Affiliate Marketing 101 - The Ultimate Beginners Guide in 2023
Affiliate Marketing, otherwise known as referral marketing, performance marketing, CPA marketing, distribution marketing or even direct advertising marketing isn't a new phenomena.
We live in a world where over 80% of all brands and businesses have already set up an affiliate program, and over 60% of all eCommerce purchases admit to making a purchase through an affiliate marketing platform or someone referring them to purchase 🤯
Bloggers, video creators and discount code websites are earning serious cash from affiliate marketing programs. They have been for 10+ years. In fact, the average full-time affiliate makes £55,000.00 per year in commission.
Blogging, video reviews and discount code sites aren't the only way of making money online, though. Email lists, social media promotion, Podcasts and even WhatsApp groups are just a few methods people use to generate an online income.
Not everyone makes a living from affiliate marketing, but there are some sure fire ways to get yourself a foot up the ladder. First of all is learning the basics.
In this beginners guide, we break down every stage of the affiliate marketing puzzle. From How Much Commission Should You Offer Affiliates to Can You Automate Your Affiliate Marketing Program?
Affiliate Marketing 101 - The Ultimate Guide includes:
- What is affiliate marketing and what does it mean?
- How to track affiliate sales
- Affiliate marketing examples
- Different types of affiliates
- Is affiliate marketing legal?
- How much money does an affiliate make per year?
- Does affiliate marketing work in 2023?
- Average commission rates for affiliate programs
But first, let's start at the basics:
What is Affiliate Marketing?
Affiliate (verb) Officially attach or connect (a subsidiary group or a person) to an organisation. Use: "they are national associations affiliated to larger organisations"
The simple explanation:
Affiliate marketing is simple (in practice), but we find it best to view it, in its most stripped back form, as having a team of sales people who work on commission. These sales people promote your product with marketing material, high-quality reviews and imagery and are rewarded for their confirmed sales with commission. The highest performing sales people earn more commission, whilst the lowest performing earn less. You can even offer bonuses to these sales people for hitting specific targets.
Now, just replace sales people with social affiliates, website owners, discount code / coupon code sites and you've got yourself an affiliate.
The more complex explanation:
Affiliate marketing is a performance-based marketing strategy that allows creators, businesses or individuals to earn commission by promoting another companies products or services. It's a popular way for individuals to earn passive income by promoting products they believe in and receiving a commission for each sale made through their unique affiliate link or discount code.
The components to affiliate marketing
The Brand / Retailer
The party responsible for creating a product can be referred to as the merchant, creator, seller, brand, retailer, or vendor. This entity could range from a small entrepreneur to a large corporation like Dyson. Any entity can serve as the merchant behind an affiliate marketing program.
Some of the largest brands / retailers in affiliate marketing are:
- Under Armour - 5% commission and 30-day cookie length
- GymShark - 3% commission and 15-day cookie length
- Tesco - 30-day cookie time and variable commissions
Affiliate marketers, sometimes referred to as publishers, can be individual persons or entire companies. Their goal is to promote one or multiple affiliate products and convince potential customers to buy the merchant's product. Affiliate marketers achieve this by creating review blogs or entire sites dedicated to promoting the merchant's products.
Customers or consumers are essential to the affiliate marketing system, as sales generate revenue and commissions for affiliates. Affiliates market to consumers using various channels such as social networks, digital billboards, or blogs.
The Affiliate Network
While some do not consider it part of the affiliate marketing equation, affiliate networks serve as intermediaries between the affiliate and the merchant. The network also functions as a database of many products from which affiliates can choose to promote.
Some of the top affiliate networks are:
- Avelon - offers the highest average commissions across the affiliate industry
- AWIN - has the most brands / retailers but low commissions
- Sovrn - has been around the longest but branching away from Affiliates and into Ad Exchange
- Amazon Associates - hosts pretty much every product in the world but has very low commissions
- eBay Partner Network - very low commissions and low conversion rates
How to track & monitor affiliate sales
There are many ways to track affiliate marketing sales, but it all boils down to one thing:
The ability for a consumer to purchase an item through an online store. Affiliate marketing is 100% online.
The simple explanation:
For affiliate marketing to work, the consumer must be able to complete an order on a website. This means a consumer comes through an affiliates unique URL, uses an affiliates unique discount code or uses a mixture of the two. When that orders source, i.e the affiliate, is recognised, a commission is registered to the affiliate and that affiliate is paid.
The more complex explanation:
Brands will integrate with an affiliate platform, such as Avelon, that generates unique tracking links and discount codes with the brands website. These unique tracking links and discount codes are then distributed to affiliates they have invited into their program.
Once the affiliate has received this tracking link or discount code, they will start to promote the brands products to their community with marketing material, photos, videos or reviews of the brand.
If a sale comes off the back of the affiliates efforts to promote the brand and the consumer purchases through one of the affiliate tracking links, or uses their discount code, the affiliate will be awarded a commission and if they make enough sales, even a bonus.
But how does that work?
Tracking sales for affiliate marketing is done through a mixture of first or third party cookies, which are 'dropped' onto a consumers device when they click an affiliates unique tracking link which goes to a brands website. This cookie tracks the consumer each time they come back to the brands website, without the consumer ever having to click that link again.
Tracking / Monitoring Dashboards
Every affiliate platform will have a dashboard for you to track and monitor your affiliate program. Some will be more in-depth than others and you can export your sales into Google Sheets or .csv format for deeper analysis.
Avelon has a simple dashboard which displays the top statistics you need to make key decisions. You can even drill down into your top performing affiliates, top products and where your sales came from.
Affiliate marketing examples
Affiliate marketing used to be like a secret lab and scientists were under strict NDA's not to release any sensitive information. However, with the rise of affiliate marketing platforms, the power has been put into the hands of the affiliates - leaving brands and platforms openly showing what commissions are paid to affiliates, for all to see.
However, this only paints a tiny amount of information on the overall affiliate industry. In fact, of the 'displayed commissions' from brands to affiliates, 34.9% of all commissions paid were not in line with the brands displayed commissions. This means affiliates are actively negotiating with brands for personalised commissions based on their worth to the program. Smart stuff.
In the below list, we'll take a look at one of the most successful affiliate marketers in the cycling space, Chris Hall, and dissect how he promotes affiliate links and codes to his vast subscriber base. We'll look into:
- Chris' Youtube Affiliate Marketing - view his channel here
- Chris' Instagram Affiliate Marketing - view his Instagram here
- Chris' Website Affiliate Marketing - view his website here
Chris Hall - Youtube Affiliate Marketing
Chris Hall has been posting useful videos on Youtube for the past 3-years. Substantially growing his subscriber base to over 9000 subs, notably growing by 100% in the past 6-months, due to his investment in creating high-quality content for the platform.
As a sponsored cyclist, his ambition was to connect with more brands and move away from the paid, upfront sponsorship deals, which tied him into just talking about and working with those brands.
Whilst Chris is generating revenue from his Youtube views, he's also placing Affiliate Links to the brands he works with in his Youtube descriptions.
Different types of affiliates
There are many different types of affiliates with each relying on different traffic sources and types of promotion to earn commission. The most common types of affiliates are below:
- Agency partners
- News & Media sites
- Content affiliates
- Email marketers
- PPC affiliates
- Coupon websites
Agency Partner affiliates are quite complex affiliates which are incredibly niche orientated. They act as sales people on behalf of agencies such as marketing, content production, SEO, SaaS or even website development with an aim to find them new clients.
Whilst Agency Partner don't trade in mass volume, their commission rates are incredibly high and even one sale could amount to ££££'s in commission.
News & Media sites
News & media sites are perhaps the original affiliates, and according to our source at Immediate Media Co, 35% of their total revenue per year comes from content-led affiliate marketing. Quite staggering for a company that trades of the London Stock Exchange.
These sites review products, release news articles, work with brands to create content and push it to a wider audience, alongside promoting deals and hosting their own ad network outside of Google AdSense.
Below is an example of BikeRadar, a popular news and reporting site that has its own Deal Finders page. You can find their Deal Finders affiliate page here.
Some of the biggest names in affiliate marketing, which act as News & Media websites are:
In the sports industry, more news & media sites are turning to affiliate programs to create a new pool of revenue for their shareholders, thanks to their high organic traffic and huge backlink potential.
Content affiliates, much like Chris Hall, Mrs Hinch or Francis Cade are affiliates who create honest reviews of products and place affiliate links underneath the content.
These content affiliates will more often than not, sign bonus deals with brands on number of sales, or even sign up for exclusive deals for higher commissions or up front payments.
Email marketers are becoming a rare breed in the affiliate space right now, but for reasons beyond their control.
Email marketing companies such as MailChimp and MailerLite are restricting link redirects to non original domains (links that don't go to the email senders website) and flagging them as spam.
Because of this, click through and viewing rates are getting lower (less than 9% is the current average for email marketers compared to 2021's historic high of 32.4%) and email marketers are moving towards hosting their own microsites to push consumers to, where they can redirect to brand domains.
However, we are seeing a rise in more curated email marketing affiliates, such as Harley Murphy's WTF is Going On? Newsletter, which offers easy clothing and fashion tips:
And Just To Delight by Bre Graham, which offers a weekly collection of things to cook and good books to read. Quite a nice change to that 70% Nike Run sales email you keep getting every 10-minutes.
PPC Affiliates historically work on high volume, high cost acquisition. Their marketing strategies have to be absolutely flawless to work correctly, as they are technically bidding against the actual company themselves for the consumer to use their discount code or click their link.
In 2021, PPC affiliates made up 2.58% of total affiliate sales and in 2023, this has dropped even further to 2.24% of total affiliate sales. For this reason, brands are adding an exclusion notice into their terms & conditions to move away from PPC Affiliates.
VoucherCodes, CouponFollow, Honey and VoucherCloud seemingly have a monopoly on coupon websites, as they take over the PPC Affiliates share of the market. As you may have guessed, Coupon / Discount Code Affiliates promote multiple codes to a vast audience across the globe, alongside tracking links.
You know when you're looking for a discount code, you click a link on a discount code site and it takes you to the brands website, but the code doesn't work? That's because you were just click baited and now a cookie from that discount code website is on your device. This means if you purchase from that site (even without their discount code), that discount code site will earn a commission. Sneaky stuff.
Just to note: not all discount code websites do this, but the ASA highlighted the above websites were notorious for this revenue strategy.
Is Affiliate Marketing legal?
Yes, affiliate marketing is legal. Like most things, it is regulated by a higher power, and you should strive to uphold their rules and regulations.
The UK affiliate marketing industry is regulated by the Advertising Standards Authority (ASA) and the Committee of Advertising Practice (CAP) to ensure that advertising is legal, honest, and truthful.
This means that businesses must ensure that their advertising complies with the rules and regulations set out by these bodies to avoid penalties and damage to their reputation.
These rules also apply to the affiliate, but more so to the business, as affiliates are technically sales people in contract with the brand. We recommend taking the time to vet potential affiliates and nail down your terms & conditions over just letting anyone in.
Affiliate Marketing Rules and Regulations
The ASA's rules and regulations are quite long, but the ASA's Affiliate Marketing rules can easily be simplified into four rules:
CAP 2.1: Marketing communications must be obviously identifiable as such.
CAP 2.2: Unsolicited e-mail marketing communications must be obviously identifiable as marketing communications without the need to open them
CAP 2.3: Marketing communications must not falsely claim or imply that the marketer is acting as a consumer or for purposes outside its trade, business, craft or profession; marketing communications must make clear their commercial intent, if that is not obvious from the context.
CAP 2.4: Marketers and publishers must make clear that advertorials are marketing communications; for example, by heading them "advertisement feature".
You can find the full list of ASA rules and regulations on affiliate marketing below or download their infographic on how to follow the rules here.
Click here to read the ASA rules and regulations.
Here's a list of resources to read on Affiliate Marketing best practices from the ASA:
- Claims in testimonials and endoresements
- Finfluencer Infographic - for affiliates and brands in the financial space. This sector is more heavily regulated than any other affiliate sector.
- Promotional Savings Claims
- Food: Probiotic Claims - if you're encouraging gut health through a beverage or food, we recommend giving this a read
- Influencers Guide to making clear that ads are ads
Do the ASA penalise or ban affiliates / influencers?
Yes, the ASA / CAP do have the legal jurisdiction to penalise or ban influencers and affiliates if they do not uphold the rules. In the past 4-years, the ASA and CAP have created a resource board where they post all findings and complaints.
Potentially one of the most notable recent court rulings was Sophie Hinchliffe (Mrs Hinch) and Tesco - who didn't identify marketing promotions as ads on social media.
The ASA received eight complaints about this ad campaign, with the majority of the rulings being upheld (agreed to) and made Mrs Hinch agree to further rulings on a suspended basis (that basically means it's a slap on the wrist and told she shouldn't break the rules again).
The full actionable wording was:
Ad (a) must not appear again in the form complained of. We told Sophie Hinchliffe to ensure that in future her ads, including those which featured her own Hinch range, were obviously identifiable as marketing communications and made clear their commercial intent upfront, for example, by including a clear and prominent identifier such as “#ad” at a minimum.
Some other interesting ASA rulings:
- Frank's Ice Cream Ltd - which launched an affiliate campaign stating their 'Ice Cream doesn't have to be off limits for people with diabetes'
- Lucy Isabella Beauty & Aesthetics - advertised that their new injection of Kenalog (a hay-fever, prescription only medicine) was available to the public, even though Kenalog is a trade marked, private medicine not available to the public
You can find all ASA Rulings on their Rulings section of their site. Just click the image below to go there:
How much does an affiliate make per year?
The earnings for affiliate marketers can vary widely depending on the product or service being promoted and the commission rate offered by the merchant. According to our data, 39% of affiliate marketers earn less than £5,000 per year, while 9.4% earn between £50,000-£70,000.00 per year. However, these numbers can vary greatly, with some top-performing affiliate marketers earning six or even seven-figure incomes.
|Earning Brackets||Percentage of Affiliates|
|£5,000.00 - £10,000.00||25%|
|£10,000.00 - £20,000.00||20%|
|£20,000.00 - £50,000.00||10%|
|£50,000.00 - £100,000.00||4%|
It's important to note that these numbers are estimates and can vary depending on the niche, marketing strategies, and effort put into affiliate marketing. However, this table provides a general overview of the earning potential of affiliates in different earning brackets.
To maximise their earnings, affiliate marketers should choose a profitable niche and focus on promoting high-quality products or services that align with their audience's interests. They should also create quality content, build a loyal following, and use various marketing channels to drive traffic and generate leads.
Does Affiliate Marketing work in 2023?
Affiliate Marketing is already up 1.4% in 2023 vs 2022. But how?
A global economic crisis is looming, demand for consumer goods is slowing and everyone's feeling the pinch. Brands are looking to withdraw from traditional paid media to save cash and put their efforts into lower-risk, lower-fee types of marketing.
Remember: Affiliate Marketing has no upfront costs, salaries and therefore, there's no risk associated to it. Brands only pay when a sale is made.
Average Commission Rates
Deciding on your commission structure for affiliates can be complicated. Offer too little and affiliates won't want to work with you, but offering too much will reduce your profit margin. We look at the average commission percentages across every industry, to ensure you're on the right path.
The below table gives an overview of the average commission offered across the course of a year by the industries we work within:
Should I change my commission for different affiliates?
We highly recommend commencing with affiliates on a trial period of a lower commission percentage, then bumping them up and offering rewards for achieving certain sales numbers. We've taken some data from how 15 of our top affiliate programs alter their commissions for affiliates, depending on their worth to the program, below:
The above is a manual process, and requires a member of your team to manually change their commission structures and keep an eye on the program.