Affiliate Marketing Explained

Affiliate marketing gets a fair amount of hype as a way of making money on the Internet, and with good reason.  For many people with websites it can be the perfect way of making cash – very little overheads, and if they have the buyers then some very good money can be made.

 

So what is it?  How does it work as a business model?

 

The Affiliate Marketing Business Model

 

At it’s most simple you are simply saying ‘buy from them’ (and pointing a link at a seller) and, with use of special coding, anyone who does earns you a commission based on the sale.  The amount of the commission can vary, and is usually done as a percentage of the sale.

 

This makes it very different from other business models like Adsense (where you get paid per click), or lead generation – where you get paid for people entering some details.  With affiliate marketing you the need the people to buy the item.

 

The good news is that there is often some very good money to be made – if you are selling high ticket items then 10-15% can be a lot of money!  With electronic items such as ebooks the percentage can often be far greater, even as high as 50%!

 

For many website owners this business model is perfect as it allows them to leverage what they have (readers, often interested in a specific niche), and earn money from those readers without having to lay out the capital on buying stuck.

 

It also avoids associated costs such as mailing the item, storage space etc.  More importantly it avoids risk – with no initial investment into stock there is no worry about not selling it, you are simply making money on what is sold, not losing money on what isn’t sold.

 

While there is more money to be made in selling items directly this lack of investment and lack of risk is perfect for those that run many sites, blogs and forums as it allows the site to push hundreds of different lines if needs be, without ever being concerned about space issues, cash flow or capital expenditure.

 

It allows ‘real’ people to make money online.

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