What Is Affiliate Marketing?
Affiliate marketing is a form of performance-based marketing in which a person or business promotes another company's products or services and can receive a reward when their marketing generates a qualifying result.
Affiliate marketing connects promotion to results
Affiliate marketing is a marketing arrangement in which an affiliate promotes a merchant's products or services using trackable links, codes or other attribution methods.
If a visitor performs a qualifying action, such as making a purchase, the affiliate may receive a commission or other reward.
This makes affiliate marketing a form of performance-based marketing.
Who is involved?
Merchant
The business selling the product or service.
Affiliate
The person or publisher promoting the merchant.
Customer
The person who follows the promotion and may purchase the product.
Affiliate Network
An optional intermediary that tracks referrals, commissions and payments.
How affiliate marketing works
What is an affiliate link?
An affiliate link is a URL containing information that allows a merchant or affiliate platform to identify which affiliate generated a visit.
In this simplified example:
Real affiliate tracking systems can use more complex identifiers and URLs.
The click can be attributed to the affiliate
If a qualifying conversion later occurs, the tracking system can attempt to connect that conversion with the affiliate who referred the visitor.
Cookies are one method of affiliate tracking
Some affiliate programmes use cookies or similar technologies to remember that a visitor arrived through an affiliate.
The exact tracking method depends on the affiliate programme.
Affiliate programmes can have attribution windows
A programme may only credit an affiliate when a conversion occurs within a defined period after the referral.
These periods are sometimes informally called cookie windows, although modern attribution systems are not necessarily based only on cookies.
Who receives the commission?
Consider a customer who visits several websites:
Which affiliate receives credit depends on the programme's attribution model.
Some programmes may use last-click attribution. Others use different rules.
What is a conversion?
A conversion is the action that the affiliate programme wants the visitor to complete.
Affiliates can be rewarded in different ways
| Model | Affiliate reward |
|---|---|
| Pay per sale | Customer completes a purchase |
| Pay per lead | Customer becomes a qualifying lead |
| Pay per action | User performs a specified action |
| Pay per click | Payment may be based on qualifying clicks |
Commission can be a percentage of a sale
Suppose an affiliate programme pays a 10% commission.
The actual commission calculation depends on the programme's terms, including which products, fees, taxes, discounts or other amounts are commissionable.
Commission can also be a fixed amount
This is common where each successful conversion has a predefined value.
Some programmes offer recurring commissions
Subscription businesses may sometimes pay commission repeatedly while the referred customer remains an eligible paying customer.
Other programmes pay only once for the initial sale.
What is an affiliate network?
An affiliate network can act as an intermediary between merchants and affiliates.
A network may provide:
A company can run its own affiliate programme
An affiliate network is not always required.
In this situation, the relationship can be managed directly between the merchant and affiliate.
Referral programmes and affiliate programmes are not identical
The terms are sometimes used loosely, but there can be an important distinction.
| Referral Programme | Affiliate Programme |
|---|---|
| Often designed for existing customers | Often designed for publishers and marketers |
| Reward may be account credit | Reward is often monetary commission |
| May reward both people | Usually rewards the affiliate for conversions |
| Often encourages personal recommendations | Often intended for ongoing marketing activity |
Not every referral link is a traditional affiliate link. A programme might reward account credit, discounts, points or another benefit instead of cash commission.
Affiliate links can appear in useful content
Educational content can create natural affiliate opportunities
Suppose a website publishes an article explaining web hosting.
The affiliate recommendation is most useful when it genuinely relates to the information the visitor is already looking for.
Affiliate relationships should be clearly disclosed
Visitors should be able to understand when a commercial relationship exists between a publisher and a product or service being promoted.
The disclosure should be clear and positioned so that readers can understand the commercial relationship before or when they encounter the affiliate promotion.
Affiliate links are still ordinary web links
An affiliate URL can be placed inside an HTML anchor:
The target="_blank" attribute requests that the destination opens in a new browsing context, normally a new tab.
The sponsored relationship value can be used to identify links created as part of advertising or other compensated arrangements.
Affiliates can measure performance
| Metric | Meaning |
|---|---|
| Impressions | How often content or advertising is shown |
| Clicks | Visitors who follow an affiliate link |
| Conversions | Visitors completing the desired action |
| Commission | Affiliate earnings generated |
| Conversion Rate | Percentage of qualifying visitors who convert |
Conversion rate measures results
Suppose:
The conversion rate would be:
A simple affiliate website example
A recorded commission is not always final
Affiliate programmes can have validation periods.
A commission may potentially be cancelled if, for example, the underlying purchase is refunded, cancelled or determined not to satisfy the programme's rules.
Programmes can have payout rules
An affiliate programme may specify:
These terms differ from programme to programme.
Affiliate marketing works best when the content has value
Publishing useful information gives visitors a reason to find the website independently of the affiliate link.
Affiliate marketing does not guarantee income
Joining an affiliate programme does not automatically produce sales or commissions.
Results can depend on factors such as:
The simplest way to think about affiliate marketing
Marketing linked to results.
Affiliate marketing is a performance-based marketing model in which publishers promote products or services using trackable links, codes or other attribution methods. When their marketing generates a qualifying sale, lead or action, the affiliate may receive a commission or other reward.
