Monday, April 16, 2012

What is affiliate marketing?

What is affiliate marketing?

Affiliate marketing is a source of income. For Instance, I have a plant that makes 1,000 Widgets per day. I sell these Widgets to hardware stores and you want to become an affiliate.

Well, for generic purposes, let’s say each Widget sells at $1.00 at market. I am selling to every source I can find for .60 cents per widget. Then you want to become an affiliate and get an answer to what is affiliate marketing. Well, you purport to be able to double my volume of sells through your connections.

So we agree to collaborate, I will sell the Widgets to you for .60 cents each, you will introduce new recipients to the product, and increase sales. So you sell my Widgets at .63 cents each to vendors as an affiliate of my Widget company. You can only resell the Widget at .63 cents per unit. The ultimate profit  to you is .03 cents per unit.

Then, all of the sudden, I have orders for Widgets, that went from 1,000 per day to 5,000 per day, because of you. So, I decide to increase you profit margin as follows: due to the increased production, I can sell you Widgets for .50 cents per unit, so your profits went up .13 cent per unit.

So what is affiliate marketing? Affiliate marketing is where you take my product – Widgets, in this case, and resell it. I make a profit, you make a profit, and the seller makes a profit.

Everything we purchase today in 2012, has element and degree of this concept. For instance, the corn you ate tonight started at the farmer, was brokered by the agricultural specialist, and wound up in the store where you bought it.

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This is what is affiliate marketing post.