What is Affiliate Marketing and How Can I Use It for My Small Business?
As a small business owner on the internet, you are probably always thinking about ways to make more money. After all, most of us spend the bulk of our days on the web. For a small business owner looking to increase profit, there’s no better, more efficient, or faster way to grow than to utilize online methods.
One of the best methods for increasing profits is affiliate marketing. You may have already heard that term but aren’t sure what it is or how to apply it to your business. Affiliate marketing involves three essential parties: the business owner (also sometimes called the advertiser), the affiliate, and the customer. Essentially, affiliate marketing is the process by which the affiliate directs customers to the business owner and earns money.
For you as a small business owner, there are two options: either direct customers to other businesses and earn a share, or utilize others to promote your own products and give them a share (or both!).
The affiliate marketing segment is growing at breakneck speed in the United States. By 2020, total spending in the affiliate marketing industry is projected to hit $6.8 billion. Spending in this sector increases by just over 10% each year. The top affiliates across all categories can make six figures (or more) per year.
The affiliate marketing industry is not going away. In fact, it’s going to continue to get bigger and bigger each year.
Here, you’ll learn everything you need to know about how to get started utilizing affiliate marketing to grow your own online business (or to make a little extra cash).
The Two Different Types of Affiliate Marketing
There are two basic types of affiliate marketing. In actuality, the model is the same for both types; it just depends which side of the model you are on.
1. Using affiliates to promote your own brand and products
If you run a small business on the internet, one of the best ways to significantly increase your sales is to utilize affiliates. In this case, you would find affiliate partners to promote your brand and products. The promotion takes place on the affiliate’s own website, on YouTube, on Instagram, on Facebook, or any other online venue.
You would not be paying the affiliates upfront: this is the biggest draw of affiliate marketing for small companies. You would only pay the affiliates if you made a sale, or booked an appointment, or added a client, etc.
There are several models for paying out affiliates. This is something you would decide on yourself. But the bottom line is that nothing comes out of your pocket upfront, and you utilize affiliates to promote your business.
Affiliate marketing for small companies is one of the best ways to grow on the internet.
2. Becoming an affiliate to promote other brands and products
Another way to use affiliate marketing to make money is by becoming an affiliate for other brands. In this case, you wouldn’t work with direct competitors, but rather businesses and products related to your own.
For example, if you had a thriving online fitness coaching business, perhaps you partner as an affiliate with protein powder companies or gym clothing brands. In this way, you would be recommending products as an affiliate to your own client base and then receiving a share if they purchased or signed up.
Financial Models For Affiliate Marketing
There are different ways to make money with affiliate marketing. Within the two types of affiliate marketing, there are three unique revenue models.
The cost-per-click (or CPC) model may be the most well-known in affiliate marketing. This is where the affiliate gets paid each time someone clicks on the business owner’s advertisement. In this model, it’s essential to control for fraud and to have reliable software to be able to track clicks accurately.
Many businesses use the CPC model with Google AdSense, for example. In this way, they can post their advertisements to multiple websites that align with their business, and easily track clicks.
CPA (cost-per-acquisition or action)
In the cost-per-acquisition or cost-per-action (also known as CPA) model the business owner pays the affiliate when customers complete a specific form of acquisition or take a particular type of action. In this case, the act or acquisition can be several things, depending on the business owner. For example, you, as the business owner, might wish to pay affiliates only when customers purchase a product.
You could also pay out when customers fill out your online information request form. Or perhaps, you would like to pay affiliates when new customers sign up for a trial of your service. Any of these examples would be a CPA model.
RevShare (revenue share)
In a RevShare structure, the affiliate is paid a commission through a percentage of sales or profits they make for the business owner. Often, these programs pay out over the full lifetime of that particular customer.
The Amazon program is an excellent example of this. Amazon affiliates earn a percentage of the sale when customers buy through their specific Amazon link.
This type of affiliate model is widespread for social influencers. Before getting into a RevShare affiliate program, you should be sure you understand the details, including what percentage you will receive.
Different affiliates and business owners will select different financial models based on their needs. For affiliates, it’s not always about targeting the highest CPC or CPA. Some categories of consumer products may provide lower CPCs or CPAs, but you would be more likely to get those clicks or actions because the search volume is higher.
On the other hand, you may find a business that provides higher payouts per click or action, but also has a much much higher competition and a lower search volume, so you are less likely to get those clicks or actions.
Finding the correct model is truly about what works for both the affiliate and the business owner.
Why Affiliate Marketing for Small Companies is a Good Idea
No matter which type of affiliate marketing you choose, it will have several advantages for you as a business owner. Whether you use affiliates to promote your own business, or you become an affiliate for another, you can expect to start seeing some increased revenues.
These are just some of the advantages of affiliate marketing for small companies.
1. Benefits of using affiliates to promote your business
Using affiliates will naturally lead to an increase in sales. You’ll be able to garner traffic from multiple different sources coming from all of your affiliates, such as social media platforms, blogs, and content production sites like YouTube.
Limited to no risk
As the business owner, you decide what you pay out and how. You can specify the acquisition or action for the CPA model so that you only have to pay affiliates out when you make money.
Savings of time and resources
It’s relatively easy to get started utilizing affiliates. It keeps you from needing to build and grow your own online blog or social platform, because you can use your affiliates’.
Getting your business name out there through your affiliates will help lead to greater brand awareness over time. You might also be able to tap into totally new markets that you otherwise wouldn’t have.
As you grow, you can get additional affiliates or more prominent affiliates. For example, as your business becomes more well-known, you may be able to partner with higher-reach influencers.
2. Advantages of becoming an affiliate
There are also several advantages to becoming an affiliate for other businesses.
Promoting products you already like
In many cases, you may already be utilizing the brand or product that you will end up promoting. Especially when you choose to work with businesses that align with your interests, you will likely seek out and find products you already like. What better way to make money than simply recommending those products to others.
Making money from your website or social channels
It’s always nice to bring in a little extra cash when you are growing your online business. If you become an affiliate for other brands, you’ll be able to start making money from your website and social channels immediately.
Building brand partnerships
As your business grows, you’ll be developing relationships with the brands you choose to work with. These contacts can be invaluable over time.
No barriers to entry
Unlike growing a business from scratch, affiliate marketing has almost no barriers to entry. Some programs and companies you choose to work with may have follower counts or traffic numbers they want you to meet, but you’ll be able to find the right fit no matter what.
You won’t need to pay anything to get started as an affiliate for other brands. You can apply and start immediately.
Once you start recommending products and sharing your affiliate links, your job is complete. While there are things you can do to increase the amount that you make, affiliate marketing is mostly passive income.
No limit to earning
Unlike having a job with a set salary, there is absolutely no limit to what you can make as an affiliate. If you are highly motivated, you can become one of the top earners in the affiliate marketing industry, bringing in six figures or more per year. Some affiliates make millions of dollars annually.
How to Get Started With Affiliate Marketing as a Small Business?
Getting started with affiliate marketing can be simple, but there are specific steps you should take to ensure you’re setting yourself up for success.
Steps to take before starting with affiliate marketing
1. Decide on your niche.
The most crucial step to take before you build anything for affiliate marketing is to decide on a niche.
Your niche should be an area that you already love and can easily monetize. It should also be an area for which you feel you will never run out of content. When choosing your niche, make sure that particular area is not oversaturated.
If it is, you may need to specify a smaller niche within it. For example, the general fitness niche is very saturated. But perhaps you could specialize in bodyweight fitness for frequent travelers.
You’ll also want to make sure that the market is big enough and that some affiliate programs already exist within that niche.
2. Develop your website and social media presence.
The next step is to develop your website and social media presence. After all, you can’t promote products unless you have a place to promote them.
You should take care to ensure that your website is professional and that it is scalable. You should curate your social media to attract the exact type of followers and customers you want for your niche.
3. Produce high-quality content.
There’s only one way to attract potential customers to your online presence, and that is by producing high-quality content. Although you may be in a hurry to get started affiliate marketing, you should never rush through your content production. Your goal should be to consistently produce great content that your customers and followers will love to read so that they keep coming back for more.
4. Grow your audience.
Now that you’ve set yourself up with your specific niche, your website, and your great content, the next step is to grow your audience. At this stage, you should start thinking about building an email list, so that you have customers ready when you start affiliate marketing.
Now that you’ve made sure you’re ready, your next step is to handle the logistics of the business of affiliate marketing.
How to get started using affiliates to promote your business
There are many avenues for you to take to find affiliates to promote your small business.
Join affiliate networks
One of the best and easiest ways to get started with affiliate marketing as a small business is to join established affiliate networks. These are companies that will take information about your business, your customers, and your target market and match you with affiliates that can help promote your products.
Another great way to get started affiliate marketing is to find influencers on your own. You can search social media networks for those individuals who are in a niche similar to yours, perhaps already using products that are like yours, and contact them to see if you can develop an affiliate relationship.
Talk to existing happy customers and colleagues
A great thing to do for your small businesses to create affiliates. In other words, talk to satisfied customers to see if they might be willing to earn money promoting your business. You may also have colleagues who work in similar industries (not direct competitors) who would be ready to sign on as affiliates for your business, as well.
How to get started as an affiliate
Getting started as an affiliate is just as simple as finding affiliates for your business.
Join affiliate networks
Just like finding affiliates for your business, to become one, you can join already established networks. These are networks where you sign up and get matched with companies who are looking for affiliates for their products.
Reach out to businesses you love
If there are any particular businesses that you love or products you frequently use, you may wish to reach out to these companies to see if they are looking for affiliates. In today’s market, it is highly likely you will find businesses excited to have a new affiliate who already loves their brand.
Great choices for affiliate programs per industry
Health is an evergreen industry that will never go out of style. Whether is weight loss, a particular diet, or new health trends, people will always be looking for health products.
DietBet – DietBet is a fun and lucrative health affiliate. Here, you can sign as a coach to help people meet their health and fitness goals by creating games. Your customers will earn money for losing weight, and you can receive a percentage of that cash.
The beauty market grows every year. Especially online, where Instagram influencers and YouTubers can do makeup tutorials and reviews, it’s easy to get started affiliate marketing in this niche.
Amazon – The behemoth of the internet, Amazon’s affiliate program pays well for luxury beauty products. One great thing about using this program is that your followers and customers are probably already using Amazon on a day-to-day basis. Recommending beauty products to them through your affiliate link will mean that they don’t have to change their purchase habits at all, and you can earn a commission.
The finance industry is a massive industry that covers both personal finance and credit cards, as well as online banking. Because most of us use the internet for our personal financial management, there are several great affiliate programs to choose from in this niche.
LifeLock – LifeLock is a well-known data protection brand. People already know it, and are likely to use it for online safety. Affiliates can earn up to $110 per sale.
The online dating industry continues to grow each year. In fact, online dating if the primary way that people meet each other now.
Match – The Match affiliate program is through a bigger affiliate company, CJ Affiliate. They are a very well-known brand within the dating niche, and they advertise as having success in creating meaningful relationships. Affiliates can earn up to 50% of new subscriptions and may even make an additional 50% bonus.
If you love to travel, it would be great to earn income while recommending travel products to others.
Sandals – Sandals is a well-known hotel brand that allows its affiliates to earn a percentage of nightly rates per person. Since it is already such a popular brand, it is a great way to get started affiliate marketing in the travel niche.
Is affiliate marketing for me?
Affiliate marketing is truly an excellent idea for anyone in this day and age. Especially if you have the drive to build a great small business, affiliate marketing will help you supplement your income. Not only that, it’s a fun and exciting thing to do.
If you’d like, and you’re willing to work hard, affiliate marketing may even end up being your primary source of income. It could help you join the ranks of the million-dollar earners!