What exactly is affiliate marketing?

Affiliate marketing is a performance-based marketing arrangement, in which a business rewards individuals (affiliates or affiliate marketers) for promoting its products or services.

Here's a typical example of an affiliate marketing arrangement:

ABC Electronics, an online electronics retailer, has set up an affiliate program and encourages affiliates to join the program. You register for the affiliate program and start promoting various products offered by ABC Electronics.

Each time a purchase is made by a customer you refer to ABC Electronics' online store, you will earn a commission on the sale, which is a specified percentage of the sale price.

In the example above, ABC Electronics is the merchant running the affiliate program, while you are the affiliate or affiliate marketer promoting its products.

How does affiliate marketing work?

Since every business needs to attract customers in order to thrive, many businesses adopt the affiliate marketing strategy. That is, they "recruit" affiliate marketers to promote their products or services on the internet.

This strategy is cost-effective since the merchant will only pay a commission when a referred customer completes a purchase.

From the perspective of the affiliate marketer, the commission is enough motivation. Even more alluring is the fact that there's no limit to how much an affiliate can earn every month. The more customers you refer to the business, the more money you make.

So, each successfully completed sale is a win-win-win situation: a win for the business (new customer), a win for the affiliate (additional income), and a win for the customer (the new product/service purchased).

How exactly does an affiliate promote a merchant's products or services?

To become an affiliate marketer, your first step is to register for the affiliate program set up by any merchant of your choice.

After you've completed your registration, you'll need to generate your unique affiliate link for each offer that you want to promote. Because this link is what tells your merchant that you facilitated a sale, you'll need to place it on any platform you use for affiliate marketing.

There are many ways to promote your merchant's offers. They include the following:

1. Blogging

This involves creating a blog, either specifically for the offers you're promoting or for a more general topic that is closely related to the offers.

For example, if you intend to promote electric blenders for ABC Electronics using a blog, your blog can be focused on the specific model of blender you want to promote, on blenders of different brands, or even on kitchen appliances in general.

2. Forum marketing

This involves joining and participating actively in a forum where there are users who are likely to be interested in the products or services you're promoting.

Your goal would be to offer helpful information to others while recommending your offers in a subtle way.

3. Social media marketing

You can also promote your merchant's offers on Facebook, Twitter, and other social media platforms. A smart way to achieve success with this strategy is to create a group or page that is catered to users who are very likely to be interested in the products or services you're promoting.

Your aim here is to offer helpful information related to your merchant's offers and promoting those offers covertly.

4. Email marketing

This very popular strategy involves creating an incentive -- such as a free e-book -- that will attract the attention of people who are likely to be interested in the products or services you're promoting and then using that incentive as bait to get them to join your mailing list.

After building a huge list of subscribers and maintaining a cordial relationship with them through helpful information, you can pitch them the products or services you're promoting.

Other strategies include banner advertising and pay-per-click advertising. I won't dwell much on those in this post.

Regardless of the platform you choose, your ultimate goal is to make money by encouraging people to buy whatever you're promoting by visiting the merchant's online store through your unique affiliate link.

With all of the above in mind, I'm sure you now have a better understanding of what affiliate marketing is and how it works.