Affiliate marketing is when a marketer earns a commission by promoting other companies products. It is also a framework or model that enables products and brands to partner with companies or individuals – referred to as “publishers,” “partners,” or “affiliates” – to measure and track their performance and do so in a cost-effective, efficient, and scalable way.
In essence, affiliate marketing is the process of spreading product marketing and product creation across different participants, where each participant receives a share of the returns as per their contribution. However, it is worth noting that it is not just the product creation or promotion that defines who one is as an affiliate marketer. As a person interested in affiliate marketing, you can be both marketer and creator and still earn revenue from the core idea of revenue sharing.
Before looking at how affiliate marketing works, let us have a look at the main parts that make up a successful affiliate marketing system.
The Affiliate: An affiliate, also known as a publisher, can be anyone from a single person to entire companies. Affiliate marketing businesses can produce hundreds to tens of millions of dollars each month. At the “affiliate level” is where all the marketing magic happens. Affiliates promote one or several affiliate products with the main aim of attracting and trying to make potential customers see the value of their merchant’s service or product so they can end up purchasing it. Most affiliates do this by running review blogs of their merchant’s products and solutions or through entire sites that are dedicated to finding cool products and brands related to specific topics and promoting affiliate products.
The Merchant: Also known as the brand, seller, creator, vendor, or retailer, merchants are the parties that create the product being promoted. A merchant can be a single, but influential individual or a large company. From Fortune 500 companies to solo entrepreneur startups, anyone can be the retailer behind affiliate marketing programs. As long as a merchant has a product to sell, they do not have actively participate in the process.
The Consumer: Also known as the customer, consumers make the affiliate system move. If there aren’t any sales, there won’t be any revenue to be shared and no commissions to be earned. Affiliates try to market a merchant’s product or service to customers on whichever platform they use, be that through search engines using marketing content on a blog, a digital billboard, or on various social networks. Whether consumers know that they’re part of affiliated marketing system or not is entirely up to the publisher.
How Affiliate Marketing Works
To those on the outside (the consumer), the inner workings of this marketing approach may be confusing and a bit mysterious. While some marketers think that it is a channel that you can turn off and on as you would with paid social or paid search, that is not the case. While partnerships in affiliate marketing are multifaceted, it is worth noting that this is a structure that is built on real relationships and transparency and not one-off transactions.
The overall aim of any affiliate program is to craft a win-win framework for both the publishers and the brands – a structure that, if well established and well managed, can help brands earn a significant amount of revenue online with low CPA and high ROAS.
• Affiliate partners promote a merchant’s or brand’s services or products on their site
• Consumers click on the merchant’s promoted content on the affiliate’s blog or website, and a cookie is stored on the customer’s browser. (This is what enables SaaS platforms and affiliate networks to track their consumers’ progress from their publisher’s website.)
• The consumer is then redirected to the merchant’s website
• The consumer buys a service or product from the merchant
• The SaaS platform or network then automatically pays the affiliate a commission (based on the guidelines set by the merchant) for driving the sale
Affiliate marketing has been around for more than 20 years now and is a testament to the model’s versatility and adaptability. Today, it has become one of the most integral parts of acquisition and marketing strategies for some of the top leading brands in the world.