What Is Affiliate Marketing and How Does It Work?

Affiliate marketing is one of the most popular ways to make money online with over 50 million people around the world using it to make some extra cash. The side hustle involves promoting products on behalf of companies and earning a commission every time that you make a sale. The reason that affiliate marketing is so popular is that it has a low barrier to entry, it is fairly flexible and it can be turned into a stream of passive income.

However, like all side hustles, successful affiliate marketing requires knowledge and the right skill set. In this article, we will take a deep dive into what affiliate marketing is, how it works and the pros and cons of starting it as a side hustle in the UK 2024.

Also read: What is high ticket affiliate marketing?

Affiliate marketing is the process of earning money online by promoting other companies’ products using tracked links. In the affiliate marketing model, companies reward third-party marketers for driving traffic to their products or services. The reward given is typically a commission on the sale that is made.

Third-party marketers are known as affiliates or affiliate marketers. Affiliates are individuals who have access to consumers through social media, search engine traffic, or personal information. By using affiliate marketers, companies can reach larger audiences that their traditional advertising efforts may struggle to tap into.

The affiliate marketing industry is worth over $17 billion dollars. The model’s success can be attributed to scalability, a low barrier to entry, and a history of success for both companies and affiliates. The model is simple and can be applied to any industry and used on almost any platform.

What are the three main types of affiliate marketing?

There are three main types of affiliate marketing. These include unattached affiliate marketing, related affiliate marketing, and involved affiliate marketing.

Unattached affiliate marketing involves promoting a product or service that you have no experience or connection with. Unattached affiliates do not use the products that they promote and have no authority in the related niche. This is the least effective form of affiliate marketing and is used purely for the purpose of making money.

There are no rules against unattached affiliate marketing and many affiliates do make money with this method. However, promoting products that have no connection to yourself, your niche or your brand makes it very difficult to encourage your audience to take action.

Related affiliate marketing involves promoting products that have a connection to your niche but that you haven’t necessarily used yourself. This could include promoting products that you think your audience will like without trying them first.

Involved affiliate marketing means to promote products that you have used and have experience with. You advertise the product through the positive experience that you have had with it yourself. This is the most effective form of affiliate marketing because consumers are more likely to trust content that is based on real-life experiences.

What is high-ticket affiliate marketing?

Another crucial term to understand is ‘high ticket affiliate marketing’. This refers to products that offer a high return due to having a high price or providing a high commission per sale. For example, a high-ticket product could be a £2000 laptop that offers a 10% commission (£200) or, it could mean a £200 online course that offers a 50% commission (£100). The term ‘high ticket’ refers to the profit that you could gain if you make a sale.

The opposite of ‘high ticket’ is ‘low ticket’. Low-ticket affiliate products have a low cost or offer a low commission. These are usually the easiest affiliate programs to get accepted into. However, it is very difficult to make significant income by promoting only low-ticket items.

Affiliate marketing is a model with 3 main components: the merchant that supplies the products or services, the affiliate program, and the affiliate marketers.

Here's a breakdown of how affiliate marketing works:

1. Company (Merchant):

   The company, also known as the merchant, is the entity that owns or provides the products or services. Companies use affiliate marketing to increase their reach by leveraging the audiences of content creators.

2. Affiliate Program:

   The company sets up an affiliate program, which is essentially a system that allows individuals or other companies (affiliates) to promote its products or services.

   In the affiliate program, the company provides unique tracking links or codes to each affiliate. These links help the company track the sales and leads generated by each affiliate.

3. Affiliate Marketers:

   Affiliate marketers are individuals or entities that sign up for the company's affiliate program to promote its products or services. Each affiliate is given a unique affiliate ID or tracking code, which they include in the links they use to promote the company's products.

4. Promotion and Marketing:

   Affiliates promote the company's products through various channels such as websites, blogs, social media, email marketing, or other online platforms. When potential customers click on the affiliate's unique tracking link and make a purchase or complete a desired action (like filling out a form), the affiliate is credited for that sale or lead.

5. Commission Structure:

   The company determines a commission structure, specifying the amount or percentage of the sale that an affiliate will earn as a commission. Commissions can be based on various actions, including sales, clicks, leads, or a combination of these.

6. Tracking and Analytics:

   The company uses tracking technology to monitor and attribute sales or leads back to specific affiliates. This tracking ensures that affiliates are accurately compensated for the sales or leads they generate.

7. Payment:

   Affiliates receive payments based on the agreed-upon commission structure. Payments are typically made on a regular schedule, such as monthly.

An example of affiliate marketing

Let’s take a look at an example of affiliate marketing in action to better understand how the process works. For the purpose of this example, we will use the Etsy affiliate marketing program which allows creators to earn commission by promoting products that are sold on the eCommerce platform.

The Etsy affiliate marketing program was created to help sellers reach a wider audience. The platform offers a 5% commission for every sale that is made through an affiliate link.

Individuals can sign up to become an affiliate on the Etsy website. However, the affiliate program is hosted by the Awin affiliate marketing network. Awin is an affiliate platform that manages affiliate programs on behalf of merchants. To become an Etsy affiliate, individuals must first sign up to the Awin platform.

Once signed up, individuals can apply to the Etsy affiliate marketing program. The Etsy affiliate program welcomes all content creators. After submitting your application, you should hear back within 2 hours.

Affiliates create affiliate links for products that they want to promote within the Etsy affiliate dashboard. It is possible to create as many links as you like. Each link will include a unique affiliate tracker that is used to monitor where sales are made so that affiliates are rewarded correctly.

Once you have created a link, simply place it in your content. If you’re a blogger, this will mean embedding the link into your content with anchor text. For social media influencers, this might mean adding links to your Linktree or similar account. Your audience will be able to use the links to purchase products that are being promoted.

Every time that someone makes a purchase through the link, you will earn 5% of the sale. So, if a product costs £20, you would make £1.

4 profitable affiliate marketing methods

In the next section of our guide, we will take a look at 4 affiliate marketing methods that can be profitable. It is important to note here that the success of affiliate marketing comes down to the skills of the marketer. However, it is possible to increase your chances of success by choosing a profitable method of sharing links.

Also read: 20 affiliate marketing tips for success

1. Pinterest affiliate marketing

Pinterest affiliate marketing is the easiest method of affiliate marketing for beginners. It involves placing affiliate links directly onto pins. This makes it easy for your audience to click the link and view products.

Pinterest affiliate marketing works well because you do not need to have a large following to reach a big audience. This is because Pinterest is a visual search engine which means that success if less about followers and more about Pinterest SEO.

Also read: How to start affiliate marketing with no money

2. Email marketing

Email affiliate marketers place their links in emails that are sent out regularly to an email list.

Email marketing is an effective strategy because it is possible to personalize emails and appeal directly to potential customers. The hardest part about this method is building an email list. This is a list of email addresses that emails are sent out to.

3. Blogging

Another popular way to promote affiliate links is through blog posts. This involves writing a post that explains the benefits of a product or service and then placing an affiliate link to the product within the content. Bloggers use SEO and high-quality content to drive traffic to their links.

4. Social media

One of the most effective ways to earn money through affiliate marketing is to become a social media influencer. An influencer is a content creator who creates promotional content. While it is a common belief that you need to have millions of followers to earn money as an influencer, many nano-influencers earn money with less than 10,000 followers.

Becoming a nano-influencer is an effective way to promote affiliate links because it is possible to build a good relationship with your followers. Influencers act as familiar faces that social media users see every time they open an app. Therefore, consumers are likely to trust content that is created by their favorite influencers.

So, is affiliate marketing a good side hustle to consider in 2024? below, we discuss the pros and cons of affiliate marketing to help you decide whether or not it is worth trying.

Conclusion

Affiliate marketing is a side hustle that involves earning commissions by promoting products through tracked links. It is a popular remote side hustle option because it has low start-up costs, a simple process and allows individuals to earn money passively.

If you invest time into learning effective affiliate marketing methods, it is possible toe earn a good income as an affiliate. However, there is no guarantee that people will purchase through your links.

In this article, we have taken a closer look at exactly what affiliate marketing is and how it works. Before signing up to an affiliate program, take a look at our list of 40+ passive side hustle ideas to make sure that affiliate marketing is the most suitable option for you.