Understanding Affiliate Marketing - In Depth Look

In the past decade or so the world of affiliate marketing underwent multiple transformations. The technology available to us today has made it both easier to track sales, stats, and receive payments.

Moreover, in todays day and age many more companies understand the benefits of affiliate marketing to their business and income. As a result many of the well established brands in the world now offer affiliate programs whether public (available to everyone) or private (hand picking influencers, etc.).

Affiliate marketing offers companies the opportunity to market their products and services on a much wider scale than regular marketing options. Theres also the added value of them only paying for the marketing efforts after a sale has been made, rather than other channels which are more of hit-or-miss.

For you as an affiliate the benefits are obvious. You don't have to invest in starting up a company, research and development, product manufacturing etc. All you really need to do is drive traffic and earn when a sale is made!

Busting Myths And Knowing Your Options

A major misconception which leads to many failures in the industry is the idea that affiliate marketing is one size fits all. Its not! What works for one affiliate and has given them great success may not work for another, even if they replicate the exact steps the other took!

This is what compelled me to break it down for you guys here today so you can take the route that best suits you. We're going to look at the various types of affiliate marketing programs and discuss the subtle and not so subtle differences between them.

Its also worth noting that not all affiliate programs are created equal! We'll also be taking a look at why that is the case.

The first thing we need to consider is that affiliate marketing programs will come in three different variations. The variation here is in the type of result the company is targeting with their program.

Pay Per Click (PPC) Affiliate Programs

The first variation is know as the PPC variation. These are programs that will pay you a few cents per click landing on your affiliate linked page. These companies are usually looking for pure traffic and will usually limit the clicks they pay for by country, or pay differently based on the clicks IP address (indicates country of click origin).

If you have a massive, engaged email list or social media page(s) with thousands of engaged followers, this might be a good option for you.

This kind of affiliate program is more of an economies of scale type of system. You need to send a large scale or free or extremely low cost clicks for it to be worth your while. Paying for clicks will be tough, because the cost per click on you will usually higher than the payout.

Think about it, if that affiliate network wanted to pay $1 or $2 per click why would they need you? They can pay just the same amount on facebook or google themselves for the exact same clicks. In fact, they could get them for even less using the facebook and google pixels and retargeting ads.

Pay Per Action (PPA) Affiliate Programs

The second variation is the PPA option. These programs will pay you slightly higher than PPC and sometimes even significantly higher depending on the industry. The action can vary but in most cases it's when the click converts to a lead. This usually happens when the visitor you send leaves their email address, mobile number, signs up for a free trial, downloads the app or a similar action.

Why do they need this and are willing to pay for it? This is where buying intent comes into play. If you download an app, give your contact details for more information, signup for a webinar, etc. you instantly become a qualified lead.

What is a qualified lead? Someone who turned from just a passer by to a prospect who could buy. Any decent company with some history behind it would have conversion statistics. They would know on average what percentage of people who become prospects buy, and average spend once they do become a buyer.

The total spend is then divided by the number of downloads which gives them an average ROI per qualified lead. They pay you less than that average and this is where they make their profit.

Pay Per Sale (PPS) Affiliate Programs

The third major variant is the PPS one and this is the most common. A sale is made and in turn once the sale happens, once its a qualified sell, they pay you (the affiliate) a commission.

The way an affiliates payment is determined in this method is simple. A percentage of the actual sell value is determined and paid out. Some programs take it a step further, just like with PPA they calculate the customer lifetime value, average out upsell purchases and either pay you 100% on the initial product sale only. Others will give you a percentage of the initial offer and a percentage of all recurring payments and/or upsells.

Multi-Tier Affiliate Programs

In addition to these programs there is one more variation which usually comes in the PPS setup in most cases. These are the multi-tier affiliate programs. They come in the form of network marketing, multi-level-marketing, etc. and is where you don't just earn on sales made by your leads but also by sales through any of your leads.

However, over the past few years, these kinds of programs have become risky. The Federal Trade Commission (FTC) frowns upon these types of programs because of a negative dogma about such programs which is deep rooted in the setup of these programs.

Multi-Tier affiliate programs are not pyramid schemes, however their setup looks similar. In pyramid schemes only the top of the pyramid ever made serious money, and all on the back of the lower levels. Unfortunately, the FTC in many cases doesn't differentiate between the two and as a result many companies have been shutdown over the past few years.

Some of these companies were legit companies, but unfortunately when a market gets saturated by scammers and complaints increase, everyone gets drowned in the storm. This is why if you choose to get involved in one of these programs, make sure they are FTC compliant, otherwise run in the other direction.

Understanding Value Chains And Different Ticket Programs

Remember how we said not all programs are created equal? Well, we're about to find out why. The most important thing, that if missing, a program is worthless is a Value Chain. You walk into a restaurant and pick up the menu, the first pages are appetizers, then soup and/or salads, then main courses and side items.

Notice how the value of these items grow and one thing leads to the next in a smooth, logical flow? This, ladies and gentlemen, is a value chain, or whats also known as the sales value ladder.

It's in essence a process, that delivers you from one low cost product all the way to the highest cost product in the chain in an intuitive manner that is seamless and makes sense.

A company that does this right is a company that you can make money from, any company that doesn't have such a process in places, or lacking in these areas, is a waste of your time and effort.

Do you know why? You'll build an entire business and audience around these products. Even if you only earn on front end sales, that company wont last long in most cases. Where does that leave you? Starting over from square one!

Ok so if a company has a solid value chain, whats next?

We need to establish are the products you will be selling high ticket or low ticket? Each has its pros and cons. Mainly it depends on your experience, skill level, and the standard what you are comfortable with/prefer.

There are actually two main ticket levels and a third annex level. Low ticket are products that go for a low price and can range from anywhere up to $100. The other main ticket level is the High ticket and these usually start upwards of $1,000 but some programs call products starting from $500 high ticket. The third (annex) level is the mid ticket, and thats basically everything in between the other two.

So what are the benefits of low ticket? Think of the buyer market as a pyramid where low ticket products cater to the base of the pyramid. That happens to be the biggest chunk of the market. So you have a bigger pond to fish in, because more people can afford it. Thats the pro!

The con? You will need to catch a lot of fish to make a sustainable income from low ticket products. This in turn means more effort and/or money and time to generate enough traffic for it to be worth your while.

High ticket products on the other hand are the mirror opposite. These are the top of the pyramid, and in turn the smallest customer base to hunt in. Unlike low ticket products the competition here is cut-throat, low supply and high demand plays a big role and is very pronounced here!

It will be challenging to acquire a single sale and there will be long periods of time between sales where you have no income. This is of course unless its something that sells like hot-cakes such as the new iPhone for example. However, even with these you will still have to deal with the killer competition over these buyers.

Does that mean high ticket sales are a no-go? Not at all, this is where all the real money is made. Its preferred by many marketers because you earn more for less headache and effort per $1 made. However, on the flip side its also the most difficult and exhausting ticket to generate a single sale. Does it make sense? You can easily make 1000 sales of $1 but not so easy to make 1 sale of $1000.

This is why preference plays a big role here. Do you prefer a constant stream of smaller easier sells or focusing your energy and time to make that one sell thats worth all of these smaller ones combined?

The mid ticket is basically a happy medium and depending on the price of the product will be closer or further from the base of the pyramid.

So what do I prefer? ALL OF THEM! Humor me, this is not one of these clich things people say. Some affiliate programs offer you the option to have your cake and eat it too.

How do they do that? They do it by having a VALUE CHAIN! The process goes as follows

offer up a low value product (the bait) > Lure > Reel> Offer Value > Upsell > Upsell > Upsell

Basically they bring in the customer in their database for a low price and then gradually grow the income from them. Most companies do that, however they only offer you a share on the bait product, then take all the income from the upsells and cross-sells themselves.

What you want to do, if you choose to follow my preferred strategy, is lock in with a company that offers you a commission on all stages. This way you take advantage of sales on all levels of the pyramid. Its also your shortcut to the top of the pyramid, especially if youre fairly new to all this. Once you send the low ticket customer through their doors, its now in the hands of their experts to get you the most income from that customer on autopilot.

What ends up happening is you begin to make these regular $1 (hypothetically) sales and focus exclusively on these, and once a week (or however long it takes the experts to move them up the chain) you find youve made $500, $1000, or more at no extra effort on your behalf.

There are a few companies that offer this, but they are not many, especially the ones that have a solid value chain, and real experts to nurture and grow your customers all the way up the pyramid. I have tried a few but the one I enjoyed being on most is the one Ive got linked towards the end of this article.

Concluding Our Discussion And In Depth Look At Affiliate Products

There is so much to know about affiliate marketing and this article literally just scraped the surface of it all. If youd like to learn more about affiliate marketing as well as making money both offline and online Id like to invite you to visit my blog today.

Its jam packed with articles, suggestions and recommendations to help you make money with the least resources ever. Whether you have startup money or not is irrelevant, my articles are for the ones who need money most, the ones who are broke.

At 36, Ive made myself from nothing, I wont claim Im on fortune 500 or any of that B.S. but Im in a comfortable financial position where money is not an issue for me anymore. I was struggling with being broke and penniless in Jan 2017. Today I own 5 successful businesses across 2 countries, and already planning my expansion into a third country.

Id highly suggest you go through some of my articles if youre struggling to make ends meet. I offer plenty of ideas both offline and online that can inspire you and help you get out of this rut as I have.

Ohh and as promised you can check out the program I mentioned earlier by clicking here.

Good luck my friend!

Looking forward to your success and prosperity,

Tareq