Joining an affiliate program is one of the best ways to generate passive income as it allows you the freedom to pursue other interests and career fields. For many publishers, affiliate partnerships account for over 20% of their annual revenue. And some of the top affiliate marketers have been able to generate six-figure revenue through the business.

In this post, we take an in-depth look at affiliate programs to help you understand how they work, what types of payment programs are available, how affiliate linking works, and more. These insights will give you an idea of exactly what you’re signing up for before joining an affiliate program. Let’s get started.

What are affiliate programs and how do they work?

An affiliate program is an arrangement between two parties in which one (the merchant) pays a commission to the other (the affiliate) for sending traffic to their site or generating sales for them. The affiliate will post a link to the merchant’s website and then get paid based on the traffic or sales generated through that link.

The exact agreement differs from program to program and may even be influenced by current affiliate marketing trends. But in most cases, the affiliate receives payment based on the number of people they refer to the merchant’s website or the number of people who take an action after landing on the site. As such, affiliate programs benefit both parties in that the merchant gets to reach a bigger audience while the affiliate gets to make money through their referrals.

An affiliate program transaction typically involves three parties:

• The merchant site – This is the site that owns the affiliate program and makes payments to the affiliates. Retail websites like Amazon are the perfect example, with the Amazon Associates program being its affiliate program. But you can also have B2B companies running an affiliate program. For example, ClickMeter has its own affiliate program.

• The affiliate site – This is the site that posts a link to the merchant website to help promote their product and in return, earns a commission from their referrals. The affiliate site can be anything from a personal blog to a leading news publication. For example, BuzzFeed regularly promotes affiliate links through their content.

• The customer – This is the individual who clicks on the affiliate link and lands on the merchant site. In some affiliate arrangements, they factor into the transaction the moment they click on the link. But in other programs, they have to perform a conversion action (like buying something, signing up for a newsletter, etc.) to factor into the affiliate transaction.

Besides these three, you can also have an affiliate network that connects affiliates with merchants that run affiliate programs.

Types of affiliate payment methods

As mentioned above, the payment arrangement varies from program to program. But in most cases, it could be any of the three main types of payment arrangements highlighted below:

• Pay-per-click – In this type of arrangement, the affiliate earns a commission based on the number of people who click on the link to visit the merchant’s website. So regardless of whether those visitors buy something from the website, the affiliate still gets to make money. This type of affiliate program is ideally for brands or companies that are looking to drive more brand awareness rather than solely focusing on sales.

For example, the Unbound Partner Program uses a pay-per-click arrangement.

• Pay-per-sale – In this type of program, affiliates earn a commission based on the number of people they refer who end up buying something from the merchant website. Some programs pay a fixed rate per conversion, while others pay a percentage of the referral sale. For example, Asos pays their affiliates 4% of the sale they refer.

• Pay-per-lead – Under a pay-per-lead affiliate program, the affiliates earn a commission based on the number of visitors they refer who end up becoming leads. This means the referred visitor fills out some form and provides the merchant site with certain info that can be used in a follow-up email or sales call.

For example, the affiliate may promote a link to a free trial of the merchant’s product. And once the visitor clicks on the link, they’ll have to provide their name and email address to begin their free trial. So it’s an excellent arrangement especially for B2B and SaaS companies.

The Skillshare affiliate program uses a combination of the pay-per-sale and pay-per-lead methods. Affiliates can earn money either by referring customers to a free trial or a Premium Membership.

There could be several other variations of these arrangements, though most of them can still fall under these three categories. In some cases, the merchant may even continue paying affiliates for every future action the referred customer takes on their site over a certain period of time. For example, they may continue to pay you a commission for every purchase the customer makes over the next 12 months. These are called residual programs.

In addition, some companies may also pay out commissions based on how active the referred customers are. For example, you may earn a commission for your initial referral. Plus, you could earn more commissions if your referred customer uses the service for a certain amount of hours a month. These are called two-tier programs.

Companies will use a payment arrangement that helps meet their unique goals, so your job is to look for ones whose arrangements work for you.

How to join an affiliate program

The process of joining an affiliate program is relatively easy, but the biggest challenge is narrowing down on a program that works for you. You could either go through affiliate program lists or see if there’s any program for the products and services you’re already using.

Additionally, you can also apply to join an affiliate network, which connects you with relevant affiliate opportunities. Most affiliate programs and networks are free to join, so it’s best to avoid joining something that requires you to pay a fee. Once you find a program that appeals to you, go to the site and fill out the application to join.

For the application, you need to submit some basic personal information such as your name and contact details. You’ll also need to provide some details about your website such as the URL and content description.

After you submit your application, the merchant site that’s running the affiliate program will review your site and content before they decide to work with you. Similarly, if you submit an application to join an affiliate network, you’ll have to wait for approval before you can start applying to relevant affiliate programs.

Once approved, you’ll have the opportunity to thoroughly review more details about the program such as the payment process and the rules and restrictions. Then you can begin creating content to start promoting the affiliate link.

Types of affiliate linking methods

To make the most of affiliate programs, it’s crucial that you understand the different ways you can link to the merchant site. The best linking method largely depends on the type of products you’re promoting and the type of content you’re creating, but some merchants might have certain rules on how to link back to them.

In general, you have three options to link to a merchant site:

• Banner links – Banner links appear as boxes with attractive graphics and text to draw in the audience. In other words, they function as display ads on the affiliate site. Here’s an example of a Squarespace banner link on CNET.
  

• Text links – Easily the most common type of affiliate link, text links are URLs embedded into relevant sections of the text content. As they blend in seamlessly with the rest of the content and lead readers to a page with additional relevant information, they’re the most natural way to promote your affiliate links.

You could add text links in the company name, product feature, product benefits, and more without disrupting the content flow. In the following screenshot from Merchant Maverick, you can see a branded text link for Shopify.

• Naked links – Some affiliates also promote affiliate products through naked links, mostly on YouTube. They’ll clearly notify their audience about the links, encouraging them to check them out in case they’re interested.

Here’s an example of YouTube tech reviewer, Austin Evans promoting a few Amazon affiliate products through naked links.

Keep in mind that you’ll have several ways to use these links. In most cases, you’ll either link to the brand homepage or the specific product you’re promoting. Other affiliate programs might also assign a link to a certain storefront for the program.

Some affiliate programs also allow co-branding in which you get to maintain your site identity even when someone clicks on the affiliate link. This means that although the merchant hosts the page and handles all the sales, the page looks like it’s still a part of your website.

Final thoughts

Hopefully, these insights will give you enough information about affiliate programs and how you can start making money from them. But if you decide to dive into the affiliate marketing industry, keep in mind that it can get overwhelming to manage all the programs you’ve joined and all the links you’re promoting.

For this, make the most of tools like ClickMeter to manage all the affiliate programs you’ve joined in one place. This allows you to customize your affiliate links, keep track of their performance, run A/B tests to optimize their performance, and more.

And if you have any questions about joining an affiliate program, let us know in the comments.

Related reading:

• How to mask URLs in affiliate tracking links

• Affiliate Marketing Trends You Must Watch In 2020

This blog post is about:

• Affiliate Marketing
• Affiliate Programs
• Digital Marketing

Originally published: June 10th, 2020.
Updated: October 04th, 2021.