Affiliate Marketing by Example

July 11, 2008 · Filed Under Affiliate Marketing · 3 Comments 

What is Affiliate Marketing? I get asked this all the time and I like to give the simplest example possible. Showing the income potential is what works with most people.

First off, to try to explain "what an affiliate program is" or "what is affiliate marketing"  in one post would not give the topic enough justice.

Here is the simple example …

making money with affiliate marketing

Imagine having a nice, shiny, great looking,  high traffic web site about cars, trucks and anything automotive. Your site is doing great for traffic, but you are currently not really making any money from this traffic.

So you do a bit of research and discover affiliate marketing.

You also discover that it can benefit you, your website and your bank account.

Affiliate marketing is where you, the web site or blog owner, can make additional money by sending traffic to another web site for a commission


… if a sale is made (this is one definition)

Going back to your web site.

webmaster money tools Based on your research, you now decide to promote  auto parts or popular car audio equipment  by placing a banner or text links on your web site in the hopes that your site visitors will click the banner, go to the affiliate site and make a purchase. (more on banners and where to get them further on)

How to make money on the Internet  Day 1:

You’ve placed your banner and 60 people have clicked the banner and visit the affiliate web site.
Out of the 60 people that clicked the banner, 7  people decide to make a purchase for a total sale price of $700.00. (Assuming the average sale is around $100.00 per transaction)
If your commission is 10%, you just made $70.00

How to make money on the Internet  Day 2:

This day you’ve had more clicks on your new banner and this time 12 people decided to purchase products from the affiliate site for a total of $1200.00.
Today you made $120.00

How to make money on the Internet  Day 3:

You decide to get smart and actively promote audio equipment through your newsletter where you may have 5000 people signed up. Early in the morning you send out the email in the hopes that people reading the email will click on the affiliate link you placed in your newsletter AND that your website visitor will click on the money making banner that you placed on your site.
You are lucky because, out of the 5000 people that you sent your email to, 500 people decide to read it and out of the 500, 50 decided to visit and possibly make a purchase.
Today you made $280.00, and it’s getting better.

This is affiliate marketing

This is also hypothetical marketing as well, because there are many variables at play here, but for simplicity purposes, the above example gives you an idea about how affiliate marketing can work for you.

This is where we stop and check back to reality as well.

The above scenario may work if:

  • The web site owner understands his web site visitors.
  • It may also work if the web site receives over 100, 1000 or even 5000 visitors a day. It also works for sites that receive much less than that as well.
  • It may work if the commission is 10% and the average sale price is $100 or more.
  • This may also work if you sign up with the right affiliate programs and get paid the right commissions.

Who benefits from affiliate programs?

A number of people benefit, but in general, there are 3 groups:

  1. The Web site Visitor. This savvy consumer benefits because you have referred them to a great deal, promotion or some form of discount through your banner or text ad.
  2. Affiliate Merchant. The merchant who is one who has sold the customer, processed the order, handled the shipping, etc.
  3. Affiliate Publisher. You, the web site owner, the publisher of a high traffic web site where you refer your visitors to related products or services for a commission

How much does it cost?

Nothing. It does not cost you anything and in most cases affiliate merchants are actively looking for motivated site owners who are looking to make more money with their website, newsletter, forum or blog.

More …

Upcoming affiliate topics will include:

  • How to join an affiliate program?
  • What are the best affiliate programs?
  • What are some of the tools I can use to help me make money online
  • and more.

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