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Why Affiliate Marketing is Such a Hot Online Business Model

Affiliate Marketing Defined


Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer delivered through the affiliate’s own marketing efforts.

The business model has four core players:

The Myriad of Benefits to Affiliate Marketing


My post, “The Many Benefits of a ‘Lifestyle’ Digital Information Business” lists the benefits that are true of affiliate marketing as well as all online information business models.

But beyond those are these additional benefits that are unique to affiliate marketing:

  • You can launch an affiliate marketing business with no or very little startup expenses

  • There are thousands of affiliate programs offered by merchants – for just about any category imaginable

  • Affiliate commissions can be significant; most programs offer commissions of 20% or higher; some merchants that have robust “back-end” products and services from which to make money, pay a 100% commission on their “entry level” offerings

  • By representing other peoples’ products and services, you don’t have to create your own; which means no production hassles, no cost of goods for you, no inventory storage and management, no fulfillment system, no e-commerce platform (each vendor has his/her own payment platform), no returns, no sizing/color hassles

  • You don’t need to create a tracking platform; each merchant (or affiliate network) has his own tracking system

  • Without any effort or expense beyond referring the lead, you are automatically the beneficiary whenever the merchant that you are rep-ing updates or adds to his/her product or services

  • The merchant typically provides you recommended marketing materials – embedded with your unique affiliate code – so that you don’t have to create materials – at least from scratch (it’s a good idea to customize provided materials so that your marketing content doesn’t look just like other affiliates – and that also has spam filter benefits)

  • Good merchants offer free or inexpensive “entry level” offerings that makes for a low “threshhold” for converting your leads to customers

  • From their “entry level” offerings, good merchants have an upgrade path to higher level offerings, and they do all the upselling to your referrals; that allows you to focus on generating new leads

  • The most desirable merchants structure their offerings so that you can earn “recurring commissions” from the referrals you provide

  • As often as you like, you can log into your affiliate account with the merchant and see reports on how many leads you’ve referred, a history of all commissions paid to you by that merchant, and the amount of commissions earned but not yet paid to you

  • Merchant commissions are automatically paid to you (usually via PayPal or electronic deposit to the bank account you set up in your affiliate account; the merchant may require a minimum accrued balance to trigger a payout)

  • There are many resources online that provide a great education, tools and support to affiliate marketers. I especially recommend taking a close look at My Online Startup [affiliate link] and Wealthy Affiliate [affiliate link].

Summary

With so many benefits, it’s easy to see why affiliate marketing is such a hot business model, whether pursued as a full-time living or a part-time supplemental income generator.

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