Why Affiliate Marketing Works? Factors To Consider

Why Affiliate Marketing Works

With YouTube and Instagram influencers on the rise, affiliate marketing has become a popular choice for earning revenue online.

This advertising model is quite simple: a company pays someone to advertise their products or services and generate traffic and sales through a personalized link.

Commissions are then paid based on the number of sales coming from the tracked source. 

Why is it convenient? 

Now that we established what is affiliate marketing, we can go into some of the reasons it has been such a successful business model for companies and affiliates alike. 

Either by scrolling on social media or reading through blogs, you have probably noticed content marked as “affiliate links” or “sponsored post.”

Promoting products in return for a small commission for each sale may not sound like the most lucrative of businesses – but when you have a large or loyal audience, the commission can add up quite easily.

In fact, approximately 15% of the digital media industry’s revenue comes from affiliate marketing. 

The affiliates can work with individual brands or sign up for partnerships with affiliate networks.

They can register and choose the programs that best fit them by browsing through the different categories (beauty, cooking, health, sports, etc).

Once approved, they start promoting the products on their blogs, on social media posts or stories, newsletters, or anywhere else.

Besides promoting the product, they have to make sure to include personalized affiliate links. 

The company then issued a payment, usually when they reached the minimum payment level. Getting to the minimum amount usually won’t be a problem for bigger creators, but it might take some time for regular users. 

This model works quite well because it is different than ads – you can just add the link to your regular content and use it as a way to gain some passive income in case someone is interested in the product you are recommending or reviewing. 

In addition, due to psychological factors like the trust built with the audience, fear of missing out, and scarcity, this business model is more compelling than traditional ads. 

Factors to consider 

Of course, there is also a bit of a risk.

Firstly, companies typically pay their affiliates per sale and less frequently by clicks alone, meaning that there are things outside of your control that might stop you from getting a commission.

For example, even if you successfully convinced a member of your audience to purchase a product, they might be changing their mind once they see the shipping options.

In this case, you do not gain any money from the interaction, even if the user spent many minutes on the product’s page.

This can especially be damaging for people who don’t think of affiliate marketing as a passive income and rather their main job. 

On the other hand, users might not always click the link you provide.

Even if they are convinced by you to try something out, if they don’t use your link and instead look it up with a search engine or directly type the website into the browser bar, you won’t be getting any money from it as it’s not being tracked through your link.

To avoid this issue, some links offer special perks, such as unique discounts and limited offers, to push users to use that link when completing the transaction.