Affiliate marketing has been around since the early days of the internet. And yet, it remains one of the most popular ways for bloggers, website owners, influencers and entrepreneurs to monetize their online presence in 2023.
But what exactly is affiliate marketing? How does it work? And most importantly – can you still make money with it in 2023?
This complete 5,000+ word guide aims to explain everything you need to know to get started in affiliate marketing this year. We‘ll cover:
- What affiliate marketing is
- How affiliate marketing works
- The different affiliate marketing models
- Is affiliate marketing still profitable in 2023?
- How to start an affiliate marketing business
- Mistakes to avoid with affiliate marketing
- Alternatives to affiliate marketing
Let‘s start with the basics…
What Is Affiliate Marketing?
Affiliate marketing is an online advertising model where a company, known as a merchant or advertiser, partners with individuals or companies, known as affiliates or publishers, to promote and sell their products or services to new customers.
In exchange for promoting the merchant‘s offerings, the affiliate earns a commission on each new sale or lead they drive to the merchant. This commission is typically a percentage of the sale price or a flat fee per transaction.
Some key characteristics of affiliate marketing include:
- Performance-based: Affiliates only earn money when a visitor they referred makes a purchase or completes a target action (e.g. filling out a lead form). If no sales occur, the affiliate earns nothing.
- Leverages influencers/publishers: Affiliates are often bloggers, Youtubers, website owners or other influencers with an existing audience. By allowing these influencers to share affiliate links, merchants can tap into new customer bases.
- Sales outsourcing: For merchants, affiliate marketing provides a sales team that requires no wages. Affiliates are only paid commissions on results.
- Low risk: Affiliates don‘t have to carry inventory or directly sell products. Their role is simply to drive new customers to the merchant.
Now that we‘ve defined affiliate marketing, let‘s explore how the process works…
How Does Affiliate Marketing Work?
While arrangements can vary across individual programs, here is the typical affiliate marketing process:
- Merchant launches program: The merchant registers with an affiliate network or offers an in-house program. They provide creatives like banners/text links for affiliates to use.
- Publisher joins program: The affiliate or publisher signs up to promote one or more merchants in their niche. They receive a unique tracking link for each merchant.
- Affiliate drives traffic: The affiliate uses their website, mailing list, social media or other assets to promote merchant offerings.
- Visitor takes action: The visitor clicks the affiliate‘s link, lands on the merchant‘s site, and completes a desired action.
- Affiliate earns commission: When a visitor referred by an affiliate makes qualifying purchase, the affiliate earns commission based on the terms.
- Affiliate paid by network: The merchant reports transactions to the network, which in turn pays commissions to the referring affiliate on a periodic schedule.
Now that we‘ve covered the basics of how affiliate marketing works, let‘s explore some of the most common affiliate compensation models…
Affiliate Marketing Payment Models
There are a variety of ways affiliates and merchants structure commission payouts. Common affiliate payment models include:
- Pay-Per-Sale (PPS) – Affiliate earns a percentage commission or flat fee for every qualified sale.
- Pay-Per-Lead (PPL) – Affiliate earns a fixed bounty when a referred visitor completes a target form submission/sign-up.
- Tiered/Threshold Commissions – Commission rate increases when monthly sales volumes hit predefined thresholds.
- Recurring Commissions – Affiliate earns a percentage on periodic subscription payments from referrals.
- Hybrid – Combination of two or more commission models.
The pay-per-sale model is the most common. But others like pay-per-lead are popular for services with long sales cycles.
Now let‘s address the million dollar question…
Is Affiliate Marketing Still Profitable in 2023?
Affiliate marketing has been around since 1989 when CDNow launched one of the very first programs.
In the mid-2000s and early 2010s, affiliate marketing gained significant momentum, as blogs and websites leveraged this monetization method.
But with the rising dominance of social media in the late 2010s, some questioned whether affiliate marketing would remain viable.
After all, many social media algorithms are designed to handicap affiliate links and discourage product promotion posts. Not to mention the prevalence of ad blockers.
However, while the affiliate marketing landscape has gone through its share of changes recently, it still remains highly profitable across various online assets in 2023 – including both websites and social media.
Here‘s why…
Affiliate Marketing Industry Statistics and Projections
According to Statista, global affiliate marketing spend reached $12 billion in 2021 across networks like Awin, CJ Affiliate, Rakuten and more.
Spend is projected to grow to $13.2 billion in 2022. And Statista predicts spend could reach $15.7 billion globally by 2025.
Clearly affiliate marketing remains a high-growth promotion model in spite of industry changes in recent years.
Specific verticals that show strong ongoing adoption of affiliate marketing include:
- Software/SaaS
- eCommerce/retail
- Lead generation offers
- Travel
- Financial services
- Education
With many of the above verticals taking place primarily online, and an increasing portion of consumer discretionary purchases occurring via the internet, the outlook for affiliate remains strong.
Additionally, content sites from blogs to Youtube channels have built-in audiences that affiliate programs want access to.
Next let‘s look at some real-world examples of bloggers and influencers still making big money from affiliate…
Case Studies: Bloggers Making $100k+ Per Year from Affiliate Marketing
Wondering if affiliate marketing still works in 2023?
While most bloggers keep their income private, some do share affiliate earnings as proof the model remains lucrative.
Here are some examples of sites making $100k+ per year largely from affiliate marketing:
Making Sense of Cents
Personal finance blog Making Sense of Cents makes most of their income from affiliate partnerships.
In April 2022 alone, the site generated $102k in earnings – with 85% coming from affiliate commissions.
Smart Blogger
Prolific blogging site Smart Blogger reveals they make the majority of their 7-figure annual revenue from affiliate marketing.
In 2021 they generated over $100k in just Amazon affiliate earnings alone.
Finances Online
Review site Finances Online is transparent about affiliate being their top money maker.
In 2021 they earned $1.5 million from affiliate programs – a 46% annual jump. Their total 2021 revenue exceeded $2 million.
These examples demonstrate that affiliate marketing remains highly lucrative for content-based sites even in 2023.
Next let‘s turn our attention to getting started…
How to Start an Affiliate Marketing Business
While affiliate programs handle most of the fulfillment process, building an affiliate site still takes considerable work.
Follow these steps to launch your own affiliate marketing business:
1. Choose a Niche
Your niche dictates not only your site‘s topic, but also the affiliate programs available to you.
Consider these factors when picking your market:
- Interests/Passions – Helps fuel content creation.
- Industry growth – Growing niches monetize better.
- Commission potential – Higher ticket/recurring products pay more.
- Competition – Balance opportunity with demand.
Some top niches include finance, software, ecommerce stores, travel, and education.
But many sub-niches exist within those broader categories. Specializing helps stand out.
For example, instead of pet products…perhaps pet insurance. Rather than shoes…hiking boots specifically. Go narrow.
2. Start Your Website
While social sites offer affiliate options, the highest earning affiliates invest in building their own sites.
You need a dedicated platform for hosting better converting pages and expanding content over time.
A simple formula – build quality content + capture emails = long term revenue.
Use WordPress to launch your site quickly. Top web hosts to run WordPress include:
- Bluehost
- WP Engine
- SiteGround
All make launching a site easy, whether you build from scratch or use pre-built theme templates.
3. Join Affiliate Programs
Once your site is ready, find merchants in your space offering attractive commissions.
Larger affiliate networks connect you to thousands of brands across many verticals. These include:
- ShareASale
- FlexOffers
- ClickBank
- Rakuten
- CJ Affiliate
Narrowed down top products in your niche? See if merchants run their own affiliate programs before joining those networks.
For example, ConvertKit and Mailchimp have popular programs for email services.
4. Create Affiliate Content
Content remains king – delivering 80%+ of affiliate value for most publishers.
Use a mix of:
- Product reviews/comparisons – Dive into pros/cons of top services.
- Best-in lists/awards – Your #1 picks in different categories.
- Deals/promo posts – Limited-time offers from favorite brands.
Focus on providing honest, unbiased information leading readers to quality recommendations.
Use your affiliate links liberally within content. But ensure proper context so links feel natural, not forced.
5. Promote Affiliate Content
You need exposure to monetize that helpful content with your links.
Leverage options like:
- SEO – Earn organic search traffic by ranking highly for buyer keywords.
- Social media – Market posts and build followings on FB/Twitter/etc.
- Email lists – Send affiliate offers to engaged subscribers.
- Paid ads – Amplify reach using paid channels like Google/Facebook.
Diversify across multiple marketing activities for the best results long term.
So those are the core steps for building an affiliate marketing business from the ground up.
While it takes effort, six and even seven figure incomes prove this remains a highly viable online business model in 2023 and beyond.
Next let‘s cover some potential pitfalls to avoid…
Top Affiliate Marketing Mistakes to Avoid
When building your affiliate marketing assets, sidestep these common yet avoidable errors:
Choosing Overly Competitive Niches
While money attracts competition, extremely saturated markets lead to dwindling conversions and commissions over time.
Try avoiding niches dominated by Amazon with razor thin margins.
Instead identify growing markets where you can establish yourself among early category leaders.
Promoting Untrustworthy Merchants
While high commissions tempt even dubious companies, low-quality merchants deliver disappointing visitor experiences.
Vet each brand thoroughly before endorsement. Monitor metrics and reviews. Drop poor performers dragging down conversions.
Your credibility hangs in the balance when promoting third-party businesses. Carefully guard your reputation.
Ignoring Relationship Building
The highest earning affiliates view programs as long term partnerships vs short term paydays.
Engage frequently with your best sponsors. Seek win-wins driving growth for both parties.
Invest in personal rapport and merchants will invest in supporting your efforts in turn.
Now that we‘ve covered both the upside and downsides, let‘s examine alternatives to affiliate marketing next.
Alternatives to Affiliate Marketing
While affiliate marketing stands strong in 2023, expanding income streams is always smart.
If also looking to diversify, consider these alternative monetization models:
Display Advertising
Ad networks like Google AdSense let publishers show text, image and video ads on their site. Whenever visitors view or click ads, the site owner earns money.
The prevalance of ad blockers limits income potential. But display ads provide diversification beyond affiliate commissions.
Top ad networks include Google AdSense, Media.net, Ezoic and Infolinks.
Sponsored Posts
Also known as sponsored content, sponsored posts involve brands paying site owners to create blog/video posts endorsing their product or service.
Income exceeds affiliate commissions per post. But sponsored content relies heavily on audience reach. Without lots of existing traffic, sponsored posts run infrequently.
Most bloggers use a hybrid paid + affiliate model once they build traffic over time.
Digital Products
By selling their own information products, bloggers tap into the 100% margins only original premium products allow.
However, creating high quality online courses, ebooks, video training series and other digital products requires significant upfront effort before profits start.
Affiliate marketing provides faster returns, making both models symbiotic revenue streams.
The above alternative models can all co-exist nicely alongside affiliate programs. Just concentrate on your core traffic-building competencies and outsource fulfillment to merchants through affiliate links until ready to expand into selling you own products.
Wrapping Up
As explored throughout this guide, affiliate marketing remains popular and profitable across both websites and social media in 2023.
While mastering affiliate requires upfront work, six figure incomes prove the model continues providing impressive ROI for those putting in the effort.
We covered what affiliate marketing is, how it works, the fact it still monetizes highly, tips for getting started the right way, common mistakes to avoid, and alternative money-making methods to consider as well.
Hopefully this piece provided an extensive overview so you can make an informed decision around incorporating affiliate programs into your overall online business and monetization strategy this year.
All the best as you grow!
