How Affiliate Marketing Works

Making Sense of a Complex Revenue Channel

This is a type of performance marketing based on relationships and numbers. A company compensates an affiliate partner for referred sales they generate through their own marketing efforts.

Affiliate marketing can be a powerful revenue driver and brand builder that should be implemented by any company selling a product or service. The key is properly launching and managing the program, often it can be the highest converting and contributing channel of a business.

Advertisers

Usually the merchant or brand is the advertiser who is selling the product directly to the consumer. Advertisers create their affiliate program and its terms for the affiliates to participate. Then they attempt to attract affiliates with audiences who are the target customers for the product being sold.

Affiliates

Also known as publishers, are individuals or companies that promote an advertiser’s product or service in exchange for a commission. They are able to monetize their content by generating traffic from ads, followers, search results, and other sources. Affiliates earn a commission when a referral transaction takes place.

Consumers

Anyone who makes a transaction with the advertiser. Consumers click on an affiliate link, reaches the advertiser’s website and makes a purchase or completes a lead, thus generating revenue for the advertiser and affiliate. Affiliate marketing is built around the purpose of attracting as many consumers as possible.