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The business of affiliate marketing: How to make money through referrals

Johannesburg, 23 Jun 2023

Source: Pixabay

Anyone can become an affiliate thanks, in part, to the internet. With a large enough following and the necessary credentials, anyone can promote companies and earn money. Of course, that’s easier than it sounds. However, the fact remains that you can make money from other companies just by having a tacit relationship with them. Okay, so what is an affiliate network and how can you make money from one?

How do affiliate businesses work?

A basic affiliate model works on a revenue share basis. Affiliates send customers to a specific website and receive a cut of the money their referrals spend. A good example of this system in action is AvaPartner.

This affiliate network is linked to AvaTrade, a regulated CFD and forex broker. So, what happens here is that affiliates who join AvaPartner are given various links and tracking tools. Then, for each customer an affiliate sends to AvaTrade via their tracked links, they get a percentage of the revenue that referral generates. As per the specifics of this program, partners can get up to 50% revenue share.

That's the basics of the revenue share model, but it's not the only way affiliates can earn money. Some companies pay a set amount per referral. For example, a company might offer affiliates $50 per customer they refer. This is a one-off payment and the partner isn't entitled to any cut of the revenue their referrals generate. There are clearly business opportunities here, but where did these ideas come from?

The first affiliate network

Source: Pixabay

Affiliate businesses aren’t necessarily a new concept. Referral marketing, as it was previously known, was used long before the internet. However, the process of sending people to a digital portal and receiving commission really took hold in the 1990s. William J Tobin launched the Prodigy Network in 1989. Five years later, he launched a beta version of a website called PC Flowers.

Tobin eventually linked the two products and, with that, the first online affiliate marketing network was born. Although PC Flowers was primitive by today’s standards, it had 2 600 affiliate marketing partners and, by 1995, it was making more than $6 million per year.

By the time computer experts had found a way to connect unconnected networks (ie, today’s internet), entrepreneurs were making the most of Tobin’s affiliate market model. Today, there are thousands of affiliate marketing companies and millions of affiliates. From clothing brands using social media influencers to trading companies growing their networks through referrals, the affiliate sector is full of opportunities.

Creating business opportunities through other businesses

The marketing team at AvaTrade has essentially embraced the notion of affiliate marketing and parlayed that into an in-house program. That gives partners a unique set of benefits. As well as up to 50% revenue share, they’re afforded accurate referral tracking and guaranteed payments. What's interesting about AvaPartner is that it's an in-house system.

Therefore, if you already have a business, you can still get into the affiliate game by creating your own system. Indeed, AvaPartner has more than 145 000 registered partners and has paid out over $300 million in commission payment, so it's clearly successful. However, for affiliates in general, in-house systems tend to be more reliable.

Affiliate marketing, on the whole, is safe and reliable. However, when a company delegates its affiliate program to a third-party, there are potential weak spots. For example, if there’s a problem tracking customers, a partner has to go through the marketing agency rather than directly to the main company. This can slow down the process or lead to a complete breakdown in communication.

Therefore, the fewer steps there are between a company and its affiliate partners, the better. Of course, this isn’t always the case. However, if you’re running a business, there’s certainly value in creating your own affiliate program. Alternatively, if you’re looking for new business opportunities, becoming a mega-affiliate might be an option. Indeed, if you have a large online following or the ability to create websites that get a lot of attention, you can parlay these things into a potentially lucrative affiliate business.