Newb Guide Pt 1: What is Affiliate Marketing?

9 February
29 Comments
by nickycakes

This is part 1 of Nickycakes’ Affiliate Marketing Newbie Guide.  This post will not be new information for almost anyone who has done much of anything with affiliate marketing, but there seem to be plenty of people who don’t know anything about the industry, so feel free to direct them to this post if you’re too lazy to explain.

Often times you will be asked, as Nickycakes is often asked, “What do you do?”  When you start making money online, people are generally curious as to exactly how you are doing it.  The first time you are asked this, it’s hard to come up with a short answer.  Nickycakes generally says something like, “I run an internet marketing company.”  If they pry further and ask specificially what that entails, it’s usually, “Companies pay me to run ad campaigns for their products.”  (No, Nicky doesn’t refer to himself in the 3rd person when talking to people irl)  While Affiliate Marketing is a little more complicated than that, and a lot less glamorous than “running an internet marketing company” implies, that’s pretty much the reality of what you’re doing.  Companies pay you a commission to advertise their products.

Of course, when you are asked by a family member to explain what you’re doing, you may have to give them a little more detail.  The analogy Nickycakes uses is one that was given to him a while ago by one of his affiliate managers:  Let’s say that Coca-Cola wants to sell more Coke.  They already have their own ad campaigns running on TV, and possibly the internet.   But, they want to sell more.  So Coca-Cola sets up a program where anyone who so desires can make their own advertisements for coke products which link to the coke website.  For every case of coke sold through one of these links, Coke agrees to pay the “affiliate” $1 commission.  Pretty simple.

There are affiliate programs for thousands and thousands of different websites, companies, and products.  Amazon.com has an affiliate program where you can link to any product on their website and make a few % commission on anything sold.  Ebay the same deal.  Lawyers sometimes pay very well for leads forwarded to them since they make so much money per case that they win.  Most dating sites will pay for every person who signs up for a free account on their site.  With the extremely low risk on the part of the company offering the affiliate program, it’s almost stupid NOT to have one.

So how does Coca-Cola know that the sales are coming from you and not from another guy?  Well, they have tracking software set up, and they give you your own link to advertise, like… coke.com/affiliate/12342345 or something, and anyone using that link is kept track if, usually via browser cookies, so that the resulting sales are credited to the proper affiliate.

What’s an Affiliate Network?

Ok, so since affiliate programs have gotten so ridiculously popular, it is easy for companies with such programs to get lost in the crowd.  There are hundreds of webhosting providers that offer generous affiliate programs, for example, so going to each one individually to see which one is the best to promote becomes tedious.  That’s where Affiliate Networks come in.

An Affilaite Network is just a company that handles the relationship between the company with an affiliate program, and the affiliates.  An affiliate can sign up to an Affiliate Network and then select from thousands of different products and services to promote, and can easily see exactly how much they will get paid per sale/lead/signup/whatever.  The Affiliate Network handles recruiting and paying the individual affiliates, so they never have to have a direct relationship with the Merchant/Advertiser.  In return, the Affiliate Network takes a small(well not always small) cut of the commissions.  With enough affiliates sending enough sales, Affiliate Networks get rich just for being a middleman.

So why would you work with an Affiliate Network instead of with the Advertiser directly, knowing that they take a cut of the money you are making?  Well, there are a few reasons.  First, and most important, is payment terms.  A lot of merchants will only agree to pay you Net 30, or worse.  This means that after the month is over you need to wait 30 days to be paid for that month’s commissions.  This can suck if you’re spending a lot of money on advertising their products and can’t afford to continue for 60 days without being paid.  Affiliate Networks generally have much better payment terms, often giving affiliates weekly wire transfer payments if they are generating a decent amount per week (usually around $1000 is the standard threshhold).  Also, many Merchants don’t want to deal with a bunch of affiliates, they just want an Affiliate Network to just handle it all for them, so even if you wanted to you couldn’t work with them directly.

Methods of Promotion

Here’s the work part.  It is completely up to the affiliate to generate customers to buy these products if they expect to earn some commissions.  There are way too many individual methods of promoting websites to even begin listing, but they generally fall into two categories: paid and unpaid promotion.

Unpaid promotion is stuff like SEO, email spam, social network spam, “social media”, “viral marketing”, etc.  These unpaid methods of promotion, while basically free (money wise), generally require much more work than their paid counterparts.  They also (generally) do not provide nearly as much volume as their paid counterparts.  But, they are a good resource for newbies to get started with if they’re broke.

Paid methods of promotion are things like PPC (pay per click), media buys, legit email spam…err…deployment, paying bums to hold up signs at busy intersections, etc.  These types of promotion can generally, but not always, generate a ton of traffic if you have the money.  They are, however much more risky, since you’re obviously investing your own money with no real guarantee that you’ll see any return on that investment.

PPC and media buying are what Nickycakes does the most of these days, so that is the focus of the majority of the info on this site.  He has done his fair share of SEO but it’s rather boring, doesn’t generate enough traffic to be worth the time, and it’s so brainless and monotonous that you could train a monkey to do it.  Even blackhat SEO is only fun for a few days after you figure out what you’re doing before the novelty of pushing a button and seeing 10 thousand backlinks showing up completely wears off.  Also, Nickycakes has never ever met ANYONE that has gotten rich from SEO.  Find someone making 5 figures a day with SEO.  Seriously, good luck.

Warning Before Doing Anything

Most people fail.  Seriously, don’t quit your dayjob.  Don’t drop out of college.  Don’t invest any money you aren’t comfortable losing in PPC.  If you want to learn how to do online marketing as a fulltime job that supports you financially, please do not make any serious life changes until you’re already making at least twice what you need to live comfortably.  Nickycakes spent the first several profitable months as an affiliate working retail and going to class full time.

Seriously, expect to fail, because chances are you’re too stupid or lazy to succeed, which is why the rest of us make so much money.

Why Nickycakes Loves Affiliate Marketing

Nickycakes loves affiliate marketing because it’s not boring, he’s good at it, the rewards are directly related to how much effort is put in, and it provides amazing freedom because there is no boss and there are no employees.  Also, the people in the industry are great.  When you go to an industry conference for the first time, you really expect a bunch of obvious computer nerds who live in their parents basements, and there are some of those for sure, but mostly everyones pretty cool.

Part 2 will be about setting up tracking.

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