What is Affiliate Marketing?

Affiliate marketing is an Internet-based marketing practice whereby a merchant (an advertiser or online shop) has consumers driven to it by adverts on an affiliate (website). The affiliate receives a payment for each visitor or customer brought about by the their marketing efforts. Payment is made for a predetermined action, which can include a sale, a newsletter sign-up or just a click. It is this cost per action model that defines affiliate marketing and sets it apart from other channels.

Affiliate marketing is also used to describe the industry where a number of different individuals and types of companies are performing this form of Internet marketing, including affiliate management companies, affiliate networks, and in-house affiliate managers, specialised third party vendors, and various types of affiliates/publishers who promote the products and services of their partners.

The affiliate model requires all sales and clicks to be tracked so that that the right revenue is assigned to each affiliate. This tracking can either be independently tracked by an affiliate network, or, less commonly, run in-house by the merchant. Affiliate marketing overlaps with other Internet marketing methods to some degree, as affiliates often use regular advertising methods such as paid search engine marketing, organic search engine optimisation, e-mail marketing, and display advertising. However, affiliates also sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.

An affiliate network is a third party that offers services for merchants and affiliates such as campaign advice, account management, independent tracking and maintenance of relationships with the affiliate base.

The affiliate needs to use creative banners and special links from the affiliate network or merchant with code embedded in them that allows for tracking. These banners and links are then placed on the affiliate site and enables all clicks through to the merchant site to be tracked along with any subsequent sales. The merchant must then validate these sales as legitimate before the affiliate can be paid their commission.