Affiliate Links

What is affiliate marketing and how does it work?

What is affiliate marketing and how does it work?
Written by publishing team

Affiliate marketing is becoming increasingly popular, and not just with the world’s most famous social media influencers.

Read our step-by-step guide to learn more about affiliate marketing for beginners, the best affiliate marketing examples, and the advertising rules you need to follow.

Get Your Free Guide to Affiliate Marketing

Download your free in-depth guide to making money from affiliate marketing. Get instant access to expert tips and tricks with just a click of a button.

Your email address will be used by Simply Business to keep you up to date with the latest news, offers and tips. You can unsubscribe from these messages at any time. simply work private policy.

What is affiliate marketing?

The meaning of affiliate marketing is simple – it is a way to earn money by promoting a company’s products or services through your platform, such as a social media account or blog.

It is a low passive income stream of investing, as you can earn commission every time you lead a sale to the company you are promoting.

Affiliate marketing sales are usually tracked via affiliate links or special discount codes.

How does affiliate marketing work?

Affiliate marketing helps companies promote their products and services to a wider audience through influential partners and a large audience online.

There are three main parties involved in affiliate marketing:

  • The seller or product/service creator (sometimes known as a merchant)

  • The publisher promoting the product/service (affiliate company)

  • A consumer who deals with a seller after interacting with an affiliate company

If you promote products through affiliate marketing, there are three ways you can earn revenue:

  • Pay per sale – Get paid every time a consumer buys a product or service after clicking a link or using your code

  • Pay per lead – Earn revenue by generating seller leads, such as consumers signing up for newsletters or downloading free guides

  • pay per click – Get paid to convert traffic to the seller’s site

As an affiliate, you will usually get paid once you generate a certain number of sales, leads, or clicks.

How to start affiliate marketing

Affiliate marketing is a popular way to earn passive income, and it often starts out as a side business. However, this does not mean that being an affiliate marketer cannot be a full-time job.

First, you will need to determine how you will promote your products and services. You can do this via your YouTube channel, social media platforms, blogs, email newsletters, or a combination of them all.

Next, you will need to find the products to promote to your audience. You can target individual companies or join an affiliate network.

An affiliate network matches marketers with products to promote. They allow affiliate marketers to sign up for advertising campaigns from a range of different companies.

If you choose to work with a network, make sure you are satisfied with the way it works and the commission offered. Once you are registered and accepted into the network, you can add links and codes to your content to start monetizing.

Affiliate Marketing for Beginners

Affiliate marketing is popular because you can get started quickly, work on your own schedule, and don’t have to be involved in things like customer service.

If you are considering becoming an affiliate marketer, here are some key questions to ask yourself:

  • Do you have an audience large enough to make money?

  • Do you have an influence to encourage people to buy products?

  • What kind of products should you promote?

  • How will you promote the products?

How to make money from affiliate marketing

Affiliate marketing is performance based, which means that there is no limit to what you can earn but you will only get what you give.

If you are going to make money from affiliate marketing, optimization is critical. For example, when creating blogs or videos, you will need to include the correct keywords to ensure that your content appears in search engine results.

Meanwhile, if you’re on social media, you’ll need to use tags effectively and learn how to use each platform’s algorithm for more people to see.

At the same time, maintaining your personal brand is key to building trust with your audience.

Examples of Affiliate Marketing

Here is an overview of some of the most popular types of affiliate marketing and what you need to consider.

Make money from blogging

Blogging is a successful way to generate passive income through affiliate marketing. You can create your own blog or buy and improve existing blogs to attract more visitors.

In addition to including affiliate links in your standard posts, you can also actively review products. If you are famous for being an expert on a certain type of product, then brands may start coming to you for reviews in exchange for an affiliate link.

To be a successful blogger, you need to create engaging content that builds authority and trust with your audience.


Affiliate Marketing on YouTube

To make money on YouTube with affiliate marketing, you will need to attract subscribers to your channel and encourage them to watch your videos.

You can include affiliate links and discount codes in your descriptions, also referring to them in your videos.

Read our comprehensive guide to making money on YouTube to get started.

Become an influencer on social media

It takes time to become an established influencer, and you will need to build a personal connection with your followers.

Your campaigns will primarily focus on platforms like Instagram and TikTok, but many influencers also use YouTube and blogs to promote affiliate products.

Influencer marketing campaigns are often developed around a specific niche, such as candle making or home baking.

These campaigns will typically include a range of sponsored posts, including photos, videos, and live broadcasts.

Advertising rules

If you become an affiliate marketer, you will need to follow the code set by the Committee on Advertising Practice (CAP), which is regulated by the Advertising Standards Authority (ASA).

There’s a full overview of the rules on the ASA website, but here’s a brief rundown of what you need to know:

  • There is a difference between editorial content and affiliate content The rules only cover marketing content, but it is important to distinguish between what is editorial and what is promotional

  • Affiliate marketing content should be clearly labeled If you are promoting products in videos, articles or social media posts, they should be clearly labeled. For example, start a social media caption with “#ad”

  • Brands are also responsible if they break the rules – If you crack the CAP code with your affiliate posts, the company you work for may have a problem with the ASA. If this happens, brands or networks may not want to work with you again in the future

It’s important to remember that the ASA and CAP Guidelines are not legal advice and you should get help from a legal professional if you think you may be breaking the law with your ads.

Make sure you pay the right tax

The tax you need to pay depends on whether you want affiliate marketing to become your main job or a side business.

If affiliate marketing is your main job, read our guide to self-employed income tax to find out how much tax you have to pay and when.

If affiliate marketing is a second job, you can earn up to £1,000 each year before you have to start paying taxes. Read our guide to the side hustle tax for a complete overview.

Do affiliate marketers need commercial insurance?

If you become an affiliate marketer – whether part-time or full-time – you will need to protect yourself from the risks that come with your business, such as damage to your equipment.

Our guide to business insurance explains everything you need to know about the type of coverage you may need as an affiliate marketer.

Do you have any unanswered questions about affiliate marketing? Let us know in the comments below.

Image 1: ronstik / stock.adobe.com
Photo 2: Jacob Lund / stock.adobe.com

About the author

publishing team