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Chapter 1: Affiliate Marketing: Exactly What it is and How it Works

Affiliate Marketing is a wonderful business relationship where an individual or company, large or small, agrees to pay you money based on a certain action that people you send to him take.

Let me give some examples:
Amazon.com has one of the biggest and longest-running affiliate programs.  They will pay you a commission based on what people buy when they come in through your links.  So, let’s say you make a website to promote a product.  You get traffic to your website and send it to Amazon using your affiliate links.

Let’s say these people buy something.  You will make a commission on anything they buy that falls within Amazon’s rules.

Amazon’s commissions are low compared to many other affiliate programs, but some affiliates have found that the ease of selling physical goods at amazon (versus selling digital goods somewhere less well known) makes up for the low commission rates.  Plus, refund rates are low.

Let’s talk about selling digital goods somewhere less well known – there is a platform called clickbank.com where people sell digital e-books. An individual or company writes an e-book and puts it up for sale and for promotion in the clickbank marketplace.

The individual or company is known as a vendor at clickbank. Each vendor can set their own commission rates and some set them as high as 75%.

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On a $37 or $97 e-book, 75% is a lot. Commission is much higher, but conversion rates – meaning how many people click through your link and buy – can be much lower.

Besides Amazon goods and e-books, there are many other affiliate marketing options. Almost any topic you can imagine will have a related affiliate program of some sort.
CPA Offers
Besides receiving a commission on physical goods and digital e-books, you can also promote CPA offers. CPA stands for cost per action.

The action can often be something simple like filling out a form, applying for something, giving out their e-mail address, or sometimes signing up for an offer.

So, the way this works is you would somehow get people to the offer and if they complete the offer you would get a set amount of money. Normally this money is low, like a dollar or two dollars, but with some offers it can be quite high.

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There are medical offers where people sign up to receive a medical item in the mail and only pay shipping and handling, but then if they don’t cancel or send back the item their credit card will get charged for the full amount of the item.

These offers often pay substantially better than one where the person would only give out their e-mail address. These offers may also have higher return and refund rates though.