What is Affiliate Marketing?

What is Affiliate Marketing?

What is Affiliate Marketing?

We have all heard the term before, but what is affiliate marketing? Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network (that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as ‘the affiliate’), and the customer. The market has grown in complexity to warrant a secondary tier of players. This includes affiliate management agencies, super-affiliates and specialized third party vendors.

Affiliate marketing is commonly confused with referral marketing, as both forms of marketing use third parties to drive sales to the retailer. However, both are distinct forms of marketing in their own right. The main difference between them is that affiliate marketing relies purely on financial motivations to drive sales while referral marketing relies on trust and personal relationships to drive sales.

Affiliate marketing is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers’ marketing strategies.

The concept of Affiliate marketing is simple, you promote a merchants website and they give you commission on the sales you generate or the click throughs you send. There are a number of methods that you can use to make money from affiliate marketing both on and offline. Methods include using your own website, mailing lists you have built up, ebooks, blogs, video blogs, forums, PPC advertising, local media advertising, and custom software.

What is affiliate marketing tracking?

Affiliate programs provide you with your own log in area and statistics. You can choose which adverts to use (banners, text links, offline flyers), how many visitors you’ve sent, and how many sales you’ve generated. It’ll tell you who much commission you have made and possible which affiliates you have referred to the program and what cut of their commission you get. The tracking works by generating unique tracking ids that you apply to your links to the merchant site.

What is Affiliate Marketing? Other Internet Marketing methods

What is affiliate marketing compared to online marketing? Is there an overlap? Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization (SEO), paid search engine marketing (PPC – Pay Per Click), e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.

What is Affiliate Marketing? Pay per Click, Pay per Sale and Pay per Lead

  1. Pay Per click also referred to as cost per click. You get paid every time your link or banner is clicked on from the affiliates site. Mainly based on unique clicks but sometimes raw clicks are used to calculate your commission.
  2. Pay per Sale also referred to as pay per action or pay per performance. You get paid for the results in the form of commission, or a set fee, for a sale or sign up. If you get paid for results, the commission can be much higher than achieving a lower amount per click.
  3. Pay per Lead also referred to as pay per action or pay per performance. Similar to pay per sale, except it is a step back in the sales process. If a merchant has a product or service that cannot be sold online (such as a company offering bespoke building work, or a mortgage advice service) and needs to have some form of face to face, or telephone contact before a sale, the you are paid for generating the lead.

What is affiliate marketing used for in your business? Please comment on our blog and share your ideas.

  • Hi Amy, thanks for explaining the basics of online affiliate marketing. I think internet and social media terminology can be confusing for most small businesses, so great to have this type of info at hand. On our Optimize Business Blog (www.optimizesbiz.com) we offer a number of business products for sale in an affiliate or re-seller capacity, but these are minimal and directly relate to our core business of improving systems, processes, etc for small-medium enterprises.