What is Affiliate Marketing: Understanding the Basics

Not sure what is affiliate marketing, and how it can be of any help to you?

Well, affiliate marketing happens to be one of the most famous, most used and one of the most profitable ways to earn money online. You must have heard a lot about it but I am sure affiliate marketing must be an alien term for most of you. So let’s get down to the basics.

What is Affiliate Marketing?

According to Wikipedia, affiliate marketing is a type of performance marketing where the business gives monetary compensation to affiliates for bringing in visitors and/or customers.

Entrepreneur defines affiliate marketing as “A way for a company to sell its products by signing up individuals or companies (known as affiliates) who market the company’s products for a commission”.

So affiliate marketing is not much different from any other type of marketing. It is a simple three-step process.

  1. You sign up as an affiliate with a business.
  2. You promote/market “their” product/services/business.
  3. You get paid for any sales that you make.

Simple isn’t it?


Affiliate Marketing Explained

There are four players in the affiliate marketing industry.

  1. Merchant (retailer, business, brand)
  2. The network (a third party that has a database of offers for the affiliates to choose from and also takes care of the payments)
  3. Affiliates (this is you)
  4. Customer

Here is how affiliate marketing works.

  1. You have a blog, website, a Facebook page, social presence, email list or some other online presence where people listen to what you say.
  2. You join an affiliate network like ClickBank where you can choose any affiliate product you like based on your interest ranging from fitness affiliate products to toys to electronics to digital products and more.
  3. You recommend (also referred to as market or promote) this product or service to your followers. You might do this by writing a post about it, placing a button or banner ad somewhere on your website or blog, mentioning it in your email newsletter or talking about it on social media. You include a special link to the product or service so followers can check it out for themselves. But you don’t just use any link, you use your affiliate link. It contains a special number, your affiliate ID, which is unique to you.
  4. A follower uses your affiliate link to check the product or service and they decide to purchase it.
  5. You earn a commission for every successful sale.
  6. You receive a payout of your accumulated earnings after a specified period of time, or when your earnings reach a certain threshold ($100 is common).
Suggested Reading  What is Affiliate Marketing and How It Works?

Got it?

I hope it does make sense and you get the basic idea as to what is affiliate marketing.

Watch the video below. I personally love this video as it explains a lot about affiliate marketing and how it works.

Affiliate Marketing Terms

Following are some of the commonly used terms in affiliate marketing industry that you will listen to a lot. It is better to get an understanding of them before you jump into affiliate marketing.

Affiliate: A website owner that earns a commission for making sales.

Affiliate Link: A URL tracking link that identifies the affiliate and sends traffic to the merchant’s website.  For example, a link might look like http://www.yourdomain.com/yourpage.asp?AffiliateID=5999. These links are unique in order to track the traffic coming from the Affiliate site.  Typically these links can be simple text links, images, product links, etc.

Affiliate Program: Can also be called an Associate Program, Partner, Referral or Revenue sharing program.  In such a program the merchant rewards the affiliate for web traffic, sales or leads on a pay-per-click, pay-per-sale, or pay-per-lead basis.

Commission: Income an affiliate earns for generating a sale or a lead to a merchant’s website. Sometimes called a referral fee, a finder’s fee or a bounty.

Merchant: The business selling the goods or service is referred to as the merchant. The merchant pays affiliates for sending traffic to the merchant’s website after a product or service is purchased.


Image from Flickr.


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