What is Affiliate Marketing?

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October 25, 2022

What is affiliate marketing and how does it work?

Let's break it down with some simple definitions. Then we'll examine the actual process to ensure you have a clear picture of how affiliate marketing works.

I'll also share a little history and the different types of affiliate marketing to give you a broader view of the industry.

If you find yourself intrigued by the end of this article, you can dive into some learning resources for affiliate marketers in the making.

What is Affiliate Marketing?

Affiliate marketing is a type of marketing in which a person or business promotes another business's products or services in exchange for commission on sales or leads.

Affiliate marketing is usually based on a revenue-sharing model. This model provides a win-win relationship; the merchant only pays when a sale is made, and affiliates earn based on their performance.

For affiliates, this arrangement can be very motivating and rewarding. The more web traffic and sales that an affiliate can generate, the more money they'll earn.

Let's take a closer look at these players and their roles.

Who's Who in Affiliate Marketing

The four main parties in the affiliate marketing business model are as follows:

The Affiliate (that's you!)

The affiliate is the person or business affiliated with an online merchant selling products or services online.

Becoming an affiliate, in most cases, requires little more than owning a website and applying to a merchant's affiliate program. Both of which you can learn to do in my affiliate guide.

Using affiliate links provided by the affiliate program, an affiliate can promote a merchant's products or services on their website. Performance is tracked, and the affiliate receives a commission whenever a customer makes a purchase.

In addition to managing their website(s), affiliate marketers work hard to attract a steady stream of potential buyers to their content.

Note that affiliate networks will often refer to affiliates as publishers.

The Merchant

A merchant in affiliate marketing is a company who sells products or services online and operates an affiliate program. Other names for this role include sponsor or brand.

A merchant may operate their affiliate program in-house or use an affiliate network to host and manage their affiliate program.

Ideally, once an affiliate joins a merchant's affiliate program, they'll be assigned an affiliate manager. The affiliate manager's job is to liaison between the merchant and their affiliates. They answer questions, provide support and materials, and guide you towards success. 

A good affiliate manager is worth their weight in gold.

The Affiliate Network

The affiliate network is a hub for multiple, sometimes hundreds of, affiliate programs. Affiliate networks bring merchants and affiliates together by providing the tools merchants need and the variety of offers affiliates seek.

Some affiliate networks have broad offerings, while others are very niche and cater to select industries. Examples of popular affiliate networks include Clickbank and Shareasale.

Affiliate networks help merchants manage tracking, reporting, and affiliate payouts. They also expose the merchant's program to many affiliates in one place. However, all of this means the merchant must also pay the network a cut of earnings.

By joining an affiliate network, affiliates gain access to a large number of merchants. Beyond that, there is minimal benefit to dealing with such a middle-man. But it's often necessary when you want to promote a specific offer.

For many affiliates, affiliate networks don't enter into the equation, as there are plenty of in-house affiliate programs to choose from.

The Customer

The customer is the person who clicks an affiliate link on the affiliate's website and proceeds to the merchant's website to make a purchase.

A customer's price is not affected by clicking on an affiliate link. But by doing so they have ensured that the affiliate will receive a commission for referring them to the merchant.

How Affiliate Marketing Works

So how does this affiliate arrangement play out? How does affiliate marketing actually work?

To look at the process in more detail, let's go through a basic example.

1. An affiliate link is placed on a website.

An affiliate joins an affiliate program and obtains an affiliate link for a product they've written about on their website. The affiliate places this link on the relevant web page.

affiliate marketing link example
Example of an affiliate link at Shareasale.

Transparency in advertising is essential, so the affiliate also adds an affiliate disclosure on the page, which explains the nature of the links to their website visitors.

2. A visitor clicks the link.

A visitor to the affiliate's website reads the article and clicks the affiliate link. The link takes them to the specific page on the merchant's website where they can purchase the product.

affiliate link button being clicked

A tracking id in the affiliate link passes on the necessary information to ensure these clicks are properly credited. The affiliate can view the number of clicks and other stats in their affiliate program account.

3. A purchase is made.

Not all visitors will make a purchase once they reach the merchant site. But when someone decides to buy, the sale is recorded by the merchant and attributed to the affiliate who referred the visitor.

In most cases, the affiliate receives credit for any purchase the visitor makes within a specified time window. The standard purchase window for most affiliate programs is 30 days, which is tracked by a cookie the merchant places on the visitor's device.

4. Commission is earned.

By referring the sale, the affiliate earns a commission based on the affiliate program terms.

Affiliate commission is usually a percentage of the purchase price. However, in some cases, it can be a flat fee per sale or lead or even paid on an ongoing basis when selling products or services with recurring, monthly billing.

5. The merchant pays the affiliate.

Payday! At the end of each reporting period, the merchant, or the affiliate network who may be hosting their program, sends out earnings to their affiliates.

Affiliate payouts are usually paid weekly or bi-monthly, so long as minimum thresholds are met. If not met, the commission is added to the next pay period.

earning affiliate marketing commisions
Affiliate commissions feel a bit like this.

When Did Affiliate Marketing Start?

Affiliate marketing as we know it today has been around since 1994. It was the brainchild of an online florist named William J. Tobin, who created PC Flowers and Gifts: the first e-commerce site with an active affiliate program. This was only four years after the first-ever website on the world wide web was launched.

Other online businesses quickly followed the affiliate marketing model established by Tobin. One of the longest-running affiliate programs launched during that time that still exists today is Amazon Associates, which debuted in 1996.

But the basic concept of affiliate marketing? That has been around since commerce began when a merchant first offered a cut to those who would bring paying customers to his shop.

Types of Affiliate Marketing

When we talk about different types of affiliate marketing, we usually look at three primary variables that differentiate affiliate marketers and their approaches.

  • Where: The platform where affiliate links are placed.
  • How: The source of traffic sent to the offers.
  • What: The type of offers promoted.

Let's look at these variables, and how they combine to produce different affiliate marketing types, plus some examples.

Affiliate Marketing Platforms

The affiliate's platform is where they place their affiliate links and convert visitors into sales. In most cases, this is a website or blog owned and operated by the affiliate.

Some affiliate marketers also place their links in email newsletters, ebooks, or even on social media sites like Twitter and Facebook.

Affiliate Marketing Traffic Sources

Some types of affiliate marketing are more defined by the source of traffic. Traffic source simply refers to how the affiliate brings new visitors to the offer.

Two of the most widely used traffic sources for affiliate marketing are organic search traffic and paid search traffic, obtained through SEO and paid advertising campaigns, respectively.

Others leverage large followings on social media or existing email lists to bring traffic to their websites.

Types of Affiliate Offers

Some affiliate marketers find a niche and stick with it. Others jump around and promote whatever's trending.

An affiliate may be very specific and define their approach by the type of affiliate marketing offers they choose to promote.

Perhaps they only promote digital products, specialize in garden supplies, or focus on the financial industry. Or maybe they only sell items through Amazon Associates or reject that program because their focus is high-ticket, high-commission sales.

Examples of Affiliate Marketing Types

Below are some of the more popular types of affiliate marketing, which are variations of the "where," "how," and "what" elements defined above.

  • Content Affiliate Marketing
  • Email Affiliate Marketing
  • High-Ticket Affiliate Marketing
  • Youtube Affiliate Marketing
  • Instagram Affiliate Marketing
  • SEO Affiliate Marketing

Where to Learn Affiliate Marketing

Those just beginning their affiliate marketing journey in 2022 are lucky. Today there are more online resources for new affiliates than ever before.

If you'd like to learn more about building an affiliate business, consider the following options.

Social Media

Social media is one of my favorite methods for learning about affiliate marketing and SEO. It's mostly passive and exposes topics and methods you may never have thought of. Simply scroll through and stop when you see content or questions that spark curiosity.

The biggest benefit to joining affiliate marketing and SEO groups on Facebook and other social platforms? The ability to ask questions and get feedback quickly and easily. In the best groups, you'll meet generous experts who are happy to offer their help.

Google Search

There's a wealth of free affiliate marketing information spread across the web. By doing searches on Google for specific questions and areas of interest, you can access hundreds of affiliate marketing articles, case studies, and guides.

The skills required for affiliate marketing cross many disciplines, such as SEO, marketing, coding, analytics, and more. Because of this, you'll find that the information you seek is often spread far and wide, leading you to many different sources.

Over time, you may find that some websites and authors provide excellent value. You can bookmark these sites or join their mailing lists to keep up to date.

Even after building affiliate sites for twenty years, I find myself searching for answers daily. Searching Google for help with all the little challenges you'll face along the way is essential.

Affiliate Marketing Courses

Affiliate marketing courses are another way to get started with affiliate marketing.

Affiliate marketing as a topic is very wide and deep. Thus, affiliate marketing courses available today often target a specific approach or area of expertise. For example, an affiliate course may focus solely on YouTube marketing, advanced SEO skills, or how to sell affiliate websites.

So if you do decide to go this route, take a close look at the course contents before investing. If the course is over your head or irrelevant to the stage you're at, it's best to wait or look for other resources.

My own introduction to affiliate marketing involved buying an ebook in 2003, which of course is now hopelessly out-of-date. Since then I haven't paid for any information but that is going to change.

In the near future, I plan to buy and complete the most popular affiliate marketing courses available. This will allow me to review and recommend the best of them to Affiliate Savant readers. Stay tuned!

Affiliate Marketing Guide for Beginners

The purpose of Affiliate Savant is to teach and inspire new affiliate marketers. To that end, I am currently writing the Affiliate Marketing Guide for Beginners.

Through online research, I've found many free affiliate guides that lay out the steps involved in creating and monetizing websites. Yet most leave out the detailed instructions for each of these steps.

If you're new to affiliate marketing you may not know how to build and publish a website. Even if you have a website, you'll need to learn niche research, content strategy, basic marketing, and how to get traffic to your affiliate offers.

It's a lot. This is why I'm motivated to create a resource that will not only break down everything affiliates need to know, but also what they need to do. Step by step.

If you'd like to be notified when the Affiliate Marketing Guide is live, feel free to join my list. The guide will be completely free, and published here at Affiliate Savant for anyone who is ready to learn and earn.

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