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Affiliate marketing businesses generate passive income, but not without effort. Discover how profitable this strategy is.
If you are here, you've probably heard about affiliate marketing as a great source of passive income. But you might wonder if it is actually profitable and how much work you must put into it.
In this post, we'll explain the affiliate marketing business model, share some examples of popular and niche affiliate marketing programs, and discuss common mistakes to avoid.
Affiliate marketing does work and can be profitable. A great example of a thriving affiliate business model is the NYTimes' Wirecutter.
Of course, we are talking about the New York Times. However, at a smaller scale, it's not that different. To reap the benefits of this marketing strategy, you need to invest time and effort in creating valuable content and crafting effective campaigns aligned with your brand to attract a valuable audience.
The business's profitability depends on the topic and products promoted, among other elements; the price of an affiliate marketing business can range from $80,000 to $2 million with a monthly net profit of $2,000 to $70,000.
According to the Danish company Influencer Marketing Hub, the affiliate marketing industry will grow to $15.7 billion by 2024. The same report states that Amazon Associates is the largest affiliate network, with over 20% market share globally.
A small percentage (3.78%) of affiliates earn over $150,000 annually. However, the majority (57.55%) earn less than $10,000.
So, before opting for an affiliate marketing business model on your website, you must know that though it is a passive source of income, this strategy requires patience and constant effort.
Through affiliate marketing, brands pay a commission to site owners or influencers who promote a product or service to their audience by including a unique affiliate link. Once a purchase is made through that link, the brand can trace the source of the sale.
These links are the cornerstone of effective affiliate marketing campaigns. Without them, knowing where the sale came from wouldn't be possible, and the site affiliate wouldn't make money from it.
The site owner (or affiliate marketer) can promote the link through its social media profiles, email campaigns, or website. Once users click on the tracked link and purchase or subscribe, the affiliate receives a commission from the sale. This process can go into a loop without the need for extra work.
The affiliate marketing business model is so effective that in 2022, 16.1% of e-commerce orders were achieved through this strategy.
It's easy to spot affiliate marketing strategies when browsing a website, looking at an influencer's profile, or watching a YouTube video. Here is a list of a few of these programs or affiliate networks and how they work.
Amazon Associates Program is one of the most popular affiliate programs, if not the most popular (depending on who you ask).
The program helps content creators, publishers, social media influencers, and bloggers monetize their traffic by choosing from many products and easily including affiliate links in their content to direct their followers to their recommended articles.
Affiliates in the Amazon Associates Program can earn up to 10% in commissions from qualifying purchases.
Hubspot, one of the most popular SaaS businesses, also has an affiliate program for content creators. Affiliates in this program can earn 30% in recurring commissions for up to a year. The payment system is tiered: the more clients an affiliate refers, the more they earn.
In addition to the payment, content creators who are Hubspot Affiliates have access to promotional assets, guides, and more helpful information to maximize their content and achieve higher commissions. The program also grants access to performance reports so affiliates can make any necessary adjustments to their promotions.
The eBay Partner Network offers commissions from 1% to 4%, depending on the category. Earnings per transaction are also capped depending on the item.
For example, you can get a 4% commission for a fashion item (up to $550).
Other less popular programs can be more valuable for niche sites.
For example, if you have a tech site, you can find options like NordVPN's affiliate program. By signing up, you have access to a specialized account manager who can guide you through setting up your campaigns. One of the key differentiators of this service is that it can be used worldwide, so the brand and affiliates have an easier time converting traffic from different countries.
The brand's affiliate marketing program also offers the option of promoting other services, which can increase affiliates' commissions.
In conclusion, affiliate programs change according to the audience, the product to be sold, the affiliate profile, and how competitive the industry is. Some brands may offer more attractive earnings due to the specificity of their product, while others provide a catalog of multiple products to choose from.
Though affiliate marketing sounds like a low-risk bet, building a successful business from the ground up takes time. Buying an established affiliate business may be a better option if you have the resources.
If you want to build a new affiliate marketing business or buy a site with an affiliate marketing business model, mistakes such as offering unrelated products to the audience or bad tracking can lead to failure. Here's what you need to be careful with:
Selecting the proper affiliate products will help you increase your income and be seen as an authority by your followers on the topic you are an expert. Failing to do so can jeopardize the trust your readers have in you.
For example, if you own a website that discusses running and offers tips on diets, accessories, and workouts for runners, users would expect to see an affiliate program related to those topics, as you are an expert or authoritative on that niche. But suppose you include an affiliate link to a SaaS product. In that case, it won't make much sense, and people might lose trust in your recommendations.
Also, the conversion rate of a product unrelated to your business will likely be lower, which can negatively impact your site's value.
An affiliate strategy must be properly tracked. Without the affiliate link, it would be nearly impossible for the seller to know where the sale came from and for the affiliate marketer to understand the performance of their affiliate program.
Including the right affiliate link can help sellers determine the source of the transaction. On the other hand, affiliate marketers can analyze the products with the highest conversion rate, review content pieces with unsuccessful affiliate links to identify possible issues, track the goods that generate more income, and learn how much passive income they're making through this monetization strategy.
As an affiliate marketer, you should know your audience's preferences. What are they looking for? What are they expecting to find on your website? A well-established affiliate marketing strategy doesn't target everyone. On the contrary, it aims to reach an engaged or niche audience.
If you're targeting a niche audience, you'll encounter less competition than if you decide to tackle a generic market that is already full of competitors and in which users might not be looking exactly for what you offer.
Let's say you target the travel industry. You'll need to invest time and resources in creating content that covers the whole spectrum of the industry instead of focusing solely on targeting people interested in "traveling on a budget," which would have a higher conversion rate since people are already interested in what you offer and you wouldn't have to put extra time into bringing them to your site.
Placing your website on the top results from the search page can also boost your affiliate marketing efforts. Over 69% of affiliate marketers consider SEO their main source of traffic. By increasing your website's visibility, you can achieve better results for your affiliate program.
By using Search Engine Optimization techniques, you can attract more visitors to your website and, as a result, increase your earnings via affiliate marketing.
If you want to learn more about improving your website's SEO, you can start by using free or paid tools like Ahrefs, SEMRush, SEOptimer, or SEO Analyzer. These tools can audit your site and show you the overall health of your site, flag possible issues, or find opportunities.
One caveat: placing all your efforts of income for affiliate marketing in SEO is not ideal either, as algorithms may impact the revenue from one day to another. Diversifying the traffic sources is key.
Evergreen content generates traffic because it remains relevant over a long period. It is a great way to bring in new followers, increase exposure, and stay relevant in your industry without constantly updating the content.
If you are on an affiliate marketing program but don't include affiliate links to the top-selling products or the ones that can drive the highest commissions on your evergreen content, then you're missing out on an opportunity to increase your revenue or keep it steady.
The products you add to your affiliate marketing campaigns should be helpful for your followers. Users can easily spot when you're trying to sell something for the sake of it, and if you do so constantly, they might get bored or lose trust.
Think of newsletters that you signed up for that turned into a catalog. You probably got sick of the company in no time.
By offering your knowledge and recommendations, users are more likely to stay loyal to you, which can yield positive results for your affiliate marketing strategy in the long run.
Affiliate marketing sites are one of many online businesses that you can build or buy these days.
At marketplaces like Boopos, you can find established SaaS, eCommerce websites, and other types of vetted businesses to acquire. We offer guidance and financing to buy a business from serious sellers. Learn how our process works!
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