If you know how to make money with affiliate marketing, your efforts will always be worthwhile. It’s a business strategy that can help you leverage your expertise in your industry, attract a bigger audience, and establish a stream of recurring income.

But before you get into the affiliate marketing business, you’ve got to understand what it is and how it works. This model differs from the typical style of business where you’re promoting your own products and services.

Believe it or not, you’ll probably never earn a dime directly from a sale through affiliate marketing. If that sounds confusing, just continue reading. We’ll explain how this model enables you to earn commissions based on consumer actions.

How the Affiliate Marketing Business Works

While entrepreneurs have been compensated for referring customers to other businesses for centuries, this reciprocal model became trickier with the advent of ecommerce. For example, if a consumer purchased a bird feeder from BirdBrainBirdFeeders.com, how would the owner of that online shop know what had prompted the purchase? It’s not like they could have a brief chat at the cash register, as you might get in a brick-and-mortar.

Serial inventor William J. Tobin provided a solution in 1994. He created tech that could track a customer’s journey, so you’d know if they’d reached your website by clicking a link created by another entrepreneur. In other words, if someone affiliated with your business created a promotion that prompted a customer to click through to your website, you could give them a kickback for their actions. Incentivizing referrals in this way creates arrangements where both parties are motivated to help one another.

Perhaps you’re familiar with Amazon Associates. With hundreds of thousands of participants around the globe, the program has made it easier than ever to sign up and promote the platform’s products. Unsurprisingly, Amazon Associates is often credited with helping the business ascend from a suburban garage to a global behemoth.

The same user-friendly structure that helped Amazon Associates reach unprecedented heights is now the industry standard. It’s simple to sign up, and you can promote the links in numerous places. And the required actions are diverse: in some cases, you’ll only be compensated if the customer makes a purchase. But other times, it’s when they schedule a sales call, download a new app, or start a free trial.

As long as the clicks come from your unique link, cookies will track the customer all the way to the final action. You can earn up to 50% of the purchase amount, depending on the program. More commonly, you could expect 5-7% of a sale.

Given the accessibility of affiliate marketing, it’s not surprising that it’s become a global phenomenon. Consider these eye-opening statistics:

• 80% of brands now have affiliate marketing programs
• The global industry is valued at around $12 billion
• Affiliate marketing is credited with 16% of all online purchases
• 80% of affiliate marketers expect their revenue to keep growing

As you can see, the opportunities are there to make substantial money as an affiliate marketer. But if you’re wondering, “Is affiliate marketing worth it?” the response is yes—if you know how to make money with affiliate marketing.

The same principle applies whether you’re talking about freelancing as a copywriter, launching a beauty line of products, or working as a consultant. Simply deciding to do one of those things won’t earn you anything. But if you understand how to do it and apply yourself to the pursuit, your earning potential goes through the roof.

Understanding the Affiliate Marketing Business

There are a couple of different ways to approach making money with affiliate marketing. First, you can use your experience in an industry to endorse a product to your followers or to a related audience. The other is to share a link to products you have no connection to, thus making it more of a generic advertisement.

Let’s look closer at these 2 strategies so you can see which might be the best fit for you.

Use Your Expertise

The first approach is to leverage your clout. If you’ve personally used a product, you can share the benefits with your audience. For example, a prominent ecommerce store owner might write a blog article about the amazing new templates that Shopify offers. Each time a reader clicked the link within the article and created an account with Shopify, the blog writer would receive compensation.

This method of affiliate marketing connects you with the product, for better and for worse. Your reputation could empower you to make more money, but if the product turns out to be rubbish, you could lose followers. For this reason, it’s important to vet the products you promote.

This dynamic is even more poignant when you promote products that are relevant to your expertise, but you haven’t actually used. When you choose wisely, your recommendation will carry weight and your followers will generally be pleased with their purchases.

If you get careless (or greedy), however, the risks increase. Not only could you lose equity with your followers, but if they return their purchases, you might forfeit your compensation as an affiliate marketer. Many programs stipulate that you only get paid if there isn’t a return within a certain window of time.

Read more: The Ultimate Guide to Affiliate Marketing for Beginners

Use the Generic Method

What if you don’t have a following? And what if you don’t even want to connect a product to yourself? No problem. You can just post normal ads that promote a link.

The advantage here is that you aren’t risking your own brand if a recommendation turns out to be misplaced. Customers might return their purchases, which will impact your compensation, but it won’t have any long-term effect on your business.

The disadvantage is that you aren’t able to speak as an expert. Because you can’t draw upon your clout within the industry, you might have a harder time convincing people to click a link and take action.

If you already have a position of authority within your industry, the hardest part of affiliate marketing is done. As you know, it can take years to develop the experience and reputation required to attract followers.

Do you want to leverage this expertise? Affiliate marketing is a natural way to be compensated for influencing the actions of others.

Of course, the generic method is just as much of an option to those who already have a following as it is to those who don’t. If you don’t want to attach your personal brand to the products you’re promoting, simply take an anonymous approach to your promotions. You’ll always have the ability to make a personal pitch for products you feel more invested in at a future date.

Targeting Is Essential for Affiliate Marketing to Work

Regardless of your own role within your affiliate marketing strategy your marketing will always need to be targeted in order to work. This isn’t some brand awareness campaign where you can feel good about “planting seeds with potential customers.” If a person doesn’t click the link and take the desired action, you don’t get paid. Simple as that.

This means you need to promote the link where your target audience will be looking. For an affiliate marketing campaign for a software product, you might have success highlighting the link in an industry newsletter. For a campaign featuring a new type of electric drill, you could have much better success promoting it within DIY videos on YouTube.

Here are some potential places to focus your efforts:

• Blog articles
• Social media posts
• Video content
• Email campaigns
• Newsletters
• Webinars
• PPC (pay-per-click) ads
• Training sessions

There is no one-size-fits-all when it comes to affiliate marketing. To succeed, you’ll need to be deliberate and precise. One of the worst things you can do is waste time and effort promoting a link to the wrong audience.

Work Hard and Be Patient

Even after you’ve identified the ideal way to share your link, the reality is that affiliate marketing is an incremental game. You might see some customer activity right off the bat, but the real money takes time to accumulate.

So it’s important to embark on this journey with high energy and realistic expectations. The harder you work, the better your results. The smarter you work, the more sustainable your results. But it will always take time to create a thriving affiliate market business.

Additionally, the quality of your affiliate marketing partners plays a key role. When the product is desirable and the customer service is good, you’ll see much better success.

If you feel that you’re not getting the results you’re looking for, it can be beneficial to talk to someone within the industry who has already achieved success. This mentor might be a friend, family member, or former coworker. What’s important is that you find a reliable guide who can help you refine your efforts and identify future opportunities.

You can also find valuable mentorship from our community of entrepreneurs. Learn from fellow entrepreneurs who have navigated the marketing of their business and found ways to expedite success.