It seems ideal, doesn’t it? You set up a website, add a few affiliate links, and start earning the passive income you’ve always dreamed of.

That’s the promise of affiliate marketing. And it’s a reality for leading bloggers who make five and six figures from monthly affiliate commissions.

Blogging isn’t the only way to make money from affiliate marketing. Microsites, email lists, and video marketing are just a few methods people use to generate an online income.

Don’t worry if you’re not earning a six-figure income from your affiliate marketing efforts just yet. Most people aren’t. But that doesn’t mean you can’t adopt the tips and strategies I share in this guide to improve your site and increase your income.

Ready to learn more? Let’s jump in.

Affiliate Marketing: The Need to Know

Affiliate marketing is a marketing model where publishers earn a commission for every sale they generate for a merchant or retailer.

There are four groups involved in the process: the affiliate, the merchant, the consumer, and the affiliate network.

Affiliate marketing has a lot of pros. It’s easy to get started, it’s low cost, and it can result in a big payday for brands and marketers.

But it isn’t perfect. It can take a long time to see success.

You can drive traffic to affiliate deals through several channels, including websites, social media, YouTube, and email.

What Is Affiliate Marketing?

Affiliate marketing is promoting other people’s products in return for a small commission for each sale. You’ve probably seen headings marked “affiliate link” or “sponsored post” on many of the websites you visit since it’s one of the most popular income streams for websites.

If you are new to affiliate marketing, let’s cover how it works.

First, you find an affiliate program or network you are interested in. Look at the program overview, including the type of products or services, payment methods, and commissions they offer.

If it appeals to you, sign up and await your acceptance confirmation. Then, start creating content and adding the custom links the program provides. Those links track when one of your users makes a purchase, and you’ll earn a small commission.

You can work with individual companies or affiliate networks, which oversee the affiliate programs of hundreds or even thousands of different companies. The programs are generally divided into categories to make selections easier. Once approved, promote your affiliate links on your website—in newsletters, on social media, and anywhere else you’re permitted to share links.

The network or merchant will send payment when you reach the minimum payment level. Payment methods vary and usually include PayPal, bank transfers, and checks.

I’ve just mentioned several key parts of an affiliate marketing system, so let’s take a minute to break them down.

The Merchant

Sometimes also known as the creator, the seller, the brand, the retailer, or the vendor, this is the party that creates the product. It could be a big company, like Dyson, which produces vacuum cleaners, or a local store. Anyone from solo entrepreneurs to startups to massive Fortune 500 companies could be the merchant behind an affiliate marketing program—they just need a product or service to sell.

The Affiliate Marketers

This party is sometimes also known as the publisher. Affiliates can also range from single individuals to entire companies.

An affiliate promotes one or multiple affiliate products and tries to attract and convince potential customers of the product’s value so that they end up buying it.

This can be achieved by running a review blog of the merchant’s products. For example:

An example of an affiliate site.

It could also be an entire site dedicated to finding cool products related to certain topics and promoting those affiliate products.

example of an affiliate website 

The Consumer

The customer or consumer makes the affiliate system go ’round. Without sales, there aren’t any commissions to hand out and no revenue to be shared.

The affiliate will try to market to the consumer on whatever channel they see fit, whether that’s a social network, digital billboards, or through a search engine using content marketing.

The Affiliate Network

Only some consider the network part of the affiliate marketing equation. However, I believe an affiliate marketing guide needs to include networks because a network often works as an intermediary between the affiliate and the merchant.

The affiliate network also serves as a database of many products from which the affiliate marketer can choose which to promote.

click bank affiliate marketing network example 

In the case of promoting consumer products, like tools, books, toys, and household items, the biggest affiliate network, by far, is Amazon.

Their Amazon Associates affiliate program lets you promote almost any item sold on their platform.

affiliate promotion program exmaple

Anyone can sign up and generate a custom affiliate link to Amazon products. If someone purchases through your link, you earn a small commission.

Pros and Cons of Affiliate Marketing

There’s a lot to love about affiliate marketing for both retailers and marketers.

For example, affiliate marketing offers passive income opportunities for both merchants and publishers. Affiliate marketers can make money in their sleep once they’ve published content, and brands don’t have to do anything to get more sales once they’ve set up their affiliate program.

Affiliate marketing also lets publishers earn money without having to have an office, offer customer support, or handle products. All they need to do is create marketing campaigns. This makes it an incredibly cost-effective business model.

Retailers don’t have a whole lot to lose. Because affiliate marketing is performance-based, they only have to pay affiliates who make a sale.

Affiliate marketing isn’t for everyone, though. It’s much harder to establish a customer base as an affiliate marketer since you are always referring users to other businesses. You also don’t have full control over your income and are always reliant on affiliate programs. If an offer stops, so does your pay.

You don’t tend to see success immediately, either. It can take months or even years to earn a significant amount of money through affiliate marketing.

How to Become a Merchant

There are two ways to make money with affiliate marketing: by becoming a merchant or an affiliate. While becoming an affiliate is the most common type of affiliate marketing for beginners, I’ll start by explaining how to become a merchant.

Step 1: Coming Up with an Affiliate Product Idea

If you want to make money with an affiliate marketing business, you can’t be attached to your idea.

Instead, just look at what products and services are already out there. Consider how you can improve upon them by delivering something that solves the problems with those products.

Another way to do research is to use a tool called Buzzsumo, which shows you what’s popular based on social shares.

Even if you’re into building sandcastles, you can instantly see what content has been recently popular.

If you go on YouTube and search for “build a sandcastle,” you’ll find thousands of results.