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The term “affiliate marketing” sounds technical, doesn’t it? But chances are you have already participated in this marketing strategy to some degree without even knowing that is what you were doing. So let’s get right down to it…what exactly is affiliate marketing?

In one sense, you can think of affiliate marketing as a type of referral program. It can take on many different forms, but basically it is a business rewarding people (i.e. its “affiliates”) for referring customers to them. Have you ever been rewarded for referring your friends and family to a certain business? Then you have acted as an affiliate at some point! For instance, the new investment app Stash will deposit $5.00 into your online account with them for each new customer that downloads the app through your invite link. Not only do you get $5.00, but your friend (aka: their new customer) gets $5.00 as well. Another example is from the skincare and makeup company Glossier. They give their already established customers $10 in free merchandise for every person referred that places a new order. This is a way for Glossier to create little salespeople out of every single customer. And the best part is, the referred person gets 20% off their initial purchase as well.

But what if you’re not looking to get minimal investment funds or free makeup? These types of affiliate programs certainly won’t make you money you can actually spend on that new pair of shoes you’ve been eyeing, so how do people make money off of this concept?

Before we move on, I should note that there has been quite a bit of debate as to what actually constitutes the definition of affiliate marketing. The aforementioned marketing tactics are sometimes called “referral marketing” (for good reason) and it can be distinguished from what die-hards would call “affiliate marketing” because it relies on already established relationships to push sales. To those die-hard definers, affiliate marketing is simply a financial strategy that doesn’t require the use of already established relationships to gain sales. For our purposes though, we will view these two marketing tactics as intertwined, since having a personal relationship with someone increases your chance of persuading them to make a purchase…and that would ultimately make you more money.

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So back to those people that are somehow able to make an income in their sleep…how do they do it? Many online entrepreneurs make money with affiliate marketing through ads on their website. Whether they are a mommy blogger or running a software business, they provide ad space for other businesses and receive either a flat fee for each click or a percentage of the sales that are generated through the ad on their page. This may help to explain why we have all encountered those horrible websites that have ads all over them and basically no content (please don’t create one of those sites).

Other ways affiliates are paid include being paid for the amount of views of the merchant’s page (usually analyzed per 1,000) and something called Cost Per Acquisition or Pay Per Acquisition (CPA and PPA, respectively). This type of pay is generated when a specific desired action is completed on the merchant’s page, such as someone providing their email address for a newsletter or completing an online review of the business. Whatever action the merchant desires, they pay their affiliates to get people to complete that action.

The reason why referral marketing and affiliate marketing are often intertwined should become clear here. If you have built a relationship of trust with your audience, they’re more likely to accept your recommendations for things you either use or are related to your field.

For instance, I love to read Lisa Leake’s blog, 100 Days of Real Food. She has a very non intrusive part of her site for “Sponsors And Such” where ads for all kinds of “clean living” items pop up. From essential oils to natural deodorant, the items advertised seem as if they have been vetted by her to coincide with her website subject matter (whether they actually have been vetted by her or not, I do not know). As a consumer of her site, I’d be much more inclined to click an ad on her site than one on a general website that I only rarely visit. I should also note that I am on her mailing list and, once in awhile, there is an actual recommendation for a product in her emails. This really encourages me as a consumer to check out what she is recommending because I trust her opinions on living healthy. I win by getting an awesome product that I would perhaps not have found otherwise and she wins by getting a few bucks out of it (or something to that effect…I have no actual knowledge of Lisa Leake’s sponsorship deals).

At first, this way of making passive income seems nominal and, quite frankly, it is. In all honesty, it does take awhile to develop your website and your online following in such a way that affiliate marketing starts working for you. But once everything is established, you will literally be making money while you sleep. Why would you pass up the opportunity to do this? Even if it’s only pennies at first, that’s more than you had before!



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About the author

Kathleen Marks

Kathleen Marks

Kathleen writes from Western North Carolina. In her free time (which is rare), she enjoys camping with her family amongst the mountains that she calls home.

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