For anyone who has ever been to an Internet Marketing seminar, workshop, event or bought a training program from an Internet Marketing Guru you'll be familiar with the idea of selling other people's products and services as a way to create a passive income stream and get that dream lifestyle of the Internet Millionaire.
If you haven't heard the name before, this idea of selling other people's products and services online is called Affiliate Marketing... and it's one very powerful way to make money online.
Selling Other People's Things
Here's a really quick explanation of how it works.
Just like in bricks and mortar retail, there are businesses who manufacture or supply products, there are people who wholesale, there are people who sell to consumers and there are people who are the consumers and buy.
In Affiliate Marketing the manufacturer or supplier is called a Merchant or Advertiser, the wholesaler is an Affiliate Marketplace (also called Affiliate Network) and the people who sell to customers are Affiliates or Publishers. Customers, well they're customers or clients.
This is how an online affiliate transaction works
Imagine you are the Publisher and you have a blog or website about pets. You get a few visitors everyday to your blog/website however you'd like it to be earning some more money so you sign up with an Affiliate Marketplace.
During the sign up process you give the Affiliate Marketplace your Paypal or banking details so that they can pay you. Then you look/search on the Affiliate Marketplace website for Merchants who have products you can sell that would appeal to your pet owning website visitors.
In your searching you find a company that is selling sunglasses for dogs and decide that you'd be happy to put an advertisement for this Merchant on your website; because your customers and website visitors may be interested in buying something like this for their pet.
You select an advertisement design provided by the Merchant that best suits your website; it could be a banner or box shaped picture ad or a simple link. You grab a copy of the HTML code that is provided by the Affiliate Marketplace for the ad you want and now you or your website developer pastes this ad HTML code into a page on your website. The HTML code is all you need for the ad to be displayed - the graphics for banner and picture ads are stored on the Affiliate Marketplace web server so you never need to worry about have a copy as part of your website. With the ad now being showing on your website that's all you need to do.
Let's imagine that one of your pet owning website visitors comes to your website and sees the dog sunglasses ad (if they ignore it nothing happens) and they decide to investigate further by clicking on the ad. The HTML code for ad contains a special link which takes your website visitor to a web page that is not part of your website where they can read about the offer and buy a pair of dog sunglasses.
The special link your visitor clicked on takes some identification information with them from your website to the dog sunglasses web page. Just like with Google Analytics tracking, the identification information and what your visitor does on the dog sunglasses web page is captured so that you, the Merchant and the Affiliate Marketplace knows what has happened; this happens invisibly and is how the Merchant & Affiliate Marketplace are able to keep track of who to pay commission payments to and when. This identification information is safe for computers and can not be used to do anything other than its intended purpose.
When your visitor buys a pair of dog sunglasses from the Merchant, the Affiliate Marketplace updates their information and allocates the commission portion of the purchase price to your account, ready to be paid to you.
Depending on the terms set out by the Affiliate Marketplace there may be a cooling off period you will need to wait before the money is given to you (this covers everyone involved should there be any returns, refunds or guarantee policies that the Merchant may have) or you may need to wait until you've accumulated a sizable amount of money before a cheque payment can be sent. The Merchant and the Affiliate Marketplace will manage your commission payments and retractions (if people claim a refund) automatically on your behalf.
The Merchant is responsible for the security and protection of the customers information, they will process the transaction including tax calculations, shipping costs and credits for returns, they also arrange the packaging, distribution and delivery of any goods and services.
In our example the Affiliate Marketplace processes your website visitors payment and the Merchant sends them a pair of dog sunglasses. When the terms and conditions for the transaction have been met the Affiliate Marketplace puts your affiliate commission payment into your account - you get paid.
Who's Responsible for What
To sum up, the Affiliate Marketplace acts as the middle-man making sure that Merchants pay Publishers when sales are made and ensures that the Merchants they work with actually deliver the products or services to the paying customer. Affiliate Marketplaces may act as an escrow agent, processing payments from customers on behalf of Merchants and handling commission payments to Publishers and refunds back to customers.
As a Merchant you supply a product or service, you set the pricing, you provide promotional items such as links and banner advertisements and in some cases a sales page for customers to buy through. You may also handle all the tax, stock, packaging, shipping and returns depending on the Affiliate Marketplace you choose to work through. You may choose to set up an account with an Affiliate Marketplace so that you can have them manage the relationships with people who want to be Publishers for you and to also assist with reporting for purchases, commission payments and refunds.
As a Publisher you select the products or services your customers and the visitors to your website will be interested in and promote their sale in a way that best suits your business... and that's all you need to do. As you may have noticed this is not a lead generation or customer relationship building strategy; it's the Merchant that gets all the customer details while you get the cash.
Getting Set Up for Affiliate Marketing
There are hundreds of online businesses that offer Affiliate Programs of one sort or another and when you've spent a bit of time making money through this sort of arrangement you'll be able to take greater risks for higher rewards. Initially however, you may want to start with the well established Affiliate Marketplaces that will give you plenty of protection and ensure you are reliably paid.
Whether you want to leverage Affiliate Marketing for your existing business or start a brand new venture - my advice is to be selective, always monitor your activity reports (from your website if you have Google Analytics and through your Affiliate Marketplace account) and be willing to be flexible so that your website visitors are getting great benefits and value from you.
We've put together Affiliate Marketing: Where Do I Start!? so that you can get started right away with the safest and easiest Affiliate Marketplaces, whether you want to be a Merchant or a Publisher.
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