26 Aug Part 1 | Affiliate Marketing 101 For Beginners
When you’re long enough in a business, you almost forget that there are people who know nothing about it.
I get many questions about affiliate marketing, and sometimes I’m pretty surprised that people are not familiar even with its basics.
But then, I remember that “the expert at anything was once a beginner.”
Thinking of beginners, I decided to explain what affiliate marketing is.
So, I put together a simple deck on the basics, and this episode is the first part of it.
There you’ll find:
– a definition of affiliate marketing;
– an explanation of the key players;
– the ways affiliates get paid.
If you want to be a successful affiliate, you need a solid foundation.
And this episode may be the beginning of building one.
So, let’s dive in!
What is Affiliate Marketing?
Affiliate marketing is the process in which an affiliate gets paid to promote a third party’s offer.
As an affiliate, you’re supposed to go out and promote somebody else’s product, trying to drive some action. And if you do, you’re getting paid.
When you generate anything defined as a conversion – the clicks, the leads, the sales, anything you earn a commission for – that will be tracked by the advertiser’s affiliate link.
An affiliate link is a link that is unique to you as an affiliate. Advertisers use them to record the traffic sent to the advertiser’s website.
For example, any activity taking place in your link will be tracked back to your account within the affiliate program. So, that’s the way advertisers know that you’re driving traffic.
The WHO of Affiliate Marketing
Three key players make up the affiliate marketing landscape:
Understanding who the players are and what they want is crucial for succeeding in the business.
1. The Advertiser
The advertiser is any entity looking to promote out their products or services in the marketplace.
Advertisers want to find as many affiliates as possible that can promote their product to an audience. They’re looking to get an online distribution of their offer. Another term for that is traffic.
Ultimately, traffic is eyeballs, people who can look at an offer and decide if they want to click or not.
The ultimate goal of the advertiser is to get in front of that audience.
2. The Affiliate
The affiliate (also known as the publisher) can be either an individual or a company that markets the advertiser’s product in an appealing way to potential consumers.
Affiliates don’t have their own offer. They just serve the third-party offers to the audience.
The goal is to find the right audience interested in the offer they’re promoting.
If those people take action (click, sign up as a lead, purchase something), it is called the payable event or payable action.
Affiliates get paid by advertisers per payable event. The two parties agree on the price in advance.
3. The Consumer
Also known as a buyer, the consumer is the most important person in this entire equation.
Consumers (and their purchases) are the drivers of affiliate marketing, so I can say they are everything you need.
When consumers take action, the advertiser and the affiliate share the profits.
The most important thing to understand here is that consumers pay the same amount of money either by buying a product directly from the seller or through an affiliate link.
The commission paid to the affiliate is already built into the product price.
So, from the affiliate’s point of view, it’s better if consumers use affiliate links because, in that case, affiliates can get paid.
Top 3 Ways Affiliates Get Paid
The affiliate may get paid in various ways, and these are the top 3 models:
– CPC – Cost per Click
– CPL – Cost per Lead
– CPS – Cost per Sale
1. CPC – Cost per Click
This model means that affiliates need to redirect consumers from their marketing platform to the advertiser’s website.
Affiliates are paid based on the increase in web traffic.
If you, as an affiliate, get somebody to click on any of the advertiser’s ads on your website, you’ve done your job.
All the consumers that click on the ad will get directed to the advertiser’s offer. And that’s the reason why the advertiser pays you.
For example, if you agree to drive clicks for $0.25 and you get 1,000 clicks, you’re going to make $250 a day.
Affiliates also refer to this model as EPC (earnings per click) or RPC (revenue per click).
2. CPL – Cost per Lead
In the cost-per-lead model, the affiliate gets compensated based on the conversion of leads.
The affiliate needs to persuade the consumer to visit the advertiser’s website and complete the desired action, showing interest in their product or service.
The affiliate gets paid every time somebody signs up as a lead. And it is called the revenue per lead (RPL).
The advertiser and the affiliate define together what the lead is – filling out a contact form, signing up for a trial of a product, subscribing to a newsletter, downloading software or files, etc.
Some advertisers want to get the name and email address of the consumer; others need phone numbers or postal addresses.
The point is that consumers are expressing interest in the product and giving the advertiser consent to contact them.
Permission for using personally identifiable information (PII) is the most important thing here.
If someone wants to reach out to you, you need to tell them you want them to – that’s the whole idea of permission-based marketing.
3. CPS – Cost per Sale
Cost per sale is the standard affiliate marketing structure. The advertiser agrees to pay the affiliate for any sales generated.
After the consumer buys a product or service from the advertiser because of the affiliate’s marketing strategies, the affiliate gets a percentage of the sale price.
This model is also known as CPA – cost per action.
It’s the same concept – driving new customers to advertisers and getting paid a commission for that.
I don’t think affiliate marketing is rocket science. But, as in any other business, you have to understand how things work inside it to become successful.
If you find value in these explanations, join me next week for the second part of Affiliate Marketing 101.
I’ll continue sharing stuff for beginners.
If you’d like to get bonus Performance Marketer content, sign up for my SurveyDetective VIP waitlist!
See you next week!
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0:00 I spent the last 17 years building my eight-figure performance business without using any of my own money, working with some of the most brilliant direct response marketers in the world today. Now I'm looking for entrepreneurs to join my affiliate army built on ethics, transparency, and good old hard work. Join me to change the perception of how people view the greatest business in the world, affiliate marketing, and follow along as I learn, apply, and share performance marketing strategies, working with some of the brightest people on the planet. My name is Eric Beer, and welcome to the Performance Marketer Podcast. OK, what's up, guys? Eric here, and we're gonna try something a little bit different today. And you have to bear with me because this is a work in progress. But I get a lot of questions about affiliate marketing. I get a lot of questions about, like, how do you do it? What do you do? Where do you start? And I get all kinds of questions that I'm actually pretty surprised that people don't know. So I made a decision that I'm going to go over this in a simple way of exactly what affiliate marketing is. Would you like to learn how I built my business using other people's money? If so, then go join my 21-day challenge at performancemarketersecret.com. I look forward to meeting you and welcome you into my family. And remember, results don't lie, but the people who don't have any do. Thanks for listening.
As an affiliate, you're looking for offers for your audience that you believe will add some value. So when your audience buys something from one of your affiliate partners, you helped your audience find that product or service, advertised or sold something, you get a commission for it. Everybody wins. It works.
Affiliate Marketing 101
This is for beginners. This is for people that know nothing. And I'm going to try to share with you a little presentation, which I'm terrible at. But I literally just spent a little bit of time making a little bit of documents for you guys. So, if you don't like how it looks, or you need more pictures and all that good jazz, give me a break - next time. But for now, you're going to learn about affiliate marketing. So, let's dive in here quickly. I'm gonna go over this quick. And if you have any questions, you can send me a text at 917-636-1998. Feel free to ask a question in the comments here. And I will answer them later after this.
Alright! So, Affiliate Marketing 101 for beginners. What is affiliate marketing? It is the process in which an affiliate gets paid to promote a third party offer, somebody else's product that you're going to go out and promote and try to drive some action. And if you do, so, you're going to get paid. The way it works is you do a deal with an advertiser. Affiliates – Advertisers. The affiliate will create a relationship with an advertiser who is a buyer to you as the affiliate. You will do a deal upfront when you begin working with them. You get paid when you generate some action. The way it works is the sales, the leads, the clicks, anything that's defined as a conversion, where you have earned commission will be tracked by the advertiser’s affiliate link. What does that mean - an affiliate link? An affiliate link means that it, that link, is unique to you as an affiliate, no one else in the world has access to that link. If any activity takes place in that link, clicks, bleeds, sales, they will all trackback to you your account within that affiliate program. So, that's the way that they know that you're driving traffic.
The who of affiliate marketing
There are three people involved in this. There's an advertiser. The advertiser is considered somebody who is a merchant vendor. Maybe they're a lead generation company, anybody that has a product or service that they're looking to promote out in the marketplace. Advertisers want to find affiliates. They want to find as many affiliates as possible that can promote their product to an audience. The whole concept here, what advertisers are looking for, is they're looking to get distribution of their offer online. And another term for that is traffic right here. A lot of people say you want to own your own traffic or you have earned media, right traffic. Ultimately traffic is eyeballs, people that are going to be able to look at an offer and make a decision if they want to click or not. So in this perspective, what advertisers do is they try to tap into all these different people out in the world who have different traffic, different audiences. They want to get in front of that audience. That's the goal of the advertiser.
Number two, the affiliate, the publisher, relatively the same thing, right, you publish something, it's another word for affiliate. But ultimately, one person that is an affiliate, or you could be a big company, that's considered an affiliate. And what you're doing is you're serving offers to your audience, you're serving third party offers, you don't own the offer, you're not going out and doing any customer service, you don't go, you don't do anything, all you need to do is get that product or service in front of the right audience to take an action. That's it, that's it, you can start this after this video, the goal is that you want to find the right audience, so that you can get people that actually have interest in the offer that you're promoting to them. And by doing so, if they take an action, we call that the payable event, right? That's the agreement that you make up front with your advertiser, the payable action, the payable event on, you're agreeing on, if you get somebody to do this, click, sign up as a lead, purchase something, you will get paid x, OK?
Number three. And the most important person in this entire equation is the consumer. The buyer, the consumer, is everything you need. A consumer or affiliate still make money, advertisers don't make money. But the idea is that you want to create a win win win situation, right. So as an affiliate, you're looking for offers for your audience that you believe will add some value, so that when your audience buys something from one of your affiliate partners, you helped your audience find that product or service advertised or sold something, you get a commission for it, everybody wins, it works. A lot of ways that they'll do it is you can promote through social media, blogs, websites, emails, etc. I'll get into that in a little bit as I go into how you get traffic or what types of traffic a little bit longer in this presentation. But the most important thing for you to understand here is consumers don't pay more money. By buying a product from your affiliate link, the commission that is being paid to an affiliate is already built in to the product offering. So you won't be charging somebody else’s more money, because you need to get paid. Whether the person goes in buys directly from the company, or through your affiliate link, they're going to pay the same amount of money. And as far as you're concerned, you want him to come to your link so that you can get paid.
Here we go with How do affiliates get paid?
So, here's the models get paid on a CPC, which is considered a pay for every click. What does that mean, advertisers agree to pay an affiliate. If you get somebody to click on any of their ads, you promote one of their offers, someone goes and clicks on that ad from your website, they will then get directed to the advertisers offer their website, their store. At that point, you've done your job, you get paid. So if you agree to drive clicks for 25 cents, you get 1,000 clicks, you're going to make $250 a day. Good deal, right? Affiliates tend to refer to this as their EPC or RPC. Right. EPC stands for earnings per click. RPC stands for revenue per click. People that email tend to look at EPCs because their job is to get emails into the inbox and then get somebody to click on the creative that will link out to a partner site. So what they typically do to model out their business is they look at it as what are they making per click, earnings per click. So if you were talking to a mailer, and you wanted to get distribution for your offer, they might say to you, what are you seeing on an EPC? He might be like, I don't know. Well, now, you know. You know it means earnings per click. Why would they ask that question? Because they want to know when they send emails, if they can generate 10,000 clicks today, and they normally see 25 cents per click. If you're only generating 10 cents a click, they're probably not going to want to mail it. They don't want to waste their time, their energy to mail something that can be less valuable, right? So you always want to understand the value of the offer. So they'll talk in EPCs. So, if anybody ever asked you those questions, you'll know now.
OK, number two, cost per lead. I talked about this all the time, right. I have a lead generation company generating leads. Generate leads for companies, for people that are willing to pay you, for someone to show some interest in their product or service. The way it works is you talk to an advertiser. They tell you they're willing to pay you for every time somebody signs up as a lead. You will agree ahead of time on what that lead is. You’ll define what a lead is. Some people may just want a name and email address; others need a phone number. Others need a postal address. So all of that is done before you start promoting. But the point is, this model is - you're going to generate a click somewhere, and then if that person lands on the site and fills out a lead form, that's where you're going to get paid. It's important to understand that these people are expressing interest in the product. They call this opting in. They’re giving you consent. They’re giving the advertiser consent to contact them. So as an example, you click on some ad all about blinds for your house, you land on a page, and there's a blinds company that's there that says, fill out this information, we'll give you a free guide on the ten ways to determine which works for your home. And then the blinds company will get that information, your name, your email, your phone number, and then what they're going to do is they're going to follow up with you at a later date. They might follow up with you with an email; they might make a phone call to you; they might text you. It all depends on what you gave them permission to do. Permission is the most important thing here. Right? They call it PII, personal identifiable information, PII, right? That's a big thing on the internet with privacy. For someone to reach out to you, you need to tell them you want them to. That's the whole idea of permission-based marketing, right? You're giving them permission. So that's all the cost per lead side, right? So, in this scenario, I'll give you some examples where someone might subscribe to a newsletter, they might register for a webinar, they might book a call, all kinds of things that you're going to get somebody to do in return for you getting paid for that lead, OK? You're not selling anything; you’re not getting somebody to take out their credit card; you’re just getting somebody to show some interest from an affiliate perspective. We'll look at that as RPL. Like, what is the revenue per lead that you're making so that you can understand how much you can pass in the marketplace. If you're getting paid $5 a lead, you're $5 RPL, which means that depending on the margins you want to work on, alright, let's say 20%, you can afford to pay $4. So that's the $4 cost per lead, right? So, in that event, the cost per lead from the advertiser to them (they're paying us, right, as an affiliate) is, let's say, five bucks. To me, if I want to be profitable, my cost per lead has to be less than what they're willing to pay me.
CPA - pay per sale
Advertiser agrees to pay the affiliate on any sales generated. This is common for most large brands out in the marketplace. Any affiliate program out there where you don't really have a strategic relationship. You want to go and sign up, right, to promote their products or services. You go to Nike, Nike will pay you a percentage of their sales. In some instances, they may pay you a straight CPA for sale. But normally, the way it works is I'll give you a percentage of the sales. What happens - consumer clicks, they land on a site to make a purchase, you make a commission, right? So, it's typically like that, either on a form where they can just fill out that form and credit card for that product, or maybe the Atlanta store. But either way, the way it works is you get paid a percentage of the sales. Most large brands do this, as I said. So, if you want to promote big ass brands, go to their sites, look through the affiliate programs, they're gonna pay you a percentage. Usually, it's not very exciting. It’s low. And you're going to find that that's the case until you start to show that you can drive some real traffic. And when you do, and you show that you can get a lot of eyeballs or drive a lot of sales. That's when they're going to want to reach out to you and really start to do some strategic deal where you're gonna get paid a lot more. But CPS cost per sale. CPA stands for cost per acquisition, same concept. The bottom line is you're driving a customer, a new customer for them, and then you're getting paid a commission for it.
I spent the last 17 years building my eight-figure performance business without using any of my own money, working with some of the most brilliant direct response marketers in the world today. Now I'm looking for entrepreneurs to join my affiliate army built on ethics, transparency, and good old hard work. Join me to change the perception of how people view the greatest business in the world, affiliate marketing, and follow along as I learn, apply, and share performance marketing strategies, working with some of the brightest people on the planet. My name is Eric Beer, and welcome to the Performance Marketer Podcast.
OK, what's up, guys? Eric here, and we're gonna try something a little bit different today. And you have to bear with me because this is a work in progress. But I get a lot of questions about affiliate marketing. I get a lot of questions about, like, how do you do it? What do you do? Where do you start? And I get all kinds of questions that I'm actually pretty surprised that people don't know. So I made a decision that I'm going to go over this in a simple way of exactly what affiliate marketing is.
Would you like to learn how I built my business using other people's money? If so, then go join my 21-day challenge at performancemarketersecret.com. I look forward to meeting you and welcome you into my family. And remember, results don't lie, but the people who don't have any do. Thanks for listening.