clicks on the advertising material and takes a remunerated action, the tracking pixel is automatically called. For example, a cookie is then used to transmit further tracking data that is important for the assignment of the customer action to the affiliate.

URL Tracking

The referring affiliate is identified by certain IDs or parameters placed in a special link. This is the simplest form of tracking. In this way, the companies can immediately see which affiliate partner receives the commission for a customer action to be remunerated.

These remuneration models are offered in affiliate marketing

Affiliate marketing can be defined as a success-based or performance-based marketing model. This means for billing: As an affiliate, you receive a commission from your cooperation partner (merchant). The following billing methods are among the most established agreements.

Remuneration models are also referred to as commission models.

Pay-per-Sale (Pay-per-Order) – The Standard

This is the best-known variant in affiliate marketing. Billing takes place after successful placement of a customer. You will receive remuneration whenever one of your website visitors is redirected to the Merchant website via a banner, an affiliate link or other advertising material and places an order or buys a product there. Depending on the agreement, you will receive a percentage commission or a fixed amount. Mixed forms are now also firmly established. If the customer does not buy immediately, you will also receive a commission for the mediation of many affiliate programs. This is made possible by cookies, through which the respective product link retains its validity for a certain period of time.

Pay-per-click

This is the standard variant from the early days of affiliate marketing. The click on the advertising medium is already billed, whereby the click prices are comparatively low.

Pay-per-click-out

With this billing method, the rereferred visitor must make at least one additional click (here: click out) on the merchant website.

Pay-per-lead

Here, the commission flows when contacted by the customer. This is the case, for example, when he requests information materials or fills out a contact form.

Pay-per-link

This variant is primarily used for advertorials or sponsored posts. For example, if a blogger or a website operator links to an article of the merchant in editorial contributions, he receives a one-time commission.

Pay-per-install

This is a special variant of the pay-per-sale principle. The first installation of a software is remunerated.

Pay-per-sign-up

In this case, you will receive a commission if the user logs in to the merchant’s homepage or shop. Thus, this variant represents a special form of the pay-per-lead model.

Lifetime Compensation / Recurring

This type of remuneration has become established especially among merchants who offer subscriptions. Just as long as the customer remains loyal to the merchant, you will also receive a commission. So you will receive both a remuneration for the initial conclusion and for each further contract extension.

With recurring, you can build up a steadily growing earnings that still yield commissions even after years without intervention. This form should make up at least a portion of your affiliate revenue.

Advertising media in affiliate marketing

Both the countless partner programs themselves and the affiliate networks usually provide their own advertising material for the publishers. You should not directly choose the first best advertising medium, but specifically contrast the advantages and disadvantages of the individual advertising media. Not all of them present themselves very conspicuously, some emphasize the advertising purpose too strongly, others convince by a dynamic structure, but contain potential problems with regard to data protection. The most important aspect for an affiliate is, of course, how much revenue he can achieve through the respective advertising medium.

These are the most relevant advertising media in affiliate marketing

Most important image sizes.
Most important image sizes.
  • Text links: most popular variant, but you should do without hard links
  • Banner: very eye-catching with good design
  • Widgets: sometimes hide the advertising character excellently
  • HTML banners:great creativity possible, but there may be privacy issues
  • Context-sensitive advertising media: are among the most important trends of recent years
  • Flash Layer: already a little antiquated, are no longer supported by all browsers and slow down the website
  • Pop-ups: are still in use, but annoying and are no longer up-to-date
  • Microsites: not yet widely used, should be tried out
  • Dynamic advertising media: are popular as an alternative to static advertising media, but are not offered by all affiliate programs.
  • Videos: continue to grow in popularity, are not yet offered by all affiliate programs
  • CSV data: offers various product data, but very demanding in the implementation
  • Search boxes: not very popular, integration is complicated
  • Forms: make sense, especially for package holidays or insurance, but integration via iframes is questionable under data protection law

How can I start as an affiliate?

The beginning is always your creativity, or more precisely content marketing.

You need to create content in some form that will attract your audience. This can be a blog, a YouTube channel, a podcast or a newsletter.

The default, of course, is the WordPress blog. Certainly still the most durable form of content marketing today.

YouTube offers a faster start and more growth, but not everyone can speak calmly in front of the camera and when you stop publishing videos, your views quickly go down.

I have already documented the steps for starting a blog in detail.

If your website is up and down, you need a lot of stamina! In the first year, you will probably hardly see any visitors and revenue. However, it is important to publish content regularly. If you stay tuned, success is not lacking. Never stop blogging!

By the way, you are looking for suitable partners for your affiliate marketing.

What is the best way to earn money as an affiliate?

Revenue dashboard from an affiliate program
Revenue dashboard from an affiliate program

1. Blog or niche blog

The classic is a well-run blog about a specific topic, where links are provided with products with their own affiliate ID. Just like I do here. This is mainly about the information and not about the affiliate products.

Niche blogs, on the other hand, are created specifically for affiliate marketing. You can usually recognize them by the product or topic in the domain name and by the fact that every article is written about a product.

Significant revenues are expected after 1 to 2 years.

2. YouTube Channel

YouTube as a marketing tool is extremely booming. The chances are great, but so are the competition. Almost every YouTuber has affiliate links in their video descriptions, as part of their income.

If you are diligent with your videos, you can build up a respectable number of views with YouTube after just a few months. This is then also transferred directly to the revenue.

3. Product Reviews

No matter what platform you publish your content on, occasional product reviews can boost your affiliate revenue.

However, it is important to create real added value, otherwise you can save yourself the work. Be free to buy the product yourself. Test it, take photos and videos of it, and provide data that can’t be found anywhere else. Tables are always suitable for this.

SEO and Affiliate Marketing

No matter where you publish your content, you won’t be able to avoid search engine marketing (SEO).

Of course, you can also buy the traffic, but I wouldn’t recommend that to you, at least at the beginning. You should really take the time to build an organic (natural) stream of visitors from search engines and social networks. This applies to a blog as well as to YouTube.

The most important thing: Create helpful texts or videos that are also searched for.

Most affiliates create at least one new article per week, preferably in combination with a video, to continuously attract new visitors.

These affiliate programs are considered particularly interesting and lucrative

Then you’ll find five affiliate programs that are particularly well received by visitors.

XOVI

The XOVI Partner Program
The XOVI Partner Program

This is a marketing tool that is now used by almost 4,000 customers in Germany. An attractive remuneration awaits affiliates here. You will receive a monthly commission of 20 percent per customer for each placement in the lifetime variant (reccuring). In addition, as an affiliate partner, you can choose which destinations you want to promote. The cookie lifetime is limited to 60 days.

HubSpot

HubSpot supports the processes and procedures in companies with easy-care all-in-one software for sales, customer service and marketing, so that the customer can be offered the best possible customer experience. Your commission is based on cost-per-sale. A maximum of 250 euros per product is paid for starters.Affiliate professionals can pocket up to 500 euros per product and in the Enterprise level it is even a maximum of 1,000 euros per article. The cookie validity period is 90 days.

Kinsta

Kinsta has a strong reputation as a powerful and reliable provider of managed WordPress hosting. If you cooperate with Kinsta in the affiliate area, you can collect commissions (cost-per-sale plus lifetime) between 50 and 500 euros per referred customer. In addition, you will receive ten percent profit sharing every month as long as customers stay with Kinsta. The cookie validity period is set to 60 days.

Shutterstock

Shutterstock is the name for a digital stock photo and video library. For you as an affiliate partner, working with Shutterstock can be worthwhile. On the one hand, the platform offers a commission (cost-per-sale) of 20 percent. On the other hand, you also benefit from the very high average order value and the high sales volume on Shutterstock. In addition, the affiliate program of the photo and video platform convinces with a large selection of banners and a user-friendly API. The cookies have a lifespan of 30 days.

Booking.com

Affiliate programs are also widely used in the tourism and travel industries. Particularly interesting for affiliates is Booking.com as the market leader for digital accommodation booking. Commission settlement is carried out via cost-per-sale. You have the choice between two different remuneration models: 50 euros or up to 40 percent for bookings. The cookie validity period is determined by on-session tracking (own affiliate ID).

Affiliate Networks – Contact Brokers and Settlement Managers

Impact Affiliate Network Dashboard
Impact Affiliate Network Dashboard

In addition to the affiliate programs themselves, you can also use an affiliate network. This is a marketing system in which affiliates and advertisers meet. Corresponding affiliate programs are managed directly by the affiliate network. To become a partner of such a network, you must register or log in to the network of your choice.

But before you decide on one or more specific affiliate networks, you should always first compare the range of affiliate programs. This way, with a little research, you’ll identify the affiliate programs that match your website, topics, and content.

Testing for seriousness and quality

However, an affiliate network does not only stand for the mediation of contacts between the market players involved. Rather, such a network offers many other important services. For example, it ensures a smoothly functioning technical process and takes care of the billing between affiliate and advertiser.

However, you may only publish links, banners or ads on your website if you as a publisher and your website have been successfully checked for seriousness by the network. This is to ensure that the quality and trustworthiness of your Pages is right.

These are the most interesting networks for affiliates

ADCELL

The affiliate marketing network ADCELL has been operated by Firstlead GmbH since 2003. The network focuses in particular on the markets of Germany, Switzerland and Austria. Regardless of the market segment, the network consistently relies on performance-dependent payment for affiliates.

Almost 60,000 publishers from a wide variety of areas (SEO, SEM, newsletters, etc.) are now registered with ADCELL. Every month, they generate several million euros in the context of sales of goods and services. Here you can find many strong sales partners for well-known and large brands.

A total of 2,161 attractive partner programs are currently available for affiliates (as of June 4, 2021). In addition to lucrative commissions, ADCELL also provides you with high-service support and can rely on secure technical processing.

Awin

The globally active affiliate marketing network Awin belongs to United Internet and Axel Springer. It offers you innovative technologies, an international community, valuable data insight and over 20 years of experience. The network has access to around 225,000 active affiliates and publishers worldwide as well as over 16,500 advertisers.

In the 2020 financial year, Awin generated a total turnover of 12.2 billion euros for the registered advertisers with 182 million sales. Affiliates revenue amounted to 920 million euros in the same period.Awin offers you good opportunities to build a successful partnership with world-famous brands from a wide range of industries.

Belboon

As part of the detailM Group, Belboon is one of the leading performance marketing and affiliate networks in Europe. You can choose between a total of 1,800 affiliate programs. Around 80,000 publishers and affiliates from more than 50 different nations are active in Belboon. The network is characterized above all by internationally experienced account management, numerous interface options, the use of state-of-the-art tracking technologies or data-based technologies around programmatic advertising and retargeting.

Digistore24

The Digistore24 Dashboard
The Digistore24 Dashboard

As a publisher, more than 8,000 highly converting affiliate products from around 45 areas await you on the Digistore24 marketplace. You can earn commissions of up to 70 percent at Digistore24. The respective commissions are paid out every week. The marketplace is particularly strong with regard to subscription products.

Here you have a good chance of generating recurring revenue. In addition, you benefit from various services. For example, there are free advertising media, statistics of the relevant key data, multi-device & postback tracking, affiliate attribution via last cookie wins and one-click upsells for more conversion revenue.

Webgains

Webgains is an affiliate network founded in 2005 that enables affiliate partnerships between advertisers and publishers worldwide. Since 2006, the network has been part of the listed company ad pepper media International NV. The platform combines know-how in performance marketing, brand expertise and innovative technologies. Here you can network with brand new start-ups and niche companies as well as with well-known large corporations and medium-sized companies via partner programs. A total of around 1,800 advertisers meet around 250,000 publishers from over 150 countries.

Amazon Partnernet

The Partner Program for Amazon Germany
The Partner Program for Amazon Germany

The easiest way to start is with the Amazon Affiliate Program. However, the revenues are minimal. No recommendation!
Read more: Which products to sell on Amazon?

International Affiliate Networks

Even if you only do affiliate marketing on German, especially in the digital area you will find a lot of offers only on international networks.

ShareASale

ShareASale is one of the most popular affiliate networks in the international world. If you do affiliate marketing, you won’t be able to get past it.

CJ Affiliate

Also known as Commission Junction. A very wide range of advertisers.

Rakuten Marketing aka LinkShare

Also one of the big ones. I’m promoting e.B. Udemy.

Avangate

Avangate is home to many digital products and software such as LinkAssistant.

eBay Partner Network

eBay can also be a profitable partner, especially for very specific niches.

Do I have to pay tax on my affiliate earnings?

Of course, you also have to pay tax on your income from the Internet. In most countries, there is an annual allowance that you can earn additionally. However, you must also provide this information at least in your annual declaration.

You must also register a business in which it is best to indicate “online marketing” as an activity.

I am not a tax consultant and do not want to make any recommendations or advice.

Advantages and disadvantages in affiliate marketing

So that you can assess how your chances are in online marketing, I have listed the most important advantages and disadvantages.

Benefits

No costs in advance

Whether as an affiliate or merchant – in advance there are no direct costs for any of the affiliate partners in affiliate marketing. As an affiliate or publisher, you do not have to buy new software to benefit from product sales.

Eminently large portfolio of partner programs

There are several 10,000 affiliate programs in total. You will find appropriate programs for every area, every topic and virtually every niche. In fact, nothing is impossible here.

Offers great potential for optimization

However, affiliate marketing is not a matter of course. To really benefit from clicks and other customer actions, you need a high-quality website. If you invest working time, you will also be interesting for the affiliate programs with high sales. The more time and effort you spend on this, the better affiliate programs and commissions you can generate.

Target group-specific customer approach

As a publisher, you have the opportunity to promote only the exact products and services of companies that match the website topics and content. This allows you to address your target group very concretely with the advertising medium. Due to the affinity for topics, the chance of clicks and thus of commission is higher than without a target group-specific approach. The same applies to merchants. Here, too, it depends on the interaction of website content and products or brands.

Easy technical integration

Except, for example, search boxes, the advertising material can be easily integrated. Especially the integration of text links and banners is relatively easy and quick to implement even for technically inexperienced users. This is one of the success factors for the popularity of affiliate marketing.

Disadvantages

No secure source of income

Even though commissions are possible, affiliates have no revenue guarantees. If you prefer to rely on secure income, you should rather offer or sell banner places on your website as an alternative.

Depending on the quality and performance of the merchants

Especially in the context of the remuneration form Pay per Sale, publishers are dependent on the fact that the online shop and the products of a company actually appeal to the potential customer. The same applies to the availability of the shop pages as well as the performance around the pagespeed. There are numerous reasons why customers jump off and don’t make a positive purchase decision. If the company does not present itself in the desired quality and does not come to purchases, the publisher comes away empty-handed.

Often lack of transparency

Affiliates usually do not have an exact overview of the actual number of contacts mediated or sales and leads. Therefore, it is not really possible to check whether all commissions are actually settled completely and correctly. There is a lack of appropriate transparency here. But even in the opposite case, there are grey areas. Numerous cases have already become known in which affiliates have tried to unjustifiably steal remuneration.

Long range required

In order to make a living from referral marketing, you need a reach or visitors or fans who make purchases through your links. That’s the real big hurdle.

Sometimes enormous competition

When I started, my competitors were other small webmasters testing new technologies. Today you fight against large agencies and editorial offices with large resources.

Best WordPress Hosting

Hosting recommendations are usually garbage.

Often extremely cheap hosting packages for $ 3 are recommended, others advertise a $ 100 VPS, because they earn the most as an affiliate thereby. In the end, we all just want the fastest possible web space for as little money as possible.

And optimized for WordPress!

What else is important? The server should be a fast backbone for your website and the support should answer as fast as possible, and preferably in your language.

You can get all this at Cloudways from $ 10,00 / month.

Is there an affiliate software I can use?

I have been asked this question many times. No, there is no affiliate software that supports you meaningfully in your work. Your most important tool is your content and you create it with your keyboard or microphone.

My Affiliate Marketing Conclusion

Affiliate Credit
Example: Affiliate Credit

In conclusion, affiliate marketing is worth it!

If you’re starting from scratch, most of the work is building reach or visitors. Because you only get money when someone makes a purchase via your referral link. So it’s best to have a huge audience that trusts you and your recommendations.

Only in the further course of your online career do you really have to take care of your affiliate marketing. But then you can earn really good money on the Internet.

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