Making money online: 3 ways to earn a living on the internet
- Introduction and index
- Part 1 - Selling other people's products (which is this post)
- Part 2 - Selling your traffic
- Part 3 - Selling your own products
Selling other people's products, also known as "affiliate marketing", is a good way to start your own home based internet business.
This is very briefly how affiliate marketing works:
A company (or an individual) has some products or services for sale. They want to increase their sales volume, so they setup an affiliate program. People who sign up as affiliates, try to sell (or pre-sell) the products or services on their own, through various channels. In return, the producer pays a certain commission to the affiliate for each successful sale.
Such a summary is of course over simplified, as there might be many turns and twists along that main plotline. I'll try to expand on some important points.
Affiliate networks
These are sites which hosts a large number of various affiliate programs from various producers. A few well known examples are Commission Junction, Click Xchange, and Performics.
These networks save the producers from the effort of launching their own program and trying to find volunteering affiliates. But for this service, they usually request a setup fee and/or a commission from sales.
And for affiliates, they present a wide variety of choices in available programs. They also enable the affiliate to cumulate their earnings from different programs and receive the sum in one check. And although networks don't request entry fees from affiliates, almost all of them slice part of your commission to themselves, even if they declare so publicly or not.
Individual affiliate programs
These are individual companies who are confident enough to setup their own affiliate marketing programs. A very good example is the associates program of Amazon.
Contrary to most network programs, individual programs usually allow the affiliates to link to single product or service, which is a plus. But the terms and conditions of the program might be designed to favor the producer over the affiliate. This is especially true of small unknown companies, so that is something the affiliate must research before spending effort on the program.
Tracking sales
Affiliate sales are usually tracked by methods that employ cookies and JavaScript.
The affiliate is given a unique link that leads to the original producer's site, so when a visitor clicks that link and makes a purchase from the original site, the referral id shows that the visitor came from the affiliate site.
Or a code in the affiliate's site installs a cookie on the visitor's computer when a link is clicked, and when the visitor comes to the original site, the cookie proves that he/she was directed by the affiliate.
However, if the visitor has turned off JavaScript and disabled cookies for security reasons, the tracking system becomes very vulnerable. Even if the visitor clicks through the affiliate link and arrives at the original site, possible purchases are very hard to track without cookies or JavaScript.
Why would someone make a purchase through an affiliate?
(And not directly from the original site?)
This is a very good question indeed.
When affiliate marketing was first developed and introduced, a vast majority of people involved in web related business asked the very same question. They claimed that the whole idea made no sense, and would never work.
However, it works alright. In fact, the affiliate "industry" has grown much further than it was initially imagined by its believers. And it's still expanding today.
Why? Because content is king.
Let's say you want to buy a camera and begin searching online.
You visit Company A, which has a wide variety of cameras, and claims all of them are perfect for you.
You visit Company B, and perhaps C and D. More cameras, more options, and it seems all of them are excellent cameras.
You get a little suspicious, and decide to do some more research. You go to a search engine, and try some keywords like "cameras, price, comparison, models".
The results bring up Company A and B again. There are also many sites in the results which (to your disappointment) consist only of links to A, B, C, and D. And also some adult or gambling sites which have included your search terms on their pages.
Then you find this little site: It is created by a photography enthusiast. It compares various camera models from various companies, discusses their pros and cons. It also helps you decide which functions are required for your situation, and which functions you would never use, so better not pay for. There are also some nice anecdotes about buying cameras, and you find yourself having spent quite a time on this site.
After you have read most of all there is, you discover there are links on this site to buy various models of cameras, also the one you have decided to purchase. You read the link text, and find out it is an affiliate link.
Now, do you exit this site, go to the original company site, and buy your camera from there?
Or do you click that affiliate link, knowing the creator of the site that helped and entertained you will make a buck out of it?
Some people do the former. They cannot bear the thought that they will be helping someone earn a buck by doing something as simple as clicking.
But a good majority of people do the latter. They appreciate the effort and value presented by the affiliate, and they know that it's not their own little click that will make bucks for the affiliate. The affiliate deserves to earn the buck through his/her great content.
That's how and why affiliate marketing works.
