What is affiliate marketing and how does affiliate marketing work? 

Affiliate marketing

Affiliate marketing is basically a performance-based marketing. In this kind of an arrangement or system, a business or E-com company rewards the affiliates for each visitor or customer due to the marketing initiative, strategy, or efforts of the affiliates.

As an affiliate, you get a commission for being able to promote the product of another company. You pick a product that you feel is saleable, promote the same using your link & get your share. Therefore, affiliate marketing can be described as a method of making money by promoting and selling products of a company.

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What is affiliate marketing and how does it work?

Affiliate marketing is one of the oldest forms of digital marketing. What you do as an affiliate is, you recommend or refer someone to buy a product and in return, you earn a certain percentage in the form of commission.

All the major companies like Google, Amazon, etc run such affiliate programs. One can join such programs irrespective of their nationality. They should have strong networking and must be able to carry out sales or influence their contacts to buy the recommended product and in the process make some easy money out of it.

This article will throw more lights on affiliate programs. The reader must go through the entire post. This article will provide them enough information in relation to affiliate marketing. By reading this article our readers will get to know one of the most interesting ways of making money sitting at home.

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A lot of E-Com companies are there & these companies run affiliate programs. You can become a member, absolutely free of cost. After becoming a member, you have to use your source, link & contacts to ensure that the given products are purchased by them. The more they buy, the better it is for you as an affiliate. You get your share in the form of commission. Assuming a new smartphone worth Rs 15,000 has been launched. What you need to do is very simple. Generate an affiliate link to this smartphone. Share it amongst your contacts.

As an affiliate you have to follow certain steps like, find your niche & micro-niche,  you can create your YouTube channel, you can create a mailing list, open a Facebook page or Facebook group, use Instagram to increase your reach & also create a landing page. These measures will boost your reach and is likely to convert your effort into sales.

We must be aware of the fact that as many as 4 core players are involved in this Industry

• The merchant.
• The network.
• The publisher.
• The customer.

These 4 players are an integral part of such business. They are primarily responsible for the smooth functioning of these businesses. If one element or player is removed from this business structure then there will be a breakdown or collapse of the system. The merchant is also known as a retailer or advertiser. The network incorporates offers for the affiliate to choose from, the publisher signifies the affiliate &  the customer is the buyers who spent a specific sum of money to procure the products.

It must be mentioned out here, that the market has become complex therefore, we can see the emergence of a secondary tier of players. Earlier business was done in a simple manner, competition was amongst a few brands, but now there is an expansion in every sphere of business which has led to more competition. This expansion has created multiple players and brands. Due to this ongoing scenario businesses needs new strategy and innovative ideas. There is a constant need to reach out to as many customers as one can as a business house either directly or indirectly using various sources. This has created enough room for a secondary tier of players which includes affiliate management agencies, specialized third party vendors as well as super affiliates.

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Affiliates usually go for regular advertising methods therefore Affiliate marketing overlaps with other Internet marketing methods to some extent like Pay per click, Search engine optimization, content marketing, display marketing, E-mail marketing, etc. Although it has been observed that affiliates at times go for less orthodox techniques, for instance, publishing reviews of products or services offered by a partner.

Usually, people tend to consider Affiliate marketing and referral marketing as the same. However, the fact of the matter is there is a difference between both these forms of marketing. Yes, there is a similarity as both these forms of marketing use third parties to increase sales of their product yet there is a difference which is usually not seen. The difference revolves around the fact that affiliate marketing relies mainly on financial motivations, on the other hand, referral marketing is dependent upon trust & personal relationship. So undoubtedly there is a difference which is usually not acknowledged by a lot of people, as they consider both these forms of marketing as the same, which is not a true notion.

Affiliate marketing usually is not given much attention & priority by the advertiser, but this trend is likely to be on the wane soon. It is a fact that Search engines or Website syndication gets more attention from online retailers compared to affiliate marketing. Affiliate marketing is low profile and is rarely hyped, but affiliates cannot be ignored. The reason being, they are relevant and are playing a pivotal role in e- retailers marketing strategy. They play an important role in the business structure. Nobody can disapprove or disagree with the fact, that affiliates are significant in the context of modern-day business strategies.

History of affiliate marketing

The concept of revenue sharing i.e paying commission for referred business came into existence when the internet facility was not extensively available. The translation of the revenue share principles to mainstream e-commerce took place in November, 1994 i.e 4 years after the origination of the World Wide Web.

The idea of using affiliate marketing on the internet was floated and put into practice and patented by William J. Tobin who was the Founder of PC Flowers & Gifts. By 1993, PC Flowers & Gifts generated sales in excess of $6 million per year. It was in the year 1998, PC Flowers & Gifts started using the business model of paying a certain part as commission on sales to the Prodigy Network.

Amazon.com ( Amazon ) launched its associate program back in July 1996. Amazon associates have the liberty of placing banner or text links on their site. Such banners or text links could be used for individual books or it can be linked to the Amazon home page.

When visitors clicked on the Associate's website to go to Amazon and buy a book then the Associate's gets a commission. Amazon was not the first merchant to offer such a program to its affiliate,  but its program was the first to gain attention and was widely known. This went on to become a renowned model for other programs that followed subsequently.

It was in the year February 2000, Amazon declared that it got a patent on components of an affiliate program. The patent application was submitted in 1997 however, prior to this PC Flowers & Gifts.com ( October 1994 ), AutoWeb.com  ( October 1995 ), Kbkids.com / BrainPlay.com ( January  1996), Page  ( April 1996 ), and few others got similar patent

Affiliate marketing has become a strong marketing tool. The e-commerce website, viewed as a marketing toy in the early days of the internet went on to become an integrated part of the overall business strategy & in some cases even grew bigger than existing offline business.

As per one report, the total sales amount obtained through affiliate networks in the year 2006 in the United Kingdom alone was £2.16 billion.  As per the estimation of Marketingsherpa's research team, in 2006 affiliates worldwide made US$6.5 in bounty and commission from various sources in Retail, Gaming, Travel, Education, Telecom, Lead generation, etc.

When we talk about affiliates surely this kind of an arrangement or system of marketing has helped them to earn a lot. It is beneficial to the companies and to a great degree it helps the customer as well. It's a win-win situation for all. It is a mutually beneficial system. Therefore, of late, it is widely used as a form of marketing by various E-Com Companies. They have spotted the potential and have tapped it properly.

Conclusion

Affiliate marketing has made its presence felt strongly in the business world. The people who are associated with this form of marketing let it be the E-Com companies or Affiliates themselves have realized the significance of this form of marketing and it's reach. Affiliates can earn a lot of money using their connection & networks by ensuring sales of products. The companies also get to reach out to new customers via the affiliates and boost their sales. So this arrangement or marketing strategy is here to stay. It will gain a higher proportion in times ahead.

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