Affiliate marketing has evolved into a true multi‑billion‑dollar industry. Global industry valuation is now estimated at $18.5 billion, and it's on track to grow to $31.7 billion by 2031, driven by widespread adoption across eCommerce, content platforms, and AI-powered optimization tools.
In the U.S. alone, affiliate marketing spend is booming: it hit $13.63 billion in 2024, up nearly 50% from just three years earlier. This surge reflects how brands increasingly lean on performance-based channels to drive measurable results.
This affiliate marketing for beginners 2021 guide includes everything you need to know about creating a successful affiliate program for your business. So, let's begin.
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What Is Affiliate Marketing And How Does It Work?
Affiliate marketing is a process whereby a marketer promotes products and services of any specific brand and earns a commission when someone buys from their affiliate link.
An affiliate acts as a salesperson who markets the company's products and receives a commission as a reward. The only difference is that the salesperson can only promote products of one company, but you can promote products of different brands when working as an affiliate marketer.
How Does It Work?
When an affiliate marketer collaborates with any brand, the merchant site provides them with a unique link that it can use to track who's contributing what to the process.
When a customer clicks on that link, a cookie gets stored on their device. The goal of the cookie is to help the brand attribute the sale to the relevant person and ensure the marketer gets paid if the customer delays the purchase.
The good thing about affiliate marketing is that it allows you to earn as much money as you want. Successful affiliate marketers generate at least six-figure revenue from their affiliate marketing efforts.
But similar to anything else in the world, affiliate marketing also demands time and effort. You may also have to manage your expectations as earning thousands of dollars initially is obviously not possible when you're starting out.
Affiliate Marketing Statistics
- More than 80% of advertisers and publishers use affiliate marketing.
- The search interest in the affiliate marketing niche is up over 200% since 2015.
- Leading affiliate networks like Amazon, Awin, and ClickBank have over 100K active affiliates.
- Over 81.4% of affiliates are involved with the marketing of B2C products or services.
- 35% of affiliate marketers generate at least $20K annually from their affiliate marketing projects.
Pros And Cons Of Affiliate Marketing
Affiliate marketing is powerful. It helps you generate a stream of passive income for yourself that you can enjoy even if you're not contributing anything to the process.
Here are some of the many benefits of implementing affiliate programs in your ecommerce business.
Pros
Flexibility
Successful affiliate programs are quite flexible. They attract marketers with their diversity and different reward systems. Some of the most common commission types include:
Pay-Per-Sale Commission
You pay a ratio of the sale price of every product sold through an affiliate link.
Pay-Per-Click
You pay for the number of leads you get on your website through an affiliate marketer.
Pay-Per-Lead
You pay for the number of leads you get on your website through an affiliate link. That means you have to pay your affiliate when a visitor enters your site and leaves their details by filling out a form.
Ease Of Entry
What makes affiliate marketing truly successful is there are no barriers to entry. You can start or quit an affiliate marketing program whenever you want. Also, there are no upfront payments involved. You only pay commission when you get sales. So it's a win-win.
Opportunity To Broaden Your Sales Audience
Another benefit of starting an affiliate program is that it allows you to reach out to wider audiences without spending additional money.
Also, leading advertisers already have established audiences, which means you can scale your marketing efforts and broaden your reach without the hassle.
More Income
As discussed before, you can connect with more than two or three affiliate networks at once. The more affiliate networks you're associated with, the multiple revenue streams you can generate for yourself.
Cons
Hefty Commissions
Established affiliates charge a lot for their services. So if you want to benefit from your affiliate program and work with the best people, you should be ready to reward your affiliates well.
Spike Periods
If you think partnering with a successful affiliate program is enough to bring you tons of traffic daily, then let us tell you that's not how this model works.
One day you can have many customers, and no one might visit your store for the whole next month.
Aggressive Competition
As we said earlier, anyone can start affiliate marketing at any time.
Now, what does that mean?
Easy entry, yes. But also intense market competition.
Now you must be wondering what you should do to stand out from the crowd?
The answer is pretty simple - work with the best affiliates who also have great SEO skills to help your brand shine on SERPs.
Scams
Remember Shawn Hogan and Brian Dunning? Ebay's two biggest affiliates have swindled more than $35 million by practicing fraudulent cookie-stuffing techniques. So yes, the risk of scams and fraud is always there when you step into the world of affiliate marketing.
What Are Affiliate Programs And How Do They Work?
Affiliate programs, popularly known as associate programs, are arrangements in which a brand pays affiliate websites a reward for driving traffic to their sites.
The affiliate websites post links to the official brand website and are rewarded as per the pre-decided agreement.
There are three parties involved in an affiliate marketing program - the affiliate website, the brand website, and the customer.
Affiliate Program VS Affiliate Network
Many people confuse these terms as they more or less function in the same manner. Both allow a brand to sign up with the affiliate website.
The only difference is that an affiliate program allows you to collaborate directly with a company. On the other hand, an affiliate network enables you to choose a program from different available options on networking websites.
Now that you know what affiliate marketing is and how it works, it's time to highlight seven steps to creating a successful affiliate marketing program for beginners.
Seven Steps To A Successful Affiliate Program
1. Set Goals
Similar to any other marketing strategy, a successful affiliate marketing program also begins with setting goals.
The first step to creating an affiliate program is knowing and establishing your audience. For this, you have to conduct market research to determine the type of customers you're looking to bring to your affiliate program.
At this point, you must also set other measurable goals, including:
- the amount of revenue you're planning to drive each month through your affiliate program
- the number of conversions you're expecting to achieve every month
- goals for clicks, impressions, leads, and more
Setting these goals will also help you measure your affiliate marketing progress (we're going to talk about this in the last step).
2. Analyze Your Competition
Before you even think about creating your affiliate program, you should look into your competitor's programs to see what they have in store for the customers and affiliates.
How to conduct an affiliate marketing competitor analysis?
Step#1 - Find two of your biggest competitors with active affiliate marketing programs.
Step#2 - Carefully examine how they have structured their programs. Also, analyze their commission criteria and the terms and conditions they're following for their affiliate programs. Are they compensating their affiliates on a per-click/sale/lead basis? Are they paying commissions in cash?
Step#3 - The next step is to figure out how each brand finds its affiliates. Do they hire affiliates through networks or on their own? How complex is their hiring process?
Step#4 - Determine the strengths and weaknesses of your competitor's affiliate marketing programs. What's missing in their program that can benefit your brand? What affiliate marketing features of your competitor's program do you think can pose a threat to your program?
3. Decide On The Right Affiliate Commission
Every business is different, and so are its rules.
You must not follow anyone blindly to make your affiliate marketing contract. However, it is critical to examine your competitor's affiliate marketing strategies before you finalize anything for your business.
Decide on whether you want to pay your affiliates on a per-sale basis or per-call or click basis. We'd recommend going with the per-sale basis as it will help you yield guaranteed results.
At this point, you'll also have to figure out the exact commission ratio you want to offer to your affiliates. Do you want to keep it high or competitive to outperform your rivals?
Whatever you decide, remember, your brand needs come first. Carefully examine other things, such as customer acquisition costs, average customer lifetime value, before deciding on an exact figure.
Ideally, your offered rate should be lucrative enough to lure new affiliates. Also, offer bonuses from time to time to those affiliates who bring more value to the table.
4. Find Affiliates
Now that you have structured your affiliate program, your next goal is to find the right affiliates. You can either find them using an existing affiliate network or form your own network.
That goes without saying that you can start immediately when you choose to go with an existing affiliate network.
Forming your own network, however, is more time-consuming and pricey. But obviously, the freedom and flexibility you get by having your own software is incomparable.
At this stage, you'll also have to invest in an affiliate tracking method you can use to register affiliates, create links, and track progress.
5. Train Your Team
No matter what method you choose to recruit your affiliates, your goal is to have the best people on board.
Do your homework and create a list of the best affiliates working in your niche. Reach out to them with a decent proposal and see if they're interested in becoming part of your affiliate marketing team.
The process doesn't stop here. Once you have the right people, you must also spend your time and resources briefing them on your program's terms and conditions.
Discuss all the contractual terms and conditions and be very open about your expectations. You must also train your affiliates on your program fundamentals.
6. Structure Your Affiliate Program
Once you know the strengths and weaknesses of your competitor's affiliate marketing programs, it's time to structure your own.
Sure, finding affiliates and deciding on an attractive commission rate are essential steps of creating a successful affiliate marketing program.
But many other things also need your consideration. For example, you should also figure out how you will allow your affiliates to promote and share your links.
How long will your affiliates be eligible to earn a reward after a visitor clicks on your affiliate link?
What can you include/exclude from your affiliate marketing program to make it stand out in the crowd?
Do you want to include any other terms and conditions in your affiliate contract?
7. Measure Performance
Every marketing program needs adjustments. If you have already invested in an all-inclusive affiliate marketing platform, then this step should not be a big deal for you.
Track your progress by comparing your final results with the goals you established in the first step. In case your affiliate marketing program isn't delivering the desired results, it may be time to rethink your commission structure or overall affiliate lineup.
