Affiliate marketing is a type of performance-based online marketing strategy where a business rewards one or more affiliates (also called partners, promoters, associates, and referrers) for each visitor or customer brought in by the affiliate’s own marketing efforts. The following is a step-by-step explanation of affiliate marketing.
The Product Creator / Service Provider (Merchant): This is the party that creates the product or provides the service. This could be a big company, like Amazon, an SaaS provider, or an individual, such as an online course creator. Many times you’ll see this party referred to as “the Advertiser”.
The Affiliate (also known as the Publisher): The affiliate “shares” information about the product / service and if a potential customer makes a purchase, the affiliate receives a commission from the sale.
The Consumer: This is the person that buys the product or service.
The Affiliate Network: Not always present, an affiliate network acts as an intermediary between the affiliate and the merchant. The network sometimes provides the marketplace for affiliates and advertisers but most times, it provides the technology for tracking sales and the delivery of promotional materials (like banners or links). The network may also be responsible for payment processing. Some well-known affiliate networks include ClickBank, Commission Junction (CJ), and Share-A-Sale.
How it all works:
An affiliate signs up for an affiliate program provided by a retailer or product creator (either directly or through an affiliate network).
The affiliate receives a unique link that tracks any potential sales or visits back to them.
The affiliate promotes the product or service using the unique link via various marketing methods — these could include content marketing, paid advertising, email marketing, or even social media promotion.
A consumer clicks on the affiliate’s unique link, which takes them to the product or service.
If the consumer makes a purchase, the affiliate earns a commission on the sale. The exact amount can be a fixed amount or a percentage of the sale, depending on the terms of the affiliate program.
Pros of Affiliate Marketing
For affiliates, it’s a way to earn passive income.
For businesses, it’s a way to increase sales without directly spending on advertising.
Affiliates don’t need to create a product or handle customer service and returns, allowing them to focus solely on marketing.
Cons of Affiliate Marketing
Affiliates are dependent on the merchant or affiliate network for payment.
If not done ethically, it can sometimes mislead consumers.
Merchants have to share a portion of the sale with an external party.
Takeaway
Affiliate marketing has grown exponentially with the rise of online shopping and blogging. When done correctly, it’s beneficial for both the merchant and the affiliate.
See my affiliate disclosure for more information.
Ivan is a professional digital marketer and advertiser.
He helps small brands and service providers, marketing managers, and big famous brands run hyper-successful ad campaigns (across multiple formats) targeting lots of diverse audiences (ex.) to meet specific goals like brand awareness, more sales, leads, etc.
He’s got lots of thoughts on the state of marketing and is deeply committed to all areas of optimization—and has no problem showing you where the massive holes are in your own campaigns!
Contact Ivan if you’d like him to take a look at your campaigns.