How Do Affiliate Programs Work

How do affiliate programs work. That’s the biggest question one can get from a beginner in the game.

I assume you’re reading this because you’re new to affiliate marketing, and you want to learn more about the topic. You’re curious to understand how affiliate programs work, right?

You want to learn if it’s possible to make money online with associate programs, since you’re probably thinking all this sounds like a scam.

Maybe you’ve heard about AdSense, Amazon, ClickBank, eBay or CJ. Maybe you know what an affiliate cookie is, or what sales conversion is. Regardless, I’ll explain everything I know about this subject in the next few minutes. Hopefully, if you have other questions, please post them in the commenting section at the bottom of this blog post.

I thank you in advance!

Affiliate agreements

Now, affiliate programs (also called associate programs), are online agreements created by well established brands and companies. The companies want to attract webmasters and relevant bloggers to help get the word out about their products and items. The first and biggest company to start the game was Amazon.com. They basically made the whole concept take off the way it did online. Commission based marketing is not new, but it really took off online in a BIG way.

Each affiliate program has its terms and conditions that you have to abide by before you join it. Herein you’ll read about commission structure, prohibited activities like spamming, and so forth.

Always read the TOS for each affiliate program you decide to join. It protects you from having your account suspended or even banned for life.

For example, Google AdSense is a program that prohibits clicking on your own ads. Lots of affiliates have seen their account banned and earnings vanished due to not respecting this simple rule.

Other affiliate programs do not allow you to purchase the product using your own link. ClickBank, for example, is OK with this practice, so if you want to save some money and at the same time, earn a commission on your own purchase, you can do so…

Affiliate tracking 

Maybe you’re wondering how these companies can know which people you refer are yours, and which people are sent from other affiliates in the same program. Your question is valid, and the answer is simple. All companies are using a cookie model. That’s a web file/tracking mechanism that “registers” your referrals and will credit your commissions accordingly.

The Amazon program offers a 24-hour cookie. That’s the shortest credit I’ve ever heard of. Most companies offer their affiliates at least a 30-day cookie. That means Amazon will not give you any commissions for sales that are generated on the second or third day. Although, there are lots of Amazon affiliates who are making a bunch of money even with a 24-hour cookie.

One thing about promoting Amazon is the brand power. People feel safe buying from Amazon. Plus, the site converts well. In fact, often, people buy much more than just the item you were promoting while on Amazon. In reality, Amazon is now a huge buyer search engine. There is not much you cannot find on that store.

Some associate programs also track sales/referrals by phone. So your commissions will not be lost or stolen even if they order by the phone!

Affiliate money-making models

Any company or individual who has a product can and should open an affiliate program. They need to get help from top affiliates in their industry and reward them when they either generate a click, a lead or a sale.

There are three main types of affiliate models you have to know about:

  • CPA (cost per action).

CPA networks like CJ.com for example gives its members the opportunity to make money by referring people who could fill out a form or download a program. Examples: “insurance quotes”, “Forex account demo” etc.

You can usually get paid anywhere from $1 and up to $30 per confirmed and valid lead.

Don’t think about creating hundreds of fake email accounts and joining these offers yourself (or with the help of friends) from your own affiliate link. That’s prohibited. If caught, you’ll lose all your commissions, with no exception. You wouldn’t want to risk the opportunity to make valid money, right?

  • CPC (cost per click)

CPC networks like Google AdSense pay their members per click and page impressions. Example:  for every 100 unique daily visitors, you could expect to generate $1 (more or less).

Your earnings (payout per click/ad views) will vary based on your chosen niche as well as the content/ads showing on your web site. You’ll generally get  a share of what the advertisers are paying per click.

  • CPS (cost per sale)

CPS networks (or revenue sharing programs) pay their affiliates when a click turns into a successful product or service order. That means CPS programs pay ONLY when a sale is made via your unique affiliate ID. This is the hardest commission to generate, and usually, the most rewarding. This is the model that I have personally mastered the most up to now.

Example: you promote a $150 software program that pays 30%. Your commission when somebody buys from your site/affiliate link will be $45.

Affiliate payouts:

Most associate programs pay on a monthly basis either via check, Paypal or international bank wire transfer.

Some programs pay on a weekly or bi-monthly basis. Each network/affiliate program has its own policy, and that’s why you should be reading the TOS paying close attention.

If you’re not sure about the commission structure or payout date, give email/ticket affiliate support a try.

Affiliate promotion

As stated above, all affiliate programs prohibit spamming methods. Your web hosting company is probably against spam as well. So you’ll not only risk your affiliate earnings, but web hosting account, and entire business can vanish by spamming. Be precautious. Instead of spamming everybody, you better start building your list and target relevant prospects and hungry buyers.

Email marketing is the way to go – a reliable, efficient and honest way to earn a living online – use aWeber to start your mailing list and pre-sell affiliate products. I use it myself, and it’s well more than worth it!

Some interesting affiliate programs to try can be found in your free HWA membership. You can login to your free membership by simply becoming a free subscriber of HWA here.

I hope I gave you enough basic details on the “how do affiliate programs work” question… if you have further inquiries, please post them in the commenting section below.

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