What is Affiliate Marketing?
Affiliate marketing is a hot buzz term right now, but what is it and how does it work? In a nutshell, affiliate marketing is an internet marketing channel where companies utilize (and compensate) other companies or individuals to promote their products or services.
Come again? Right, it sounds a little sketchy. It’s not though; it’s actually ingenious, win-win marketing. Affiliates, also called publishers, can be individuals or companies who use their skills to promote other companies’ offerings to their audiences. When someone decides to buy the product or service based on an affiliate’s recommendation, the affiliate gets paid.
Who is Affiliate Marketing?
Who are these affiliates? Basically anyone who has a proven history of generating interesting content that may be similar to the industry or company, also known as merchant, advertiser, or brand, they promote.
These are often bloggers who are posting and making videos in which they might recommend a particular product or service. If one of their visitors makes a purchase (or submits information) the affiliate gets paid. How much they get paid and for what is dependent on pre-determined terms of the affiliate program.
Additionally, affiliates can promote the company by putting banner ads or links on their sites. When visitors click, they can earn a commission.
And what companies do this? Pretty much all of them. There are countless brands that want to sell products and services and are willing to offer commissions to people with the marketing skills to promote their products or generate leads.
How does Affiliate Marketing Work?
There are different types of performance-based affiliate marketing models:
- Pay Per Click (PPC): Affiliates are paid for all valid clicks regardless if it led to a sale or lead.
- Pay Per Lead (PPL): Companies pay a fixed commission for qualified actions including: installing software, submitting an online form, completing a survey and more.
- Pay Per Sale (PPS): Companies pay affiliates a percentage of all qualified sales. This is usually an agreed upon rate. For example, Amazon Associates can earn up to 15% depending on what products are sold.
To add another layer to this, affiliate networks such as ClickBank, ShareASale, and Rakuten act as liaisons between companies and affiliates by managing the relationships, tracking and reporting payments, and offering an additional element of security for all participating parties.
When an individual or company signs up for an affiliate program, they’ll get a special URL (or affiliate link) containing their unique information. They then use this link whenever mentioning the company or advertiser.
Whenever visitors to their site click this link, a cookie tracks their subsequent actions. If they perform the desired action (make a purchase, submit information, join mailing list) the company is notified that a customer was referred from the respective affiliate and the affiliate is compensated.