How To Start an Affiliate Marketing Business

How To Start an Affiliate Marketing Business

Affiliate marketing can be an excellent way for aspiring entrepreneurs that don't have access to a lot of upfront capital to start making money online. Affiliate marketers do not need to purchase any inventory and are not involved in shipping or customer service issues. Affiliate marketing can be done remotely and has the potential to produce significant levels of income or can be treated as a side income or passive income source.

Getting started in affiliate marketing and reaching sustainable profitability can be time a consuming and challenging endeavor. In this how-to guide, we will discuss the basics of how to become an affiliate marketer, which will include the following topics:

  • Understanding How Affiliate Marketing Works

    Affiliate marketers market and promote a third-party company's product or service and get paid a commission for referring or leading sales to the third-party company's products or services on that company's website. Affiliate marketers conduct their business online through various means, including social media, video content, blogging, and affiliate websites created solely to market the product.

    Many companies have affiliate programs and offer commissions to affiliate marketers to help boost their sales. The most well-known program of this sort is the Amazon affiliate program known as Amazon Associates. Once enlisted in an affiliate program, the affiliate marketer will receive a special link known as an affiliate link that enables a company to track the sales that originated from that link and the marketing efforts of the affiliate marketer. Once a sale is made through traffic that originated from that affiliate link, the affiliate marketer receives a commission.

    Affiliate marketers focus on driving traffic to the website to convert sales for the company with whom they are operating as affiliates. Driving this traffic can be done through generating content about the product or service, discussing a company or website on relevant social media platforms and sharing the link for people to follow, running affiliate ads on a well-trafficked website, and other methods. Affiliate marketers are independent and can work with several companies at once to earn commissions from multiple sources.

    Different companies will offer different commission percentages in their affiliate programs, but usually, commission rates range from 3-10%, although some programs can pay up to 30%. Affiliate marketers that can drive significant traffic and convert a large number of sales through their affiliate links have the potential to earn significant income from their efforts. Others treat affiliate marketing as a smaller passive income stream that is operated in conjunction with their primary business or online content that they generate. For example, if someone has an online business selling homemade jewelry, they can mention and offer their affiliate links to websites where they bought their equipment or supplies. Therefore, affiliate marketers can focus on generating their main source of income through affiliate marketing which could be quite substantial, or they can use affiliate marketing to help earn supplemental income online.

    Most affiliate programs will have an extended cookie period which differs based on the program. An extended cookie allows the affiliate program to track customers who may have found their site through an affiliate marketer's link and give credit to that affiliate. For instance, if a person accesses a website through an affiliate link and does not make an immediate purchase but eventually does make a purchase within a set amount of time, the affiliate will still earn a commission for driving the traffic and helping convert the sale. Again, this extended cookie period will differ depending on the affiliate program. The extended cookie period can typically range from 24 hours to 30 days. In addition, some companies offer lifetime commissions to their affiliates. This means if a customer finds a website through an affiliate link and makes a purchase, that affiliate marketer will continue to earn multiple commissions from that specific customer's purchases with the company over time, indefinitely.

    One of the most appealing aspects of affiliate marketing is not having to deal with everyday business concerns such as manufacturing, housing inventory, shipping, or customer service issues. Instead, affiliate marketers recommend products and drive traffic to another company's website selling the products or services and handling all of these various facets. Affiliate marketing is an important and effective sales model widely used online and one that can create significant income streams for the affiliate marketer and the companies whose products and services the marketer promotes.

  • Choosing a Niche

    Affiliate marketers can utilize diverse strategies and methods to market a wide range of products. But for someone just starting in affiliate marketing, it is wise to begin by focusing on a particular product or a handful of products within a specific niche. While selecting a niche, choosing an area you have some interest in or wouldn't mind learning more about is a good idea. Affiliate marketing campaigns can take considerable time and effort to develop, so it may be beneficial to pick a niche that piques your interest. Over time you can learn more about your niche through research and the content you generate regarding the products you are marketing. In addition, having a niche that you enjoy learning and writing about will increase your likelihood of success because you will be able to invest time and effort more easily into developing your affiliate marketing business.

    Profitability is also an important factor to consider while picking a niche. Even if you enjoy reading and writing about something, that does not necessarily mean you will be able to create significant profits from your affiliate marketing efforts. Conducting proper market research to determine the level of demand and competition within your niche will be vital in developing a successful affiliate marketing business. However, if there is an abundance of competition within your niche, this does not necessarily mean you cannot become successful in it. A balance between profitability and personal interest is a good thing to aim for because even if your niche is saturated with competition, your personal interest in the area can assist you in generating unique, insightful, and valuable content that can help you stand apart from the competition. Conversely, having a highly profitable niche that is uninteresting to you, you may find yourself being challenged to stay focused and unmotivated to create content revolving around your niche.

    Market demand and commission rates will also play a role. For example, suppose you have a product that has a relatively low market demand coupled with low commission rates from your affiliate program. In that case, you will have to work harder to drive enough traffic to reach your desired level of profitability. On the other hand, if your niche has a high demand with low commission rates from your affiliate program, in that case, you may be able to generate a higher level of traffic more easily. As a result, in this scenario, you may be able to make more conversions via your affiliate links, bringing you closer to your income goal. Similarly, if you have a product with a lower demand but one that offers higher commission rates, it will be easier for you to reach your income goals.

    Considering all of these factors is essential when selecting what niche you would like to start with as an affiliate marketer. Based on your initial efforts and once you have gained some experience, you will have learned more about affiliate marketing and what works and doesn't work, and you can branch out and experiment with other niches as time goes on.

  • Signing Up with an Affiliate Program

    Next, you will need to sign up with an affiliate program. Many companies that operate online have an affiliate marketing program, and there is much diversity in how affiliate programs can operate. You will need to choose one program to start with initially that works for you and meets your needs. A couple of things to consider while choosing an affiliate program are:

    Does the company offer a reasonable commission rate?

    Picking an affiliate program that pays a good commission percentage could make a big difference in your earnings. These programs can include smaller companies or companies that offer specialty products. Even if there is a smaller demand for their products, you may have an opportunity to carve out a niche in the marketplace and help grow their company while being well compensated for your efforts.

    Does the company have a trustworthy and reliable reputation amongst consumers?

    By signing up with an affiliate program with strong recognition and a positive reputation amongst customers, you will immediately associate your marketing efforts with the company's credibility, which will help consumers purchase items through your affiliate links much more easily. This credibility does have the potential to counterbalance lower commission rates offered to affiliates enlisted in the program, as more people will be more likely to purchase items through your links. Furthermore, working with larger online retailers that offer a wide range of products but may have lower commission rates on certain products, you may also be able to earn additional commissions from products that are not related to your niche. For example, if a customer clicks on your link and purchases several other non-related items through the retailer, you can also earn commissions on those products.

  • Forming a Business Entity

    While an affiliate marketing business can grant you a lot of freedom and autonomy, these businesses are still subject to the same legal risks and requirements as any other business. While you can operate your affiliate marketing business as a sole proprietor, which does not require you to register your business, this can leave you vulnerable as you can be held personally liable in a variety of matters, such as debt or different types of lawsuits regarding your business. Therefore, we recommend forming a business entity utilizing a business structure such as an LLC or corporation that can provide you with legal protection and offer you the ability to take advantage of different tax options. To learn more about the different types of business structures, please view our Compare Entity Types page, where you can view the advantages and disadvantages of the various entity types side by side.

    When the state recognizes a business as a legal entity, that business is required to have a designated registered agent. A registered agent must be available at all times during standard business hours to receive legal notices and official documents on behalf of a business. An individual running an affiliate marketing business can operate as their own registered agent and will need to comply with this schedule and must have the address where they can receive official mail publicly listed. Most people starting affiliate marketing businesses on their own will be operating out of their own homes, so this means if they are their own registered agent, they must be at that location at all times during standard business hours, as well as have that address listed publicly so that third parties and the state can be able to reach that business regarding legal matters. Therefore, many people who operate home-based businesses choose to hire a registered agent service out of convenience and to protect their home address's privacy. InCorp offers registered agent services that will keep your business in compliance with the state, keep track of your official mail, and notify you upon receipt.

  • Generating Content On your Preferred Platform

    With these initial steps out of the way, it's time to begin your marketing efforts. You can market your niche across a wide range of platforms, but while starting out, it's good to select one to focus on in the beginning. Common platforms that affiliate marketers use to promote products include product review blogs, social media platforms, YouTube channels, or affiliate sites centering around a niche. You can focus on generating content around your niche and chosen products on one of these platforms and then branch out from there and share this content and your affiliate links through other avenues. For example, suppose you have created a handful of TikTok videos or blog posts. You could then go to other social media sites, such as Instagram and Facebook, and start building a following to share your newly created affiliate marketing content.

    As you grow your affiliate marketing business, the more points of contact you have online to share the content you have created and your affiliate links, the more likely people will find their way to purchasing products through your links. Focusing on authentic audience engagement and producing content of value that people can benefit from will go a long way in establishing a successful affiliate marketing business. Content focusing on product reviews, comparisons, and tutorials can be of great value to consumers looking for information online and can help distinguish you as a knowledgeable source within your niche.

Starting an affiliate marketing business can be a time-consuming and involved process. However, if executed properly, it can yield you a substantial income while also providing a large degree of freedom in how you choose to operate your business.

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