What Is Affiliate Marketing?
Affiliate marketing is the process by which an affiliate earns a commission for marketing another
person’s or company’s products. The affiliate simply searches for a product they enjoy, then promotes
that product and earns a piece of the profit from each sale they make. The sales are tracked via affiliate
links from one website to another.
Best Affiliate Marketing Definition
Source: JustLearnWP.com
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How Does Affiliate Marketing Work?
Because affiliate marketing works by spreading the responsibilities of product marketing and creation
across parties, it manages to leverage the abilities of a variety of individuals for a more effective
marketing strategy while providing contributors with a share of the profit. To make this work, three
different parties must be involved:
Seller and product creators.
The affiliate or advertiser.
The consumer.
Let’s delve into the complex relationship these three parties share to ensure affiliate marketing is a
success.
1. Seller and product creators.
The seller, whether a solo entrepreneur or large enterprise, is a vendor, merchant, product creator, or
retailer with a product to market. The product can be a physical object, like household goods, or a
service, like makeup tutorials.
Also known as the brand, the seller does not need to be actively involved in the marketing, but they may
also be the advertiser and profit from the revenue sharing associated with affiliate marketing.
For example, the seller could be an ecommerce merchant that started a dropshipping business and
wants to reach a new audience by paying affiliate websites to promote their products. Or the seller
could be a SaaS company that leverages affiliates to help sell their marketing software.
2. The affiliate or publisher.
Also known as a publisher, the affiliate can be either an individual or a company that markets the seller’s
product in an appealing way to potential consumers. In other words, the affiliate promotes the product
to persuade consumers that it is valuable or beneficial to them and convince them to purchase the
product. If the consumer does end up buying the product, the affiliate receives a portion of the revenue
made.
Affiliates often have a very specific audience to whom they market, generally adhering to that
audience’s interests. This creates a defined niche or personal brand that helps the affiliate attract
consumers who will be most likely to act on the promotion.
3. The consumer.
Whether the consumer knows it or not, they (and their purchases) are the drivers of affiliate marketing.
Affiliates share these products with them on social media, blogs, and websites.
When consumers buy the product, the seller and the affiliate share the profits. Sometimes the affiliate
will choose to be upfront with the consumer by disclosing that they are receiving commission for the
sales they make. Other times the consumer may be completely oblivious to the affiliate marketing
infrastructure behind their purchase.
Either way, they will rarely pay more for the product purchased through affiliate marketing; the
affiliate’s share of the profit is included in the retail price. The consumer will complete the purchase
process and receive the product as normal, unaffected by the affiliate marketing system in which they
are a significant part.
How Do Affiliate Marketers Get Paid?
A quick and inexpensive method of making money without the hassle of actually selling a product,
affiliate marketing has an undeniable draw for those looking to increase their income online. But how
does an affiliate get paid after linking the seller to the consumer?
The answer can get complicated.
The consumer doesn’t always need to buy the product for the affiliate to get a kickback. Depending on
the program, the affiliate’s contribution to the seller’s sales will be measured differently.
The affiliate may get paid in various ways:
1. Pay per sale.
This is the standard affiliate marketing structure. In this program, the merchant pays the affiliate a
percentage of the sale price of the product after the consumer purchases the product as a result of the
affiliate’s marketing strategies. In other words, the affiliate must actually get the investor to invest in the
product before they are compensated.
2. Pay per lead.
A more complex system, pay per lead affiliate programs compensates the affiliate based on the
conversion of leads. The affiliate must persuade the consumer to visit the merchant’s website and
complete the desired action — whether it’s filling out a contact form, signing up for a trial of a product,
subscribing to a newsletter, or downloading software or files.
3. Pay per click.
This program focuses on incentivizing the affiliate to redirect consumers from their marketing platform
to the merchant’s website. This means the affiliate must engage the consumer to the extent that they
will move from the affiliate’s site to the merchant’s site. The affiliate is paid based on the increase in
web traffic.
