Chapter 1

Welcome to the guide!

Welcome to the ultimate blogger’s guide to affiliate marketing! When you first start building up a blog you might have money on your mind or you might not. After a few months though, most people start to wonder why they’re doing it. Affiliate marketing can give you the money you need to fuel your passion and keep blogging. Some people even make a full-time living blogging and promoting products with affiliate marketing. You can even build up a passive income with affiliate marketing (despite what many people say) but I will say, it isn’t something that will make you rich overnight. It does require that you put the work in. This isn’t a get rich quick scheme, it’s a real business. You might be confused and overwhelmed by all the information available about SEO, blogging advice, email marketing and smore. And sure, affiliate marketing is something that you can add to that pile but that is why we wrote this. Its job is to demystify the how part of monetising your blog with affiliate marketing. It’s the guide I wish I had back when I started. So, are you ready to start learning about affiliate marketing and how to implement it into your blog? Let’s get stuck in! Cheers.

Some definitions before we start…

Before we begin, let’s define some common industry terms that you’ll come across in this guide. If you don’t understand something while reading, check back here for the definition.

Affiliate:

this is the person or company that promotes products and/or services for a merchant. In return, they receive an agreed commission for the sale made or lead generated.

Affiliate Link:

this is a special link given to the affiliate by the merchant that is embedded with a unique tracking code. This enables the merchant to track the sales or leads the affiliate has generated.

Affiliate Program:

the affiliate program details the specifics of the arrangement between the merchant and their affiliates, how much commission is given, exit conditions, and other important terms. By joining the merchant’s affiliate program the affiliate agrees to these terms and is bound by the rules of the program.

Associate:

another term for an affiliate.

Commission:

this is the percentage or amount a merchant pays an affiliate for generating a sale or a lead. The exact percentage or amount is agreed upon in the affiliate program terms.

Merchant:

a store owner or company that runs the affiliate program the affiliate is participating in. They are often the producers of the products and/or services that affiliate promotes.

Niche:

a specific topic or business area. For example, if you have a site about yoga, your niche is yoga. On a more general level, your niche is health and well-being. If you focus just on clothing for yoga, that is your sub-niche. Other more specific definitions will be given throughout the guide for additional terms.

Chapter 2

Why affiliate marketing is the ultimate win-win scenario

People who’ve never tried affiliate marketing either think it’s too easy or too hard for it to work. Some even believe only the lucky get rich and all others won’t be able to make more than a couple of bucks a month. In reality, it depends on what you’re trying to accomplish. One truth I’d like to make clear is this: Affiliate marketing is NOT easy money and you won’t get rich overnight from it. There is money to be earned in affiliate marketing, but whether you’ll earn from it or not will depend on a lot of factors such as your commitment, experience, site traffic, etc. In this chapter, we’ll be teaching you how you can compute your earnings, how to make affiliate marketing profitable for you, and the types of payment terms used by most affiliate programs along with why affiliate marketing is the ultimate win-win scenario.

The 3 Types of Payment Terms

Affiliate programs can use different payments terms. You need to be familiar with the three main types to get a better idea of how commissions work.

➔ Pay per Sale:

These programs pay you a percentage of the product sale price whenever a purchase is completed.

➔ Pay per Click:

You get paid depending on the number of visitors you redirect from your affiliate site to the merchant’s website, regardless of whether a sale is made.

➔ Pay per Lead:

In this program, you get paid every time a visitor fills out a contact form and provides their information.

“Do I need to learn the math even if I don’t have a site yet?”

If you haven’t registered to any affiliate programs, you might think you don’t need to learn how it all works. Remember, affiliate marketing will only work if you are willing to research and treat it like a real business. Real businesses do projections even before they have a product. If you want to set concrete and attainable goals (and reach them), you must be familiar with the metrics. To paraphrase Peter Drucker: what gets measured, gets managed. Learning how to project your affiliate earnings lets you create a sustainable marketing strategy.

The Terms & Metrics to Know

1. Commission Rate

A merchant will set a specific commission rate for their products. This is the portion of the revenue that you receive as an affiliate. Commission rates can range from as low as single digits to more than 50%. Usually, digital products (such as e-books and software) have the highest commissions while physical products may have the lowest.

2. Clickthrough Rate (CTR)

The number of clicks your link or links get divided by the number of times they were viewed (impressions).

. Earnings per 100 Clicks (EPC)

Sometimes called EPHC, this metric gives you an idea of what other affiliates are earning through this program. While it shouldn’t be used as a single criteria to gauge a program’s profitability, it’s still good to analyze.

4. Average Order Value (AOV)

The average order value is the sum total of all orders divided by the number of orders. It’s a handy metric to know for forecasting your sales.

5. Reversal Rate (RR)

The percentage of transactions that get reversed by the merchant. Most affiliate programs may not provide this data prior to registration, but some networks (such as ShareASale) do provide this data so you can analyze.

6. Conversion Rate (CR)

This metric is the most exciting to track. It may be a click-to-sale CR or a click-to-lead CR, depending on the program. The conversion rate is calculated by the number of visitors who clicked through the site offering the product/service and made a successful purchase (or converted).

Example Scenario

Let’s assume you’re a blogger with around 10,000 page views every month. And let’s say you pick a merchant that pays 30% commission on sales. For our calculations we’ll also assume the following values for each metric: CTR = 5%
EPC = $250
AOV = $125 CR = 10% RR = 10% We can calculate for the traffic, sales, and earnings by using the following formulas: Traffic: 10,000 * 5% (CTR) = 500 click throughs Sales: 500 * 10% (CR) = 50 sales 50 sales – 10% (RR) = 45 sales 45 * $125 (AOV) = $5625 Earnings: $5625 * 30% (Commission)= $1687.50 To get your personal projected EPC, you can use the following formula: EPC: $1687.50 (Earnings) / 500 (Traffic) * 100 = $337.50 As you can see, your personal projected EPC isn’t that far off from the program’s actual EPC, which was set at $250. NOTE: The above formulas may differ from merchant to merchant. Don’t assume these projections will apply to all affiliate programs so please spend time to research on your own, too.

Why Affiliate Marketing Is Good For Merchants Too

Companies wouldn’t continue to have affiliate programs if they weren’t making money from it. To give you an idea about how merchants also earn from affiliate marketing, take a look at the formula below:
Revenue – Cost – Affiliate Commission Payment = Profit Revenue can be seen as the gross income or “top line” figure from which costs still need to be subtracted from. Cost includes anything and everything the company spends on to market and produce the product (which may include other company expenses). Affiliate Payment is the commission they pay to affiliate marketers like you. Since you, as an affiliate marketer, are the one doing the product promotion for the company, the merchant does not have to spend as much on marketing to attain that sale – that’s what they’re paying you the commission for. Here’s an example scenario. Assume the following values:
Revenue: $199 Cost: $40 Affiliate Payment: $59.70 (30%) And inserting these values into the formula, we get the merchant’s profit, or net income. $199 – $40 – $59.70 = $99.30 profit per sale $99.30 is still a great margin for the company so while the $59.70 commission (30%) might seem like a lot, it’s actually probably similar or less than what they themselves are paying to acquire a customer through their own marketing channels. Merchants have the potential to earn more from affiliate programs because, as I’ve just shared with you above, they are earning without the cost of marketing. Of course, they’ll still have to run marketing campaigns on the side for their products/services to gain exposure, but their profits would be dramatically lower if they did not have affiliate programs in place. It’s The Ultimate Win-Win Scenario Affiliate marketing is a strategy that benefits both you and the merchant. It has turned many average Joes and Janes into millionaires and has helped small and large businesses grow. And now that you know how the math works, it should give you the confidence you need to trust in this strategy so you can earn millions in the future, too!

Chapter 3

Common misconceptions about affiliate marketing

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