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The affiliate marketing landscape is an ever-competitive $17-billion-worth battleground where thousands of affiliates and advertisers fight for the best deal. Affiliates search for generous and reliable advertisers, whereas advertisers seek cost-effective affiliates that draw high-intent customers.
Affiliate marketing is not for everyone. It does look lucrative from afar, but as you get closer, you realize that you must go the extra mile to succeed. To save you from committing to something you may not be ready for, let’s review some statistics:
- Over 57% of affiliate marketers earn less than $10,000 from their efforts annually, with 16% making $10,000 to $50,000 and 3.78% making over $150,000.
- The three most profitable industries for affiliate marketing are retail (44% of the global affiliate revenue), telecom and media (25%), and travel and leisure (16%).
- The three most popular media for affiliate marketing are social media platforms, blogs, and review or coupon sites.
Numbers don’t lie, do they?
Whether an affiliate or advertiser, you must outpace dozens and possibly hundreds of competitors standing in your way. There’s a long road to success, from internalizing basic affiliate marketing practices – the future backbone of your strategies – to searching for the scale-tipping extra that will elevate your offer above the competition.
But Wait…Is There Anything Left? Haven’t the Affiliate Marketing Behemoths Already Drained the Market?
The affiliate marketing competition is scary, with programs like Amazon Associates uniting close to a million affiliates and countless customers. This, however, in no way prevents your success, and here’s why:
- The virtue of affiliate marketing is that the same customer can buy – usually not even knowing it – from any number of affiliates simultaneously, bringing profits to both marketing “powers that be” (Amazon, eBay, Fiverr, etc.) and smaller (local) affiliates. You don’t need to grow big to succeed: 86% of consumers prefer local businesses to their global counterparts.
Affiliate marketing is wide open for you – just give it a chance!
What Is Affiliate Marketing?
Affiliate marketing comprises three parties – affiliates, advertisers, and customers –with affiliates promoting advertisers’ products in exchange for remuneration for a target action made by referred customers: a purchase, click, impression, or any other action envisioned in the affiliate agreement.
How Does Affiliate Marketing Work?
In a very basic form, affiliate marketing works as follows:
- An affiliate embeds a trackable affiliate link – known to both the affiliate and the advertiser – whenever the product is promoted. The link contains an ID that identifies the affiliate as a referral source.
- A potential customer clicks on the affiliate link, and the affiliate tracking software – the most powerful affiliate marketing tool in your toolkit – connects the customer to the affiliate.
- The link tracks the target action. If the referred customer makes a purchase or completes another target action, this action is instantly and unmistakably attributed to the affiliate, issuing a due payout.
Now, there is good and bad news for aspiring affiliate marketers:
- The good news is that tracking affiliate links is the centerpiece of most affiliate campaigns, so you won’t have to learn much more to switch strategies.
- The “bad news” is that there are at least three types of affiliate tracking to harness: cookie tracking, pixel tracking, and cookieless tracking.
Let’s address popular affiliate tracking methods.
Three Most Popular Affiliate Tracking Methods
|Cookie Affiliate Tracking||How it works First, a tracking cookie is generated on a user’s device upon clicking on a unique affiliate link. Once the referred customer completes a target action, the cookie uses the tracked information – the affiliate’s ID, the promoted product, and the click’s timestamp – to connect the customer, the affiliate, and the advertiser. Advantages: |
|Pixel-Based Affiliate Tracking||How it works Pixel-based affiliate tracking is based on placing a transparent 1×1 pixel image on an advertiser’s website to track the referral’s URL, IP address, browser version, and other marketing information. When a referral visits an advertiser’s website, the pixel sends a request to the affiliate tracking software to record the referral’s actions, thereby informing the parties about the purchase. Advantages: |
|Cookieless Affiliate Tracking||Cookieless affiliate tracking encompasses several affiliate tracking methods, such as: |
How To Choose an Affiliate Tracking Method for Your Campaigns
Getting started with affiliate marketing means choosing your affiliate tracking method, among other things. To hit the bull’s eye with your choice, consider the following factors:
- Tracking accuracy: You need instant and clean attribution.
- Reliability: You need a reliable tracking method with no vulnerabilities like cookie expiration.
- Compatibility: You need a method that integrates with your CRM or lead management software.
Utilizing old-school cookie affiliate tracking or its advanced cookieless counterpart will depend on your marketing goals and business capabilities. You may even use several different tracking methods with different affiliates or campaigns.
How To Get Started in Affiliate Marketing: 5 Crucial Steps
As daunting as starting affiliate marketing may seem for a novice, there’s a surefire way to get a head start in your career: a well-thought-out plan. Having a step-by-step affiliate marketing plan outlined in front of you – or your team – will help you stay on top of things from the get-go without missing important details or postponing tasks you are unwilling to complete at a given moment.
Below is an affiliate marketing step-by-step plan. Remember, you can’t just copy someone else’s success – you must find your scale-tipping extra to make money in affiliate marketing.
1. Find a Profitable Niche That You’re Crazy Good At
You can’t become an affiliate marketer overnight. The very least you need is a minimum viable audience and products best aligned with your expertise. In other words, you must find your niche first.
To find your affiliate marketing niche, consider the following factors:
- Niche’s potential: Level of competition, number of customers, advertising potential, etc. Some affiliate niches are just easier than others.
- Your skills in a chosen niche: Your value proposition, experience, expertise, background, and other advantages you can bring to the table. You must dominate your niche.
- The depth you’re willing to go: Whether you are willing to choose a macro or micro-niche, global or local audience.
Global niches will grant you access to more referrals at the cost of higher competition. Conversely, micro niches will draw fewer leads, most of which will convert.
There are plenty of free and paid tools for researching your affiliate marketing niche. You can use Google Trends to identify the affiliate marketing trends and demand by location, Google Search Console to analyze search queries, Subreddit Stats to see emerging topic ideas and subreddits, and many other tools depending on the research topic.
Top Niches for Affiliate Marketing
|Financial Services||A basic sector of the global economy, financial services include anything from banks to credit unions to stock brokerages, altogether valued at $226.5 billion. This gigantic affiliate marketing industry gives you more than enough room for choice, from financial advising to personal finance. Advantages: |
|Insurance||The insurance market is vast, with increasingly more people seeking insurance protection in developed countries like the United States. Like financial services, insurance encompasses dozens of sub-niches to unleash your potential. Advantages: |
|Home Services||From smart home services to household care to HVAC, the home services industry is increasingly popular among smaller affiliates for its local focus. You don’t necessarily need to compete with global affiliates – just pick your sub-niche and cater to your audience. Advantages: |
|Debt/Tax||The consumer society has long made personal debt a major global issue, especially in the Western world. As of 2022, consumers in the United States owed over $16 trillion in debt, most of which were home mortgages. Naturally, millions of people are seeking a smooth and fair debt resolution. Advantages: |
|E-commerce||Having grown by an incredible 16.9% in just a year, the e-commerce market involves 50% of the world’s population and comprises dozens of niches, from beauty to electronics to online media. Advantages: |
|Gaming||Valued at $97 billion in the United States alone, online gaming is the promised land for affiliates willing to capitalize on the hobby of their youth – or just for the ones willing to tap into one of the most promising and rapidly developing industries. Advantages: |
The mentioned niches are only a drop in the sea of online business avenues that can be scaled with affiliate marketing. For example, you can combine two or more niches within your successful affiliate marketing strategy.
Take, for example, gaming and gambling. Interconnect the gigantic gaming audience and a no less impressive $65 billion gambling and betting industry, and you may find your unique marketing angle.
2. Create a Superior Value Proposition
Whether you advertise on your own or through an affiliate network, you must have a unique identifier to set yourself apart from the competition. Your value proposition – established by only 64% of retail companies and 69% of B2B firms – must be better than anything your referrals have ever seen. For quality content marketing, you need quality content.
- Affiliate networks may help you refine your value proposition and provide creative materials – registration forms, landing page templates, ads, etc. – to reinforce your affiliate marketing. On the other hand, as an individual affiliate, you must do everything mentioned on your own.
The composition of your value proposition may differ, with the basic elements being a headline, a subheading, and a few lines of text against a storytelling background. You can see these elements on the homepages of many world-leading companies.
Your value proposition must contain the gist of your offer, competitive advantages, and the reason to act now. To create such a message, you must know your product and audience through and through, being able to appeal to your referrals’ needs and wants in a unique way.
Here’s the canvas you can use to craft a compelling value proposition:
Source: Peter Thompson
Alternatively, you can use the “Three Questions” value proposition approach by Harvard Business School. The Institute for Strategy and Competitiveness reduced the issue to three simple questions:
Source: Harvard Business School
At the end of the day, you need an elevator pitch that epitomizes your referrals’ pain points and how you can solve them better than anyone else. All things equal, prioritize clarity over creativity; real benefits over pretentious wording.
Cut to the chase. Make them want you.
Here are some inspirational examples:
|See what’s happening in the world right now. |
|Shopify||Build your business. You’ve got the will. We’ve got the way. |
|Uber||Get in the driver’s seat and get paid. |
|Airbnb||Book unique homes and experiences. |
|Phonexa||Convert. Compete. Conquer. Conquer Your Marketing with One Solution |
You may need a slightly shorter or longer value proposition or several ones for different audiences. Anyway, keep it cool and intriguing to make them click.
3. Join an Affiliate Network
As a new or aspiring affiliate, you may find a safe haven in an affiliate network that will connect you to a gigantic pool of advertisers and help with promotion. Over 70% of affiliates in the United States run partnerships with three or more affiliate programs to make money with affiliate marketing.
How Do Affiliate Networks Work?
An affiliate network is a middleman between advertisers willing to buy high-quality traffic at the lowest price and affiliates willing to drive and sell their traffic at the highest price. The mediator must reconcile the parties by offering a fair ground for deals.
Affiliate networks work as follows:
- Advertisers and affiliates join the network. An affiliate network is a two-sided gateway — on one side, advertisers shape traffic demand; on the other side, affiliates shape traffic supply.
- Parties set their goals. After signing up on the platform, advertisers and affiliates can choose how many leads they want to buy or sell, the quality of those leads, the price range, and other parameters like, for example, demographics.
- The system matches the supply with the demand. An affiliate network fills orders when the supply matches the demand. If the best buyer or seller is unavailable, the remainder of the demand or supply goes to the next best buyer or seller as long as the offer satisfies both parties.
From an advertiser’s perspective, an affiliate network works as follows:
5 Steps To Finding Your Best Affiliate Network
Step 1. Compile a List of Relevant Affiliate Networks
Only a small segment of the affiliate networks operating globally will suit your affiliate marketing niche. To separate the wheat from the chaff is easy: discard all irrelevant networks – for example, the ones working with insurance but not the insurance type you need – leaving only the perfect matches on the table.
Step 2. Check the Network’s Background
Get your shortlist and evaluate each network’s track record. You need a reliable network to guide you through the process.
Step 3. Check the Program’s Affiliate Marketing Toolkit
An affiliate network can offer some or all of the following:
- Marketing materials: Trackable affiliate links, banners, ads, landing page templates, email templates, etc.
- Product data feeds: Data feed with product-delated information, such as descriptions, images, and pricing.
- Tracking, reporting, and digital marketing analytics: Tools for tracking your performance, such as clicks, conversions, and affiliate commissions.
- Training and support: Free training materials – an affiliate marketing guide, case studies, webinars, etc. – and round-the-clock support.
- Automatic payment issuance: Timely, due, and safe payments for the target actions specified in the affiliate agreement.
All things equal, go for the most exhaustive affiliate marketing toolkit.
Step 4. Choose Your Payment Model
Find an affiliate network with a payment model that resonates with your expertise. Depending on what you can do best, you can choose to get paid for sales, clicks, impressions, leads, or any other marketing impact you can produce.
Popular Affiliate Marketing Payment Models
|Pay-Per-Action||Advertisers pay affiliates for specific actions completed by referred customers. The paying action may be downloading the advertiser’s software, subscribing to the newsletter, signing up on the website, etc. |
Payment size: Widely varies depending on the target action, reaching $100 and more in the most expensive niches
|Pay-Per-Impression||Advertisers pay affiliates for ad displays, which makes sense for seasoned affiliates and awareness marketing campaigns. |
Payment size: Up to $20 per 1,000 ad displays
|Pay-Per-Click||Advertisers pay affiliates for clicks on trackable affiliate links that lead to the advertiser’s products or services. |
Payment size: From a few cents to a few dozen dollars
|Pay-Per-Lead||Advertisers pay affiliates to generate leads, which are the customers that fit the agreed-upon criteria. For example, a lead is a user who has asked for a quote or a user who has filled out a website form. |
Payment size: From dozens to hundreds of dollars
|Pay-Per-Sale||Advertisers pay affiliates for purchases made by referred customers |
Payment size: Any flat fee or percentage of the sale amount (usually 20% or less)
Step 5. Peruse the Affiliate Agreement Before Taking Action
Last but not least, make sure to check the affiliate agreement for pitfalls, ambiguity, lack of clarity, and other signs of malpractice. Should you spot any of the mentioned, double-check the network — chances are you’ve missed some crucial information on one.
That said, most affiliate networks are fair, solving most, if not all, of your problems while only taking a small percentage of your referral profits.
Three Major Benefits of Affiliate Networks for Aspiring Affiliates
|The easiest way to start affiliate marketing||Affiliate networks are all about getting a head start in the affiliate marketing business. While you are creating value for your customers, your affiliate network takes care of the rest. |
|No upfront investment||Affiliate networks are a chance to learn affiliate marketing at no cost and with no upfront investment. Your network will only take a percentage of your referral profits or a flat fee per sale (or other target actions). |
|Infinite scaling||Multi-tiered affiliate networks will allow you to create your own affiliate sub-networks, establishing a stream of smart passive income from your sub-affiliates. |
4. Integrate Affiliate Tracking Software Into Your CRM or Lead Management Platform
Having created your unique value proposition and joined an affiliate network, you are almost ready to foray into the multiverse of affiliate marketing. One thing is still missing, though: affiliate tracking software.
- Affiliate tracking software is indispensable for data-driven affiliate marketing. Whether an advertiser or affiliate, you need to track your conversions and ensure fair and timely payouts, not to mention you need referral data to rely on.
Your affiliate network may provide you with affiliate tracking software or share post-purchase analytics, but it’s more reliable to have proprietary affiliate tracking software or SaaS affiliate tracking software, such as Phonexa.
Phonexa’s Affiliate Tracking Software Features
|Unlocking Referral Journey||You will unlock the customer journey from A to Z, knowing who and why clicked on your ads and whether the click resulted in a conversion. Deep customer insights will enable data-driven decisions and boost your confidence. |
|Real-Time Adjustments||Real-time reports will keep you informed as your affiliate marketing campaigns evolve. With Phonexa’s affiliate tracking software, you will update your campaigns on the fly to secure more conversions. |
|Granular Customization||You won’t have to resort to the ineffective one-size-fits-all approach anymore, as you will be able to tailor your affiliate marketing strategies to different types of customers. |
|Automated Payouts||Whether an advertiser or affiliate, you will never miss a payout and will be able to create customized commission rates for your affiliates and sub-affiliates. |
|Fraud Protection||Phonexa’s affiliate tracking software, powered by robust security algorisms, will shield you from malicious practices. |
Phonexa’s Lynx – automated affiliate marketing software – encompasses performance tracking, journey control, and precise targeting, among many other features. Likewise, it integrates into Phonexa’s all-encompassing lead management platform LMS Sync.
5. Track Your Performance
Whether you like it or not, making money with affiliate marketing will require constant campaign monitoring. You will need failproof affiliate marketing tracking metrics to rely on and robust affiliate tracking software to collect affiliate marketing data and transfer it to you (or your sales agents) in real time.
Luckily, almost all affiliate marketing tracking metrics are the good old standard marketing metrics – clicks, impressions, conversions, sales, customer lifetime value, conversions, and ROI – which saves you much time. To refresh your knowledge of digital marketing tracking metrics, check this guide.
Advantages of Affiliate Tracking Software You Can’t Ignore
|Unification||Affiliate tracking software will unique your heterogenous marketing campaigns within a single dashboard, enabling one-click management of all affiliates or sub-affiliates. You will see how your campaigns unfold in real-time, being able to adjust your ways on the fly. |
|Automation||Unlike the outdated manual approach that largely relies on guesswork, automated affiliate marketing will put data on top of things, enabling instant processing of any number of campaigns and customers. Not only will automation help you scale, but it will save time, increase customer engagement, and unlock upselling opportunities. |
|Reliability||The two most sensitive aspects of affiliate-advertiser relationships are conversions and payouts. Advanced performance marketing tracking software will ensure all your customers are accounted for, with expected revenues arriving on time. This will strengthen your position as an independent affiliate or an affiliate network member. |
|SEO-friendliness||One of the most overlooked advantages of software-driven affiliate marketing is search engine optimization (SEO). Surprisingly, your SEO will become more effective with the best keywords brought to you on the silver platter. Affiliate tracking software will determine the keyword that triggered a particular sale, call, or other target action. |
|Fraud Prevention||Not only will affiliate tracking software prevent you from rash and thoughtless steps, but it will minimize the possibility of affiliate fraud, such as, for example, click fraud. |
The Other Side of Affiliate Marketing
|Lack of Control||As an affiliate marketer, you may be unable to research the product you promote profoundly. However, you can join an affiliate network that thoroughly checks its advertisers and runs fraud-preventing affiliate tracking software. |
|Insane Competition||Aspiring affiliates have very little chance if they act independently, even if they use affiliate tracking software. The only viable way to beat the competition, especially in the highest-paying niches, is to use the power of an affiliate network. |
|Legal Complications||You may not know where legal marketing practices end and shady ones start. However, an affiliate network will likely keep you on the legal side of things |
Redefine Your Affiliate Marketing With Phonexa
With Phonexa, you can get an all-in-one suite for marketing automation – including affiliate tracking software – with solutions for calls, leads, clicks, email, SMS, and accounting products, while only paying for the features you need.
Book a free consultation to learn how Phonexa can revolutionize your affiliate marketing.
Frequently Asked Questions
What is affiliate marketing?
Affiliate marketing is a type of marketing in which an advertiser pays an affiliate a commission (a flat fee or a percentage of the sale amount) for customers, leads, impressions, or clicks generated by the affiliate.
What are affiliate links?
Affiliate links are special trackable links that connect customers, affiliates, and advertisers within an affiliate marketing campaign. Affiliate links are used to track clicks, impressions, sales, and other trackable marketing metrics and attribute them to a particular affiliate (publisher) so the latter can get a timely and due payout from their advertiser.
Here’s an example of an affiliate link: https://www.example.com/?affid=1234, where www.example.com is the advertiser’s website and “affid=1234” is the link’s identifier used to track the purchases (leads, clicks, etc.) from this link.
How do you get affiliate links?
You will get unique affiliate links after signing up for an affiliate program. Likewise, you can get your affiliate links directly from your advertiser.
What are affiliates?
Affiliates (publishers) are companies, individuals, or agencies that promote a third-party (advertiser’s) product or service in exchange for a commission from the sale amount or a flat per-sale fee. Affiliates use affiliate links or other tracking techniques in their marketing companies to attribute their customers to themselves.
What are advertisers?
Advertisers are companies or – rarely – individuals that sell their products through affiliates, whom they provide with a trackable affiliate link or other customer tracking strategies. Advertisers pay a commission to their affiliates for every sale, lead, click, or other marketable action.
Likewise, advertisers – or affiliate networks – provide affiliates with creative materials, such as ads, banners, registration forms, and other marketing stuff that can help affiliates generate more leads and sales for their advertisers.
What is a lead in affiliate marketing?
A lead in affiliate marketing is the same as a lead in business: a customer who has expressed a certain interest in the advertiser’s products or services by creating an account, subscribing to the newsletter, adding a product to the cart, calling the sales department, etc.
At the same time, advertisers are free to set individual lead qualification criteria. In other words, potential customers – for example, website frequenters – qualified as leads with one advertiser may not be qualified as leads with another advertiser.
What are referrals?
Referrals are customers referred to an advertiser by an affiliate or an affiliate network. For example, someone who has clicked on an affiliate link and then made a purchase or completed any other desired action on the advertiser’s side would be considered a referral of a specific affiliate.
How do you start affiliate marketing?
On paper, getting started in affiliate marketing is as simple as completing this plan:
- Find your niche.
- Create a superior value proposition.
- Join affiliate networks to tap into revenue streams.
- Integrate affiliate tracking software into your CRM or lead management system.
- Track your performance for timely updates.
In reality, each of these points requires thorough research, deep knowledge, and maybe help from one of Phonexa’s experts. Learning affiliate marketing will require some time and effort.
How can you learn affiliate marketing effectively?
The most effective way of learning affiliate marketing is through practice.
Here’s how to start affiliate marketing for beginners:
- Learn affiliate marketing theory (most of which is outlined on this page).
- Join an affiliate network.
- Increase your budget as you grow confident.
How much can you make from affiliated marketing?
There’s no limit to how much money you can make from affiliate marketing. If the history is any indicator, you may assume your odds are as follows:
- Under $10,000 per year – around 60%
- $10,000 to $50,000 per year – around 18%.
- $50,000 to $100,000 per year – around 7%.
- $100,000 to $150,000 per year – around 10%.
- Over $150,000 per year – around 5%.
How come you have more chances to earn $100,000 to $150,000 than $50,000 to $100,000 annually? Well, since these odds are derived from a 2021 global survey of affiliates, there’s a chance that some affiliates obscured their income or did not answer fairly. Another possible assumption is a barrier of around $100,000 in annual income, after which things get easier due to the exponential growth of an affiliate network.
What is the best niche for affiliate marketing?
It’s hard to say what niche and type of affiliate marketing are the best for you, as it depends on your expertise, countless individual factors, and luck. Traditionally, the best niches for affiliate marketing are the highest-paying ones: insurance, finance, and home services.
How to choose the best niche for affiliate marketing
The ultimate advice would be to choose an affiliate marketing niche that you’re exceptionally good at and with a high referral marketing potential.
What are the most popular affiliate marketing channels?
Social media aside (Facebook, Twitter, LinkedIn, etc.), the most popular affiliate marketing channels – not necessarily the best ones, though – are blogs (28%), review websites (18.7%), and coupon websites (14.8%).
What is affiliate tracking software?
Affiliate tracking software is a set of unified affiliate marketing tools that help affiliates and advertisers track and optimize affiliate marketing campaigns, among other things. Advanced affiliate tracking software can unlock every referral’s interaction within the customer journey, including marketing data (clicks, views, sales, etc.) and customer data (demographics, psychographics, customer status, budget, history of purchases, etc.).
Can a single affiliate tracking software suite manage all your affiliate campaigns?
You only need one affiliate tracking software suite to manage all your affiliate campaigns, as any affiliate tracking software will have the capacity.
What is the best affiliate software?
The best affiliate tracking software is the one that will cover your affiliate marketing needs in full while not overcharging you. Phonexa’s Lynx is among the best affiliate tracking software suites, enabling advanced campaign tracking and smooth integration with your CRM or lead management platform.
What is EPC in affiliate marketing?
EPC – earning per click – is an affiliate marketing metric that measures how much money a click brings you on average. For example, if you earned $1,000 in sales after 200 clicks, then your EPC would be $5.
EPC depends on the niche, affiliate program, and marketing campaign, ranging from a few cents to around $50 for the most sophisticated campaigns in the most expensive industries. EPC is only one of many affiliate marketing evaluation metrics and cannot predict your success alone.
What is CPA affiliate marketing?
CPA affiliate marketing is a performance-based affiliate marketing model in which an affiliate marketer is paid for a referral’s specific action, such as signing up on the advertiser’s website, signing up for the newsletter, downloading software, submitting an on-site form, etc.
CPA affiliate marketing doesn’t pay a percentage of the sale amount but a flat fee for the target action completed by the referred customer. This revenue model suits advertisers willing to achieve specific actions on their website without focusing directly on sales.
What is PPC affiliate marketing?
PPC affiliate marketing is a performance-based marketing model in which an affiliate marketer is paid for every ad click. PPC affiliate marketing doesn’t require an affiliate to run a website – the latter can just create ads using services such as Google AdWords and Bing Ads.
What is affiliate marketing on YouTube?
YouTube affiliate marketing is one of the most perspective niches of affiliate marketing for the dominance of the most popular video platform. In November 2022 alone, YouTube collected over 75 billion visits on mobile and around eight billion from desktop devices.
In a nutshell, YouTube affiliate marketing works as follows:
- You create a YouTube video and add an affiliate link in the description.
- Some viewers click on this affiliate link.
- You get income from clicks or purchases, as per agreement with your affiliate network or advertiser.
YouTube affiliate marketing is no different from any other type of affiliate marketing except that it’s built around video content.