How to start affiliate marketing: your questions answered
AUGUST 16, 2022 | USE CASES
The affiliate marketing industry is set to grow to $15.7 billion by 2024. It’s a global phenomenon – and yet getting started requires little more than some canny strategy, top tools and the willingness to seize opportunities. But what actually is affiliate marketing and how does it work? Find out in this guide, from how to set up to picking the best affiliate programs.
What is affiliate marketing and how does it work?
First things first: affiliate marketing is a way in which you can monetize traffic by promoting a product or service made by a third-party in return for a commission.
What causes the commission can differ, but is usually one of:
Pay per sale: when an individual purchases a product
Pay per lead: when an individual signs up for a service
Pay per download/install: when an individual downloads and/or installs an app or software
For anyone looking to make money from affiliate marketing, then, this is the key point. Your costs are whatever it took for you to generate the traffic; your revenue is the commission from the conversion – and your profit is your revenue minus your costs.
How much commission do affiliate marketers make?
This is one of the most common questions when people look to start affiliate marketing. Generally speaking, commissions range from about 5% to 30% of the sale upwards. In some affiliate programs for very high-value products like selling attendance at an event, it could hit 50%. In many ways, in paying you the commission, the provider is absorbing what would otherwise be their cost for generating the traffic.
Large marketplaces also often have their own affiliate structures. Amazon, for example, through its Amazon Associate Program, bases its commissions on the product category. It can go from as little as 1% on Amazon Fresh or personal care items, to 5% on digital music, 10% on luxury beauty and 20% on Amazon games.
More broadly, Shopify data shows the highest commission rates – those above 30% - can be found in affiliate marketing for business, accessories and health products.
What conversion rates can you expect when you start affiliate marketing?
While it doesn’t take much in the way of resources to begin with affiliate marketing, it does require some time to start building up your traffic unless you have an existing source. As you continuously refine and improve your campaigns and content, you will find conversions begin to stabilize. According to Shopify data, conversion rates go from around 3% in health verticals to close to 10% for automotive and business niches.
How do affiliate marketers track conversions?
This is a really important element to consider when looking at the best affiliate programs (more on this later). Reliable tracking is the only way you and the business you’re working with can attribute a sale to your traffic specifically.
You will usually receive an affiliate code or tracked link that is unique to you. You need to use this whenever you direct a potential customer to the product or service – without it, there is no way to prove to the merchant that they came from you.
How do you identify the best affiliate programs?
There is no single answer to say that X or Y is the definitive best affiliate program. Rather, you need to identify sectors and products for which you either already have or could build an engaged audience. For example, if you’ve traffic from a gaming blog, then tech products are clearly easier to market than, say, healthcare products. You want to be ‘adding on’ to your audience and not interrupting their experience with something completely different.
In cases where you have an established source of traffic – your ‘distribution channel’ – then you also have a foot in the door of inquiring directly to brands.
In other cases, where you don’t have an already-established source like a blog, then you will likely begin looking at the best affiliate programs for you on affiliate marketplaces like ClickBank or ConvertKit.
Either way, it’s generally a good strategy when you start affiliate marketing to spread your risk. Consider that there isn’t one best affiliate program, but rather a healthy mixture of higher-volume but lower-paying and higher-paying but lower-volume programs. If you can find ones on the sweet spot of high volume and high payment, then you’ve hit the motherlode!
How can you scale after you start affiliate marketing?
The most important thing is to consider how you can get the most value for your efforts. If you have successfully built up traffic with a good conversion rate, will continuing to head after the more difficult-to-convert elements of that traffic be the most profitable use of your time?
Often, instead, it's a case of expanding into multiple areas – and this is where you need to think about multiple accounts.
Running multiple accounts allows you to grow your reach by expanding into different areas without diluting your authority. For example, if you have built a good following in the healthcare industry, it makes sense from a branding and authority perspective to keep that separate from a venture into a different sector.
When’s the best time to get started with affiliate marketing?
You’ve read our answers to ‘what is affiliate marketing and how does it work?’ – and the answer to this final question is that, with the information above, there is no time like the present. Start scouting out the right opportunities for your traffic, set up your first accounts through Multilogin and get ready to start affiliate marketing and scaling further than you’d ever thought you could. With the right technology and strategy, it’s all within your grasp!