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Ever since Timothy Ferriss published his book “The 4-Hour Workweek,” people have been ditching their 9 to 5 jobs and taking the plunge into affiliate marketing. If you’ve dreamed of being able to make a decent living through passive income, then affiliate marketing is a path you should consider taking.
The idea behind affiliate marketing is that you promote the products of other people, many times through an affiliate network, and earn commissions when people buy those products as a result of your marketing efforts. Pretty easy right?
Unfortunately, there is a little more to the process, and it will take some upfront work on your part.
Before you can get started in affiliate marketing, it is essential for you to understand that there are four different parties involved in the process and how each fit in with the system.
When it comes down to the actual marketing part of the affiliate marketing system, there are two sides to the equation: the creator and seller of the product and the affiliate marketer. What does this mean?
You can look at affiliate marketing as the process of spreading product creation and marketing across various parties, where each of the parties receives a share of the profits according to their individual contribution to the marketing efforts.
This, simply put, means that you can be both the creator and the marketer and still make a profit from the underlying idea of revenue sharing.
Four Parties of the Affiliate Marketing System
The Merchant: The merchant is known as the creator of the product, the seller of the product, the brand, the vendor, or the retailer. This is who creates the product. It can be a big company like Dell, who manufactures personal computers, or an individual.
Anyone can be the merchant behind an affiliate marketing program, from the solo entrepreneurs, to the startups, to gigantic Fortune 500 companies. They can be anyone who has a product to sell.
The Affiliate: This party can be a single individual or an entire company, that helps to market the products of the merchant. An affiliate marketing business can produce several hundred dollars in commissions every month to tens of millions.
This part of the system is where the marketing happens. The affiliate promotes one or more of the merchant’s products, trying to attract and convince potential customers of the value of the product in hopes that they will end up purchasing it.
This can be accomplished through a review blog of the merchant’s products or through an entire site that is dedicated to finding products that are related to a particular topic and promoting the affiliate products.
The Consumer: The consumer is what makes the affiliate system work. Without their purchases, there wouldn't be any commissions to be earned, and no revenue would be shared.
The affiliate markets the products to the consumer through the channels that they see fit. This can be through digital billboards, social media, or a search engine using a blog and content marketing.
The Network: The network works as an intermediary between the merchant and the affiliate. While technically, you could promote a merchant’s product and arrange a direct revenue sharing system with them, having a network like Jvzoo or ClickBank handles the payment for and delivery of the product, eliminating the hassle. Sometimes, in order to even promote a product, affiliates have to go through an affiliate network.
When it comes to the affiliate marketing system, you can choose to become a merchant and have others market your products in exchange for a commission on the completed sales, or you can become an affiliate marketer, promoting products in order to make money.
While most people decide to take the affiliate marketer route, building enough traffic to make an income that makes it worth your while, isn’t easy, or quick.