So if you check the video description of all your favorite YouTuber, you may find them using these
short affiliate link.
And you might be wondering, well, how exactly these link are helping the content creator makes more
money.
And that's why in this video we're going to talk about affiliate business model.
And we will understand how exactly as a creator, you can make money.
Now, not only YouTube, if you read a blog post, let's say yesterday I was reading a blog post about
the best CRM that I can use in 2023.
And when I open that blog post, I found out that those people have compiled a list of all the CRM.
But when I click on the CRM, they will take me to a specific landing page that will have these UTM,
medium, UTM shores and UTM parameters.
Now we'll talk more about UTMB by the end of this video, but even if you click on these YouTube affiliate
link, then they will take you to the Amazon page so you can see that they are taking me to the Amazon
UK and Amazon US page and if I purchase anything from this page, then the content creator will get
around 5 to 7% affiliate commission on every purchase.
So basically this YouTuber is giving a customer to Amazon and that's why Amazon is paying them around
5 to 7% commission.
So in this video we will understand what is an affiliate business model, why and how companies use
this type of business model.
Then we will understand about the different types of affiliate business model, and we will also understand
how your favorite creators make money using this business model.
And in the end, we will understand how exactly does affiliate business model work?
And we'll understand how does it work under the hood.
So let's start by understanding what is our affiliate business model.
So affiliate business model, also known as affiliate marketing, is a process of promoting and selling
the product of other companies so that you can earn a small commission.
So let's say there is a company who has a product.
Now that company can have a physical product or a software product.
And let's say you are a content creator.
You create content on YouTube, on Instagram, on TikTok, or let's say you have a simple blogging website.
In that case, you have the network of people who trust you.
So a company will have a product and you have a network of people who trust you a lot.
And if your customer align with the kind of product that they are selling, then you can sell all of
these products to your customer.
And in return of that, you will get a small commission of around 5 to 7%.
Now, in this process you have four different parties.
At first we have affiliate and this is the promoter of the product.
I mean, as a content creator, if you are promoting a product, then you are the affiliate.
Then we have product creator who are the creator or the owner of the product.
Then we have a network.
And you can use a third party network software that can help you manage all of these affiliate commissions
or let's say these affiliate campaigns.
And finally, you have a consumer who is using that specific product.
Well, in general, almost every single company, irrespective of their domain, is using the affiliate
business model.
But let me give you a couple of example if you wanted to understand it.
So you have some website hosting platforms like to host a marketplace like Amazon or e-learning platform
like Skillshare or CRM software like HubSpot or trading platform like Robinhood or Zerodha.
And then you have a VPN product like Nord VPN.
Now, all of these companies are using affiliate business model.
In fact, I feel almost every single company nowadays is using an affiliate business model because they
feel that if some people are liking their product and they can also promote that specific product to
other people and they can also generate a bit of revenue as well.
So I'm going to pick Amazon as an example, because I believe that almost every single person have used
this marketplace.
And that's why it's going to be easy for us to understand this.
So on Amazon, you have some sellers who are selling their product to the end customer, but Amazon
also need a continuous flow of customer who are buying their product from their platform.
And that's why Amazon have an affiliate program.
So let's say if you are an influencer and if you make videos on YouTube, TikTok or Instagram, then
you can create an affiliate page or you can share a product individually with the affiliate link and
you can promote that product on your video description or on your Instagram bio or maybe on your TikTok
profile.
So influencer is promoting the product to all of these end customer by creating a video or by giving
a small call to action in the video.
And if these customer will purchase the product.
On Amazon.
In that case, the Amazon will give a 5 to 7% affiliate commission to all of these influencers.
Now, if you closely look at this process where our influencer is giving a customer to Amazon, and
Amazon is paying around 5 to 7% of the complete transaction, you will realize that this is a win win
deal for both the people because in this case.
The influencer or let's say if you are a content creator, you are happy because you are earning a commission
on every single transaction that is happening.
The company that can be Amazon or any company, the company is also happy because they are getting a
new sales from the customer.
And this is because acquiring a new customer is expensive and the company could have run a campaign
on Google or they could have done some marketing to get those customers.
But you are giving them a customer by creating the awareness about a product using a video or a blog
post.
And the customer is also happy because he learned a lot about the product from the video or the blog
post, and he is also getting the product at the same price.
Now let's understand about the different types of affiliate business model and how a company can use
all of these different options.
So when we talk about the different types of affiliate business, we have paper click, paper lead and
paper sales.
So let's say if an influencer is giving this affiliate link in their description and the value proposition
of that product or that company is not that good, the content creator is doing their job, but the
product is not attractive enough to entice these customer.
And that's why some content creator will normally tell these companies that we're going to promote your
product using our platform by creating a video or a blog post.
But if people are not finding that product interesting and if they're not buying it, we still want
some money from you.
And that's why these companies will pay that specific content creator based on the number of clicks
they are giving.
Or let's say if a hundred people are visiting a specific landing page of a software product, they will
pay that specific content creator based on the number of visit or the clicks they got.
Second type of monetization model is paper lead.
So let's say if there is a software product and if the company wanted to promote that product using
a YouTuber and they don't really want people to purchase the product at the first place, they only
want it to take an email ID or the mobile number of that customer.
In that case, they will give a link and they will ask the user to enter their email ID or a mobile
number so that they can connect with them and they can sell that product.
In that case, the company will pay these content creator based on the number of leads they are getting
from their campaign.
In the end, we have paper sale and this is there in case of marketplace like Amazon.
In Amazon, you will always have a small ticket size or you normally purchase product from, let's say
$10 to $30.
In that case, Amazon is not really bothered about the number of clicks you are giving to them or the
number of leads you are providing.
They are more concerned about whether your customer is buying the product or not.
But in case of software product, where the ticket size can go up to 10,000, in that case, they only
want.
Some details of the prospect so that they can talk to them and they can convert them.