What is affiliate marketing and how does it work?

What Is Affiliate Marketing and How Does It Work? [Guide]

Are you looking for a way to monetize your website and earn money while you sleep? If yes, then you’re probably asking yourself “what is affiliate marketing, and how does it work?”

Affiliate marketing is a convenient and flexible way to make a passive income, all while not having to worry about customer support, logistics, or warehousing.

In this article, we’ll teach you about affiliate marketing. We’ll talk about what affiliate marketing is, how it works, and how can you start making money from it.

What Is Affiliate Marketing?

Affiliate marketing is a process where you earn a commission for recommending and promoting a merchant’s products.

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So, when a visitor comes to your website, clicks on your affiliate link, and makes a purchase of the product or service you’re promoting, you’ll receive a percentage of the profit.

Affiliate marketers make a commission for every product or service they help to sell.

How Does Affiliate Marketing Work?

Affiliate marketing includes different people at each step in the process. Each of them plays an important role in making affiliate marketing work.

Lets break down each of the players involved in the process:

  1. Merchants (also known as Sellers or Retailers) – These are people who create a product or provide a service and then let others (affiliates) promote it on different websites.
  2. Affiliates – People who promote the merchant’s products are affiliates. They earn a commission on the sale of that merchant’s products and services.
  3. Customers – Customers are the people who find the product or service through the affiliate, click on the affiliate’s link, and make a purchase.
  4. Affiliate Networks – These are websites or platforms that act as a middle man between merchants and affiliates, where merchants can list their products and affiliates can choose from the products or merchants they wish to promote.

How Are Affiliate Marketers Paid?

A standard payment structure is that when a user buys a product using your affiliate link, you get paid. But more complex structures also exist.

For instance, you can get paid for sending traffic to others’ websites. The goal here is to send people from your website to the merchant’s site.

Another structure is where you get paid when a visitor completes an action on the merchant’s website, like signing up for their email list or downloading a PDF.

Every merchant you work with and every affiliate network might have different pay structures.

Now that you know what affiliate marketing is and how it works, are you ready to get started?

How to Start Affiliate Marketing

Before you jump into affiliate marketing, it’s important to plan your journey ahead. For instance, do you need to create a website or research which affiliate programs you should join?

Rushing into these things can leave you overwhelmed. And you’ll end up promoting the wrong product to your audience, which will ultimately lead to poor results and low revenue.

What is affiliate marketing? How affiliate marketing works

So, just go through these steps to start affiliate marketing.

Step 1: Find the Right Niche

The first step is to find the right niche for your affiliate business. Why is it important to get this right?

When you know what niche you’re targeting, you can research your audience, find out what they like, and then decide which products to sell. When you’ve got that figured out, you can create content and develop targeted marketing campaigns to drive clicks and sales.

One simple way of picking out the right niche for your affiliate marketing site is to follow your passion. We often have more knowledge about things we’re passionate about! This makes it easier to come up with topics to write about and consistently publish content.

Many affiliate websites don’t make it in the long run because they lack consistency or the owner loses interest. That’s why it’s important to pick a niche that you’re interested in.

Once you’ve decided on a passion to follow, pick a category to focus on. For example, if you select food or technology as an industry, you’ll have a tough time tackling them because they are so vast. Instead, select specific topics like keto diet or WordPress as a niche.

To validate that the niche you’ve selected is worth entering and finding more targeted categories, do a little research about the industry.

To help you research the niche, you might want to use keyword research tools to find out how popular it is. If the keywords you’re thinking of targeting have a high volume, then it’s a popular niche where you can hopefully pull in some traffic.

Semrush WordPress keyword search

For instance, Semrush shows you the search volume for keywords, which tells you how many people are looking for the search term each month. It also provides information about the competition level through keyword difficulty.

Another way of finding your niche is by looking at affiliate network websites (like ShareASale or CJ Affiliate). They list different merchants in various categories. You can work your way backward by exploring categories with many merchants, and then selecting a niche that’s right for you.

Step 2: Create an Affiliate Website

After finding a niche you’re interested in, it’s time to create a website if you don’t have one already. You can start building a website in no time these days.

Here’s a tutorial that breaks down everything you’ll need to have a site up and running:

A few things that you’ll need for your site include web hosting service, a domain name, and a website builder. Then select a theme and add content to your site to get started.

As you’re filling your website with content, there are some important pages that you need to have a successful affiliate site. That includes:

  • About Us – Tell a little about yourself and let your audience get to know you
  • Disclaimer – Since you’ll be using affiliates to earn money from your site, many affiliate agreements require you to use a disclaimer so that your readers know you’re going to earn a commission if they click.
  • Contact Us – Provide a contact us form where people can get in touch with you
  • Privacy Policy – It’s important to disclose how you’ll be collecting and using your visitors’ information in order to comply with privacy laws
  • Terms of Service – Tell your visitors about trademarks and copyrights on your site

Pro Tip: If you’re just starting out, financial resources can be tight. So, it’s important that you try to keep the costs as low as possible. Try following our guide on how much it costs to build a website to work within a budget.

Step 3: Choose Products to Sell

Once your website is ready, you can select which products you’d like to promote and sell on your affiliate website.

There are a number of ways you can go about it. First, you can join the affiliate programs of different companies. By referring their products and services to your visitors, you can earn commission.

One idea is to look for affiliate programs for products and services you’re already using on your website. For instance, if you’re using the best Google Analytics plugin for WordPress, MonsterInsights, you can join our affiliate program and recommend the plugin to your readers.


The second way of selling products is by joining affiliate networks.

As we explained earlier, these are intermediaries between merchants and affiliates. When you sign up for an affiliate network, you can pick products and services from different categories in your niche and start selling.

A popular example of affiliate networks is Amazon Associates. Once you sign up, you can generate an affiliate link for any product on Amazon and get paid to sell it.

When users click on the product link on your website and complete a purchase from Amazon, you’ll earn a commission. It’s that simple!

Here’s a guide you can follow for setting up an Amazon affiliate store on WordPress.

Amazon Associates - What is affiliate marketing?

There are other affiliate networks you can select like ClickBank, ShareASale, and more.

Step 4: Produce High-Quality Content

Now, you’ve got a website and you’re set up with merchants. It’s time to get lots of clicks and make sales! How exactly do you get visitors to your site, though?

Content is what will attract people to your website and keep them engaged. When you recommend a solution within your content, your audience will want to click on your affiliate link to check it out.

However, you shouldn’t go about blindly creating articles and posts. It’s important to have a content marketing strategy in place first! It will help you understand your audience, keywords, and the content types you should produce.

When it comes to finding content ideas that’ll drive affiliate revenue, follow these tips:

  • Competitor Analysis – Go through the content your competitors are publishing and ranking with on Google, then create better posts on the same topic
  • Use Google Alerts – You can set up Google Alerts for topics in your niche and get an instant notification whenever someone publishes content on that specific topic
  • Go Through Your Existing Traffic – If you already have a website that’s generating traffic, then you can see which posts are getting the most traffic and engagement and find similar or related topics
  • Perform Keyword Research – By researching keywords in your industry, you can also uncover blog topics
  • Participate in Forums and Community – Another way of finding helpful topics for your website is by participating in forums and communities where users share problems they’re facing or ideas they’re interested in

For more on coming up with blog post ideas, check out 103 Blog Post Ideas That Your Readers Will LOVE.

Step 5: Drive Traffic to Your Site

Content creation is just the first step of a winning affiliate marketing strategy. The next phase is to drive traffic to your posts.

The first thing to try is optimizing your content for search engines to rank higher in search results. Staying on top of your SEO (search engine optimization) is a great way to get consistent visitors to your website, as where you rank in search plays a huge role in how much traffic you get.

And if you can get hold of the top couple positions on Google, you’ll be in much better shape to pull in a lot of traffic. Here, you can see what percentage of clicks each position gets on a Google search results page:

Another way of generating traffic is by running paid ads or pay-per-click (PPC). Using Google Ads or social media ads, for instance, you can run paid campaigns and attract visitors to your site.

Another essential marketing idea is to build an email list over time and then run a newsletter to inform subscribers about new content or affiliate deals.

For more ideas to drive traffic to your site, check out these 30+ marketing hacks for growing your traffic.

Step 6: Convert Your Visitors

Once you’ve got people visiting your affiliate website, the next step is to get them to convert (click your affiliate links and make a purchase). And there are many ways you can do that.

Use Countdown Timers

For instance, you can add a countdown timer on your website to create urgency. You could even test different affiliates in a floating bar countdown timer to see which affiliate performs the best.


Use Social Proof

Using social proof is another way of getting people to complete a purchase. You can show a recent sales notification popup with TrustPulse on your website to provide proof and boost your conversions.


Use Smart CTA Placement

Your call to action (CTA) placements throughout your content will also play an important role in converting users. You should add them where as many visitors as possible will see them.

A safe bet is to always add them near the top of the page. If your website is on WordPress, you can also install MonsterInsights to see your average scroll depth:

average scroll depth

You can go through our guide on 18 ways to make more money from your existing traffic for more ideas.

How to Track Affiliate Links on Your Website

Now that your affiliate marketing website is set up and you’ve got the basics of marketing down, you should track the performance of your affiliate links. This will help you optimize your website to promote the most converting affiliates and tailor your marketing campaigns.

The best tool to track your affiliate links is MonsterInsights. It’s the best Google Analytics plugin for WordPress and helps you easily measure how your affiliate marketing efforts are doing.

MonsterInsights Home Dashboard

Using MonsterInsights, you can track affiliate links super easily, and you don’t have to touch your Google Analytics code. Here’s a detailed guide on how to set up affiliate link tracking in WordPress.

Once you’ve configured MonsterInsights, you can then view reports of your affiliate link performance right inside your WordPress dashboard.

Go to Insights » Reports and then select Publishers from the top menu. Then, navigate to the Top Affiliate Links report.


The report shows your best affiliates along with the number of clicks each link generates. You can then use this information to select affiliates that have the best conversion rate and promote them more across your website.

At the same time, you’ll also get to know which affiliates don’t do so well. So, you can either optimize them on your site for better performance or replace them with other affiliates.

Pro Tip: If you’re having difficulty managing affiliate links on your website and want to turn ugly looking links into more user-friendly links, then try PrettyLinks. Using the plugin, you can cloak affiliate links, apply redirections, and don’t have to manually replace affiliate links on your website.

And that’s it!

You now know how to generate passive income using affiliate marketing. Using the steps in our post, you can get started in no time.

We hope you liked our article about affiliate marketing. We bet you’d also like to check out our article on How to Build a Profitable Affiliate Website Using WordPress.

And don’t forget to follow us on Twitter, Facebook and YouTube for more helpful Google Analytics tips.

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