Affiliate Marketing: Everything You Need To Know
Affiliate marketing is one of those activities that is now depopulating, many have undertaken this activity on the wave of a possible profit with a minimum of effort. Those who make affiliates, however, know very well that the reality is quite different. While it may be a very scalable and revenue-generating system, the efforts to make our affiliate marketing business generate noteworthy earnings are many.
What it is affiliate marketing?
Affiliate marketing consists of a series of activities that lead to the acquisition of customers and the sale of products through a network. The network can be a website, a web page, a blog, a Facebook profile, Instagram etc. …
The affiliate subject (who practices affiliate marketing), has the task of making sure to bring traffic, generate sales to the merchant, / seller. If the user purchases, or on the basis of the affiliation contract, visits the site / channel in question, a percentage gain is obtained.
This is not a simple activity, it is not a way to earn quickly, as every business requires commitment, perseverance and experience. Although as a type of business it is a bit atypical, the growth steps for it to become profitable are the same.
We cannot venture out and the investments to be made are many, just think of the advertising campaigns or the great variety of content necessary to attract customers.
With the affiliate, earnings are made above all through numbers. In fact, the percentages of earnings per product sold through the affiliate link are often very low.
On the one hand, business is the natural evolution of door-to-door salespeople and network marketing, the earning mechanism is similar, on the other hand, it can be compared to e-commerce, however it has the significant advantage that “sponsored” products” Do not have to be bought first and then resold, a warehouse is not necessary. The ownership of the goods always remains with the manufacturer / retailer, we will earn if the end customer purchases through our link.
Furthermore, we can sell everything, many companies today offer affiliate programs, from the largest to the smallest companies. Even our small company will be able to offer affiliate programs. Also, there are some real companies that sell affiliate link packages.
What you need to start with the affiliate marketing?
To make an activity of this type pay off, however, you cannot improvise. If we have said that if you want to make a profit you need numbers, you need to start from an excellent base. Having a website with a lot of traffic, as well as having social channels, very popular YouTube that create trust in users in order to create conversions and purchases.
In this sense, even advertising has a considerable weight, in fact we will have to push our channel site to have the largest possible catchment area.
So, if we are looking for an easy and effortless income, unfortunately this is also not one of those businesses, provided there is a business that works this way.
The myth of making money quickly and effortlessly is still a myth today.
You can start and learn, but it’s not an easy method. It’s very scalable yes, but you have to work hard. Furthermore, putting your finger in the sore spot, in order to be able to do affiliate marketing in good standing, a VAT number is required. In fact, we will have to share a large slice of revenue with the tax authorities and the social security system.
How does affiliate marketing work?
Within an affiliate program, we can identify three protagonists:
- the affiliate: who earns through the affiliation mechanism
- the merchant / producer: who pays the affiliate based on his sales performance
- the buyer: the end customer who purchases through the affiliate
It is a circle in which the affiliate publishes a banner, a link, from a specific code to the end customer. The end customer purchases through the affiliate’s link. At this point the manufacturer makes the sale and the affiliate has his own percentage.
Affiliate programs are different and are not only aimed at selling but can also refer only to traffic, for example, brought by the affiliate to a certain site or channel of the merchant.
In addition to the merchant who can also be a trader, a producer, today there are real aggregator networks. Real companies that aggregate affiliation packages and act as a link between affiliates and merchants.
Affiliate marketing has received so much success
Why affiliate marketing has been so successful is simple. At first glance, in fact, it represents a mechanism of unlimited gain with minimal effort.
An income that is generated automatically passively through your website or social profile. It is clearly a dream. Online, many sponsor courses on how to generate customers and make money through affiliate links.
It is good to be careful though, not all that glitters is gold. There are no perfect or infinitely replicable recipes. We live in a saturated market and from being successful to falling into a rip off is a snap.
With this we are not saying that those who advertise or sell courses of this type are doing something wrong, that is also a job, let’s just say that the videos of the gurus, the courses of those who promise an assured income thanks to affiliate marketing or who knows what other business, they don’t even count anymore.
“Immediate earnings, effective solutions, zero efforts to change your life and move to a tax haven”. The reality is quite different. To make money, making money that can support our lifestyle, you need something else.
Types of marketing affiliation
Taking an overview, we have two types of affiliation, the direct one and the indirect one.
By direct affiliation we mean a direct agreement between the affiliate and the brand or company. This type of affiliation includes, for example, affiliates with Amazon, or with real brands.
Indirect affiliation, on the other hand, or affiliate networks are real companies that put together offers and offer affiliation packages.
How to earn with affiliate marketing
We have said that the affiliate receives an income by sponsoring a brand, a product, etc … However, there are different ways of earning depending on clearly the agreements. The most common affiliate programs are:
- PPL (pay per lead), where the affiliate receives a fixed amount for each subscription that the user makes if it comes from the affiliate’s site.
- PPC (pay per click), the affiliate receives an amount for each user click on their banner or link.
- PPS (pay per sale), the affiliate receives a percentage of the user’s purchase that comes from the site.
Do you need a vat number to make affiliate marketing?
Once the agreement with the company that provides an affiliate program has been concluded and we begin to receive what are commissions, are we sure that nothing else needs to be done? Well, you need to declare those earnings and pay taxes.
How to do? Is it possible to occasionally carry out the affiliate marketing activity? Do we have to have a VAT number?
This is a legitimate question and a beautiful and good dilemma.
The activity of affiliates is difficult to classify as an occasional activity. Our site, our contents are online 24 hours a day, our affiliate links are present on social networks all the time.
We should be able to demonstrate, in the event of checks, that this is a completely occasional activity. A somewhat difficult operation.
To stay calm and do things right, the solution is clearly to open the VAT number, and if we have the requisites open the VAT number in a subsidized regime in order to save on taxes.
Having established that a VAT number is required, it is necessary to understand whether our business is of a professional nature or a business activity in all respects.
We know that the border is often very blurred, especially for new businesses born in recent years.
In general, there are two cases.
An activity already started, for example, of a consultant who starts earning through the affiliate or a new activity that starts just to become an affiliate.
In the case of a professional who earns from some advertising banners placed on his site, for example deriving from googleadsense and his main activity is still that of consultancy, p. VAT as a professional.