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Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.
The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network (that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as ‘the affiliate’), and the customer. The market has grown in complexity to include a large range of players, including network operators, super-affiliates and specialized third party vendors.
What Is Affiliate Marketing?
Affiliate marketing is a type of commission-based marketing in which a business rewards an affiliate for driving traffic to their website. The affiliate is paid a percentage of the sale they generate, or a set fee for each lead they introduce. This arrangement is sometimes known as “pay per performance” marketing.
The industry has four core players: The merchant, also known as the brand or retailer, sells products or services; The network, which contains offers for the affiliate to choose from and also takes care of payments; The publisher, also known as the affiliate; and The customer.
How Does Affiliate Marketing Work?
Affiliate marketing works by incentivizing publishers to promote your products or services on their website. When a customer clicks on one of these links and makes a purchase, you pay the affiliate a commission. Typically, affiliate programs offer commission rates between 2% and 20%, meaning that an average sale will net you between $4 and $80 in commissions. Some programs pay out more for high-performing affiliates, while others have tiered commissions that incentivize affiliates to drive higher volumes of traffic.
There are two main types of affiliate marketing: pay-per-sale and pay-per-lead . Pay-per-sale programs pay affiliates based on each sale they generate; pay-per-lead programs, on the other hand, compensate affiliates for each lead they introduce, regardless of whether that lead results in a sale. There are also hybrid programs that combine elements of both models. For example, some programs may pay affiliates based on both the number of leads they generate AND the percentage of those leads that result in sales.
