Affiliate marketing has emerged as one of the most popular ways for individuals and businesses to earn money online. From it’s early introduction in the 1990s to its widespread coverage across Amazon and popular affiliate networks, it has grown very aggressively. But what exactly is affiliate marketing, and how does it work? In this post, we’ll break down the basics of affiliate marketing, including tracking methods, payment structures, and the role of affiliate networks.
What is Affiliate Marketing?
Affiliate marketing is often called performance marketing since it’s a performance-based marketing strategy where individuals or businesses (“affiliates”) promote products or services from another company (“merchants”) and earn a commission for each sale or action generated through their marketing efforts. Essentially, affiliates act as middlemen between consumers and merchants. Affiliates leverage their platforms (audience or blog, social media, website, etc.) to drive visits and ultimately sales. (Sometimes affiliates are called publishers or partners. Sometimes merchants are called advertisers. More on affiliate networks later.)
How Affiliate Marketing Works
- Joining an Affiliate Program: Affiliates join an affiliate program offered by a merchant or through an affiliate network. Once approved, they receive unique tracking links to use in their promotions. Sometimes, specific affiliates are given unique promo codes or coupons that function like tracking links.
- Promoting Products/Services: Affiliates use various marketing strategies, such as content creation, social media, or email campaigns, to promote the merchant’s products or services. They share unique links or promo codes that track sales or actions like leads or signups resulting from their promotions.
- Tracking and Reporting: When a consumer clicks an affiliate link, a cookie is usually placed on their device. This cookie tracks their activity and ensures the affiliate receives credit for any sales made within the referral period, which can range from a few hours to several months (or even longer). Tracking reports typically show metrics like clicks, conversions, and revenue generated.
Payments in Affiliate Marketing
Affiliates earn commissions based on the sales or actions they generate. There are several common payment structures in affiliate marketing:
- Pay-per-Sale (PPS): Somestimes referred to as Cost Per Action (CPA), affiliates earn a commission when a customer makes a purchase through their link. This is the most common model.
- Pay-per-Click (PPC): Affiliates earn a fee for each click generated through their link, regardless of whether a sale occurs.
- Pay-per-Lead (PPL): Affiliates earn a commission when a referred customer takes a specific action, such as signing up for a newsletter or filling out a contact form.
Payment methods vary by program but usually include options like direct bank transfers, PayPal, or checks. Payments are typically made monthly once a minimum threshold is met.
The Role of Affiliate Networks
Affiliate networks act as intermediaries between merchants and affiliates. They provide a marketplace where affiliates can find brands, products, and/or service providers to promote and manage their affiliate relationships. Some well-known affiliate networks include:
- Amazon Associates
- Ascend by Partnerize – Formerly Pepperjam but acquired by Partnerize in 2020.
- AvantLink
- Awin – Formerly Affiliate Window. Awin acquired the ShareASale network in 2017 and fully absorbed that into Awin in 2025.
- CJ Affiliate – Formerly known as Commission Junction.
- Everflow
- Impact – Formerly known as Impact Radius.
- Rakuten Advertising – Began as LinkShare but was acquired by Rakuten in 2005.
- TradeDoubler
These networks streamline the process for both merchants and affiliates by offering tracking tools, reporting dashboards, and payment processing. Each one has unique strengths that serve different needs within affiliate marketing.
Examples of Affiliate Marketing in Action
- Bloggers: A food blogger may write a recipe post and include affiliate links to the kitchen gadgets they used. When readers click the links and make a purchase, the blogger earns a commission.
- YouTubers: A tech reviewer may create a video showcasing the latest smartphone and include affiliate links in the video description or mention a trackable and exclusive promo code. Viewers who purchase through those links or the promo code are attributed to the YouTuber’s earnings.
- Social Media Influencers: An influencer on Instagram might post a picture using a specific skincare product and include an affiliate link or exclusive promo code in their bio. Followers who purchase through that link or code generate commissions for the influencer.
Conclusion
Affiliate marketing offers a unique opportunity for individuals and businesses to earn what can sometimes be classified as passive income by promoting products and services they recommend to their audience. With the right strategies and tools, anyone can tap into this lucrative industry. Whether you’re a seasoned marketer or just starting, understanding the fundamentals of affiliate marketing is key to unlocking its potential. Happy marketing!
