What Exactly Is Affiliate Marketing & How Does It Work?

So, what exactly is affiliate marketing? Well, affiliate marketing in simple words is a kind of advertising in which a affiliate networks pays third-party publishers to generate sales or leads to its products and services.

Affiliate network is a place where advertisers/merchants and affiliates find a common ground to work with each other. Advertisers are the ones who want their products to be sold or looking for certain leads. Advertiser could be an individual or a huge company looking to sell their wide variety of products, for each sell or lead generated they pay commissions to affiliates and the affiliate network involved.

Third-party publishers here are actually affiliates who promote the products of  these advertisers suitable to their traffic. Affiliate networks of those respective products pay commission fees to the affiliates for every product sold or every lead generated through that particular affiliate and keep some part of that commission to themselves.

Affiliate marketing model is a kind of marketing in which a company pays partners for business generated by the affiliate’s marketing tactics. The fact is affiliate marketing has become a multi-billion dollar industry, all thanks to digital marketing analytics and cookies. Affiliates are typically paid for sales and less frequently for clicks or impressions of the product ads.

Affiliate marketing can be classified into three types.

1. Unattached affiliate marketing

2. Involved affiliate marketing

3. Related affiliate marketing

According to business insider, affiliate marketing accounts for 15% of e-commerce revenue. An affiliate can help an e-commerce merchant to reach a larger audience of internet users and consumers. An affiliate may own several websites or email marketing lists as a source of traffic. The more websites or email lists an affiliate owns, the larger is its network.

The affiliates who are approved make contact with the affiliate networks who approved them to work with and then starts promoting the products suitable to their audience. The affiliate accomplishes this by displaying banner ads, text ads or links on its websites as well as sending emails to clients. Companies use advertisements in the form of articles, videos and images to capture the attention of consumers.

The ever rising use of internet has increased the importance of affiliate marketing to the whole new level. It was Amazon which actually popularized this model by creating an affiliate marketing program called Amazon Associates. In this program, websites and bloggers/publishers insert links to the amazon page for a reviewed or discussed product in their blog post. Whenever a purchase is made, affiliates earn certain amount of commission for it. In other words Affiliate marketing is a pay for performance marketing program where the process of selling is outsourced across a huge network.

A company running an affiliate marketing program can track the links that bring in leads and sales through internal analytics to see how many convert to sales. Visitors who click the ads or links are redirected to the e-commerce site, if they purchase the product or service the e-commerce merchant credits the affiliates account with the agreed-upon commission which could be 5% to 10% or even more of the sales price.

The ultimate goal of affiliate marketing model is to increase sales and create a win-win solution for both merchants and affiliates. The model is unique and profitable and that is why its becoming increasingly popular day by day. Also, the increase in use of internet and improving technologies are making the model easier to implement for the affiliates. Affiliate networks also have improved how they track and pay commissions on qualified sales and leads.

The ability of affiliate networks to track leads and sales contributes to how affiliates can improve or better position their promoting products. Overall, affiliate marketing model is a cost effective way of advertising products and services to increase brand awareness and expanding a consumer base.

If you are a beginner who is willing to give affiliate marketing a try then following are some of the trusted and most used affiliate networks by publishers and bloggers.

• Amazon Associates
• ClickBank
• DigiStore24