Beginners in affiliate marketing: How does affiliate marketing work?

Affiliate marketing is a lucrative method for earning income by promoting products or services without owning them. This marketing discipline is often carried out by professional marketers who excel at driving sales but prefer not to handle product ownership. Instead, they leverage performance marketing to attract customers and earn commissions based on the performance of those customers.

Types of Affiliate Marketing Programs

Understanding affiliate marketing involves recognizing its various verticals (niches) and the different payout models available, namely CPL (Cost Per Lead), CPA (Cost Per Action), and RevShare.

What is CPA, CPL or Revenue share in the affiliate side?

• CPA (Cost Per Action): This model pays affiliates when a predefined action is completed by the customer. In the gaming industry, this often means a purchase, while in iGaming, it typically refers to a First Time Deposit (FTD). Simply put, CPA is the amount paid to the affiliate when the user performs the desired action.
• CPL (Cost Per Lead): Popular in finance and investment niches, CPL pays affiliates for generating leads. These offers usually pay less than CPA but require high-quality leads, resulting in a narrower conversion funnel.
• RevShare (Revenue Share): As the name suggests, this model involves sharing a percentage of the profit from the product. It’s recommended for products with high consumption rates, ensuring a steady income stream as long as the customers remain active.

Types of Affiliate Marketing Programs? (Verticals)

The world of affiliates has a lot of possibilities as you are a professional who focuses on optimization, however, we will talk about 3 affiliate verticals: iGaming, Finance, and Nutra

iGaming Affiliate Program

The iGaming industry has in our opinion one of the most competitive offers, an iGaming brand could pay you in 3 different models:

• CPA: iGaming operators pay affiliates when new customers make their first deposit. It’s important to note the baseline or threshold amount the customer must deposit before the affiliate earns the CPA.
• RevShare: Affiliates earn a percentage of the revenue generated by the customers they bring to the casino. This model is fair as it aligns the affiliate’s earnings with the quality of customers they attract.
• Hybrid: A combination of CPA and RevShare, this model provides an initial CPA for the first deposit and a share of the revenue generated by the customer over time. This deal is usually reserved for affiliates capable of bringing in high volumes of quality players.

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Affiliate for Finance and Nutra

Finance and Nutra Affiliates

In the finance and Nutra verticals, the predominant payout model is CPA. Due to the irregular nature of customer transactions in these sectors, CPA models are more suitable.

Benefits of the Affiliate Marketing

The main advantage of affiliate marketing is that each party does their work this means that the owner of the product will keep their eyes on providing a very good service or product and find ways to increase the live time value of the customer without worrying about bringing all the time new customers.

In the meanwhile, the affiliates do what they know, advertise, and sell massively a product online, the affiliate of course have to be compliant with the rules of the company that is having the affiliate offer, as we have to remember that they are the experts on the local countries and they know the distribution process of the product or service

Challenges and Considerations in Affiliate Marketing

Affiliates must understand that joining a program makes them service providers to the brand. This role requires delivering high-quality customers consistently.

Advertising Challenges

As well we have to talk about the challenge of the advertisement, as you can do pay media or non-paid media, the ad spend will be completely on your side and you’ll be responsible for optimizing all the marketing activities.

You should also keep a good track of the payouts and the income vs revenue rate as you can have a lot of income but very little revenue, Using tracking tools and optimization tools is the key to keeping a positive revenue.

Conclusion

Affiliate marketing is ideal for marketers with expertise in performance and acquisition marketing. It allows them to generate income by promoting products without owning them, using various payout models to maximize their earnings. By understanding the different verticals and optimizing their marketing strategies, affiliates can achieve significant success in this field.